3QFY2013 Result Update | Media

February 13, 2013

HT Media
Performance Highlights
Quarterly Data (Consolidated)
(` cr) Revenue EBITDA OPM (%) Recurring PAT
Source: Company, Angel Research

ACCUMULATE
CMP Target Price
Investment Period
3QFY12 524 78 14.9 48 % yoy 4.4 12.0 109bp 11.4 2QFY13 511 57 11.1 33 %qoq 7.1 54.8 492bp 61.1 547 87 16.0 54

`102 `113
12 months

3QFY13

Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Media 2,391 (643) 0.6 150/82 59,576 2 19,608 5,933 HTML.BO HTML@IN

For 3QFY2013, HT Media reported a subdued 4.4% yoy growth in its top-line to `547cr. Its OPM expanded by 109bp yoy to 16% aided by 134bp yoy decline in consumption of raw materials as a percentage of sales (driven by pagination efficiency, cutback in excess circulation in few markets and lower job work). Consequently, the companys profit grew by a healthy 11.4% yoy to `54cr. Key highlights for the quarter: Advertising revenue registered a sluggish growth of 2% yoy to `415cr, primarily driven by volume growth. Although the decline in advertising revenue in Delhi continued (real estate, education and BFSI sector continue to be laggards in ad spend), HT Medias hindi print business subsidiary, HMVLs ad revenue grew by 15% yoy (aided by strong growth in local ad revenues in UP, Bihar and Jharkhand on back of festive season). The circulation revenue grew by 12.3% yoy to `56.5cr driven by combination of higher circulation and higher realization per copy. In terms of other segments, the radio segment contributed `22cr, HT Burda contributed `29cr while the digital business contributed `14cr to the top-line. Outlook and valuation: At the current market price, HT Media is trading at 13.0x FY2014E consolidated EPS of `7.8. We recommend Accumulate on the stock with a target price of `113, based on 14.4x FY2014E EPS. Downside risks to our estimates include 1) a sharp rise in newsprint prices in INR terms, and 2) higher-than-expected losses/increase in the breakeven period of emerging editions and digital business. Key financials (Consolidated)
Y/E March (` cr) Net Sales % chg Net Profit (Adj.) % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 68.8 7.3 13.4 10.5

Abs. (%) Sensex HTML

3m 5.3 5.2

1yr 10.3

3yr 21.4

(30.3) (29.4)

FY2011

FY2012

FY2013E

FY2014E

1,776 25.7 181 31.1 18.7 7.7 13.2 1.8 15.9 15.8 1.1 5.8

2,003 12.8 165 (8.6) 14.3 7.0 14.5 1.7 12.0 10.8 1.0 7.6

2,061 2.9 156 (5.7) 14.0 6.6 15.4 1.5 10.3 10.0 0.9 6.7

2,205 7.0 184 18.1 15.1 7.8 13.0 1.4 11.0 11.0 0.8 5.5
Amit Patil 022-39357800 Ext: 6839 amit.patil@angelbroking.com

Please refer to important disclosures at the end of this report

HT Media | 3QFY2013 Result Update

Exhibit 1: Quarterly performance (Consolidated)

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM Interest Depreciation Other Income PBT (excl. Ext Items) Ext Income/(Expense) PBT (incl. Ext Items) (% of Sales) Provision for Taxation (% of PBT) Recurring PAT PATM Minority Interest Reported PAT Equity shares (cr) EPS (`)
Source: Company, Angel Research

3QFY13 547 187 34.1 98 17.9 175 32.0 460 87 16.0 11 22 24 78 0 78 14.3 22 28.2 56 10 3 54 24 2.3

3QFY12 524 186 35.4 94 17.8 167 31.8 446 78 14.9 11 22 19 64 0 64 12.2 16 25.1 48 9 (0) 48 24 2.1

% yoy 4.4 0.4 4.9 4.9 3.0 12.0 3.3 0.0 27.3 22.0 22.0 37.3 16.9

2QFY12 511 195 38.2 103 20.2 156 30.5 454 57 11.1 10 24 24 47 0 47 9.2 11 22.7 36 7 3

% qoq 7.1 (4.3) (5.2) 12.2 1.2 54.8 11.8 (9.1) (2.3) 67.0 67.0 107.3 55.1

9MFY2013 1,548 559 36.1 293 18.9 484 31.3 1,337 211 13.6 31 68 69 181 0 181 11.7 46 25.2 135 9 7

9MFY2012 1,508 541 35.9 266 17.7 462 30.7 1,269 238 15.8 26 67 58 203 0 203 13.5 54 26.7 149 10 5 144 24 6.1

% chg 2.7 3.4 10.0 4.8 5.3 (11.5) 20.1 2.4 19.9 (11.2) (11.2) (16.1) (9.4)

11.4 11.4

33 24 1.4

61.1 61.1

128 24 5.4

(11.1) (11.1)

February 13, 2013

HT Media | 3QFY2013 Result Update

Subdued top-line growth

For 3QFY2013, HT Media reported a subdued 4.4% yoy growth in its top-line to `547cr. Although the decline in advertising revenue in Delhi continued (real estate, education and BFSI sector continue to be laggards in ad spend), HT Medias hindi print business subsidiary, HMVLs ad revenue grew by 15% yoy (aided by strong growth in local ad revenues in UP, Bihar and Jharkhand on back of festive season).

Exhibit 2: Subdued top-line growth

560 540 520 500 (` cr) 480 460 440 420 400 462 3Q11 467 4Q11 495 1Q12 29 25 23 13 13 6 -1 489 2Q12 524 3Q12 493 4Q12 490 1Q13 511 2Q13 547 3Q13 4 4 35 30 25 20 15 10 5 0 -5 (%)

Consolidated Top-line Source: Company, Angel Research

yoy growth (RHS)

Exhibit 3: Circulation revenue up by 12.3%

60 50 40
(` cr) 9 4 (2) 7 3 11 8 12 21

Exhibit 4: Volume driven ad revenue growth

25 20 15
(` cr) (%)

500 400 300 200 100 369 362 384 369 407
20 17 12 10 3 374 (1) 2 27

30 25 20 (%) 15 10 5 (5) (3)

30 20 10 47 3Q11

10 5

47 4Q11

49 1Q12

51 2Q12

50 3Q12

48 4Q12

53 1Q13

56 2Q13

57 3Q13

(5)

373

364

415

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

Circ. revenue (LHS)

yoy growth (RHS)

Ad revenue (LHS)

yoy growth (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

The circulation revenue grew by 12.3% yoy to `56.5cr driven by combination of higher circulation and higher realization per copy. In terms of other segments, the radio segment contributed `22cr, HT Burda contributed `29cr while the digital business contributed `14cr to the top-line.

February 13, 2013

3Q13

HT Media | 3QFY2013 Result Update

OPM expands 109bp yoy

The companys OPM expanded by 109bp yoy to 16% aided by 134bp yoy decline in consumption of raw materials as a percentage of sales (driven by pagination efficiency, cutback in excess circulation in few markets and lower job work). Consequently, profit grew by a healthy 11.4% yoy to `54cr.

Exhibit 5: OPM expands by 109bp...

70.0 60.0 50.0
64.3 64.7 65.1 62.7 64.6 63.0 63.7 61.8 65.9

Exhibit 6: ...boosting profitability

50 40 30 20 10 48 3Q11 53 4Q11 51 1Q12 44 2Q12 48 3Q12 5 22 4Q12 41 1Q13 33 2Q13 54 3Q13 11 11 11 10 9 9 7 10 14 12 10 (%) 8 6 4 2 -

30.0 20.0 10.0 -

18.8

18.1

18.2

14.4

14.9

9.8

13.6

11.1

16.0

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

(` cr)

(%)

40.0

OPM

Gross margins

Recurring PAT (LHS)

NPM (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Investment rationale
Margin pressure to ease as ad revenue picks up: HT Medias recent underperformance can be attributed to OPM pressure on account of losses in digital business and emerging markets, higher newsprint costs and cyclical nature of ad revenue growth (sluggish due to slower GDP growth). We expect ad revenue to bounce back as economic activity picks up. New businesses continue to grow: In terms of other segments, HT Medias digital businesses continued with its growth momentum during the quarter (18.2% yoy rise in digital segment revenue in 3QFY2013). The companys job portal, Shine, has more than ~5.2mn engaged candidates and is expected to achieve a positive EBITDA in the current year. HT Campus became EBITDA positive in 1QFY2013. The radio segment also registered a strong growth of 25.6% yoy to `22cr while HT Burda grew by 28.3% yoy to `29cr. We expect these segments to continue to post robust revenues. Going forward, we believe reduction in losses of emerging editions and stabilization of newsprint costs in INR terms will help HT Media to improve its margin to ~15% in FY2014.

Outlook and valuation

At the current market price, HT Media is trading at 13.0x FY2014E consolidated EPS of `7.8. We recommend Accumulate on the stock with a target price of `113, based on 14.4x FY2014E EPS. Downside risks to our estimates include 1) a sharp rise in newsprint prices in INR terms, and 2) higher-than-expected losses/increase in the breakeven period of emerging editions and digital business.

February 13, 2013

HT Media | 3QFY20 Result U a 013 Update

Exhibit 7: Peer valuation t

Compa any HT Me edia Jagran n DB Co orp Reco o Accum m. Buy Accum m Mcap (` cr) 2,391 3,270 4,362 CMP (`) 102 103 238
^

TP P (`) ) 113 3 125 5 266 6

Upside (%) 11 21 12
#

P/E (x) FY13E 15.3 16.1 20.1 FY14E 13.0 14.2 16.4

EV/S Sales (x) FY13E 0.8 2.3 2.6 FY14E 0.7 2.0 2.2

RoE (%) FY13E 10.3 25.9 21.4 FY14E 11 1.0 26 6.6 22 2.4

CAGR # R Sales 4.9 11.9 11.0 PAT 5.6 13.8 14.8

Source: Company, Ang Research, N gel Note: denotes consensus data denotes CAG for FY2012 a, GR 2-14E

Exhibit 8: Angel v consensu estimates t vs. us s

Top-lin (` cr) ne Angel estimates Consensus Diff (% %)
Source: Company, Ange Research el

FY2013E 2,061 2,069 (0.4)

FY2014 4E 2,20 05 2,27 70 (2.9 9)

EPS (`) E Angel estimates A s Consensus C Diff (%) D

FY201 13E 6.6 7.0 (5 5.7)

FY2 2014E 7.8 8.4 (7.1)

Exhibit 9: Return o HT Media vs. Sensex t of a x

200% 180% 160% Sensex HTMe edia

Exhib 10: Onebit -year forward P/E band d

18 80 16 60 14 40 Share Price (`) 12 20 10 00 80 8 60 6 40 4 20 2 0 Oct-10 Apr-11 Oct-11 Dec-10 Dec-11 Oct-12 Aug-11
9x 13x 17 7x 21x

140% 120% 100% 80% 60% 40% 20% 0% Oct-10 Oct-11 Feb-11 Feb-12 Dec-10 Dec 10 Aug-11 A 11 Aug-10 Aug-12 Oct-12 Apr-11 Apr-12 Apr 10 Apr-10 Jun-10 Jun-11 Jun-12 Dec-11 Dec-12

Source: Company, Ange research el

Source Company, An e: ngel research

Company Backgroun y nd
HT Media is the second large a s est print m media company in terms of readership/ /circulation and the large listed print media company in te a est erms of revenue. T The company two key offerings, Hindustan Tim y's mes and Hind dustan, feature in the top five newspapers in their respective cate e s egories in terms of . ny t elhi an har readership. The compan is a market leader in De (Hindusta Times), Bih and Jharkhand (Hindustan) and has eme erged as a s strong conten nder in the fin nancial daily segme (Mint). ent

February 13, 2013

Aug-12

Dec-12

Feb-11

Feb-12

Apr 12 Apr-12

Jun-11

Jun-12

HT Media | 3QFY2013 Result Update

Profit and Loss Statement (Consolidated)

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Total operating income % chg Total Expenditure Cost of Materials Personnel Others (include SG&A) EBITDA % chg (% of Net Sales) Depreciation& Amortization EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Share in profit of Associates Recurring PBT % chg Pr Period & Extraordinary Exp/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earnings of assoc. Less: Minority interest (MI) PAT after MI (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E 1,347 1,347 1,347 11.9 1,259 595 242 422 88 (48.3) 6.5 69 19 (83.1) 1.4 32 33 166.6 20 (85.7) 19 1 12 62.9 (12) (13) 1 20 (80.3) 1.5 0.9 0.9 (80.3) 1,413 1,413 1,413 4.9 1,163 515 252 396 250 184.4 17.7 71 179 839.6 12.7 30 41 21.5 191 860.7 2 188 54 28.2 135 (1) 136 138 589.8 9.8 5.9 5.9 589.8 1,776 1,776 1,776 25.7 1,444 666 301 477 332 32.9 18.7 84 248 38.3 14.0 25 34 13.2 257 35.0 257 71 27.7 186 5 181 181 31.1 10.2 7.7 7.7 31.1 2,003 2,003 2,003 12.8 1,716 781 356 579 287 (13.6) 14.3 92 195 (21.2) 9.8 36 75 32.1 234 (9.0) 234 63 26.7 172 6 165 165 (8.6) 8.3 7.0 7.0 (8.6) 2,061 2,061 2,061 2.9 1,773 822 381 569 288 0.4 14.0 94 194 (0.5) 9.4 33 70 30.1 231 (1.2) 231 69 30.0 162 6 156 156 (5.7) 7.6 6.6 6.6 (5.7) 2,205 2,205 2,205 7.0 1,872 880 397 595 333 15.5 15.1 104 228 17.4 10.3 27 70 25.7 271 17.0 271 81 30.0 189 5 184 184 18.1 8.4 7.8 7.8 18.1

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with previous year numbers

February 13, 2013

HT Media | 3QFY2013 Result Update

Balance Sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Other long term liabilities Long term provisions Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Net Block (incl WIP) Goodwill Investments Long-term loans and adv. Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 698 71 232 396 540 158 1,233 671 109 200 362 576 95 2 1,413 823 247 576 196 772 304 1,033 322 712 129 841 475 1,213 408 805 10 815 759 60 757 109 185 464 614 144 7 1,726 1,284 497 787 19 806 832 62 866 157 189 520 626 239 23 1,901 1,338 591 747 27 774 870 79 1,076 223 234 619 729 347 22 2,014 1,450 695 755 35 790 890 85 1,188 275 250 662 748 439 22 2,141 1,233 1,413 47 802 849 (7) 371 21 47 0 924 971 22 402 18 47 1,255 1,302 130 297 (9) 2 3 1,726 47 1,400 1,447 136 346 (35) 2 4 1,901 47 1,544 1,591 142 297 (22) 2 4 2,014 47 1,716 1,763 147 247 (22) 2 4 2,141 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with previous year numbers

February 13, 2013

HT Media | 3QFY2013 Result Update

Cashflow (Consolidated)
Y/E March (` cr) Profit before tax Depreciation Change in WC Interest / Dividend (Net) Direct taxes paid Others Cash Flow from Operations (Inc.)/ Dec. in Fixed Assets (Inc.)/ Dec. in Investments Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Interest / Dividend (Net) Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2009 1 69 132 12 20 6 199 (259) (82) (341) 0 148 11 2 135 (7) 77 71 FY2010 188 71 66 15 41 (6) 293 (144) (133) (277) (2) 31 8 (1) 22 38 71 109 FY2011 257 84 (46) (7) 52 0 237 (77) (240) (318) 185 (88) 10 7 81 0 109 109 FY2012 FY2013E FY2014E 234 92 (32) (28) 115 0 151 (76) (109) (185) 0 65 11 (29) 83 49 109 157 231 94 (65) (30) 69 36 197 (62) (38) (100) 0 (49) 12 (30) (31) 66 157 223 271 104 (40) (35) 81 0 219 (120) (20) (140) 0 (50) 12 (35) (27) 52 223 275

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with previous year numbers

February 13, 2013

HT Media | 3QFY2013 Result Update

Key ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post-tax) Leverage (x) Operating ROE Returns (%) RoCE Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover Inventory / Sales (days) Receivables (days) Payables (days) Net WC (days) Solvency ratios (x) Net Debt to equity Net Debt to EBITDA Interest Coverage (0.0) (0.0) 0.6 (0.2) (0.7) 6.1 (0.4) (1.7) 10.0 (0.4) (2.2) 5.4 (0.5) (2.8) 5.9 (0.5) (2.8) 8.4 1.6 48 60 142 24 1.4 31 63 142 (4) 1.5 30 53 117 7 1.6 33 50 110 14 1.5 35 61 124 21 1.5 35 61 119 26 1.6 0.8 2.4 13.5 15.5 15.2 15.8 21.0 15.9 10.8 15.8 12.0 10.0 14.8 10.3 11.0 16.4 11.0 1.4 0.4 1.7 0.9 0.0 (0.1) 0.8 12.7 0.7 1.7 15.3 0.1 (0.1) 13.8 14.0 0.7 2.1 21.3 0.1 (0.3) 14.6 9.8 0.7 2.3 16.2 0.1 (0.4) 9.1 9.4 0.7 2.3 14.9 0.1 (0.5) 7.9 10.3 0.7 2.3 16.9 0.1 (0.5) 8.3 0.9 0.9 3.8 0.3 36.2 5.9 5.9 8.9 0.4 41.3 7.7 7.7 11.3 0.4 55.4 7.0 7.0 10.9 0.4 61.6 6.6 6.6 10.6 0.4 67.7 7.8 7.8 12.3 0.4 75.0 119.4 26.9 2.8 0.3 2.0 30.7 2.2 17.4 11.5 2.5 0.4 1.9 10.8 1.9 13.2 9.0 1.8 0.4 1.1 5.8 1.1 14.5 9.3 1.7 0.4 1.0 7.2 1.1 15.4 9.6 1.5 0.4 0.9 6.7 1.0 13.0 8.3 1.4 0.4 0.8 5.5 0.9 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with previous year numbers

February 13, 2013

HT Media | 3QFY2013 Result Update

Research Team Tel: 022 - 3935 7800

E-mail: research@angelbroking.com

Website: www. angelbroking.com

Disclaimer
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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

HTML No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) :

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

February 13, 2013

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