2QFY2013 Result Update | Media

October 12, 2012

HT Media
Performance Highlights
Quarterly Data (Consolidated)
(` cr) Revenue EBITDA OPM (%) Recurring PAT 2QFY13 511 57 11.1 33 2QFY12 489 70 14.4 44 % yoy 4.5 (19.6) (331) (24.1) 1QFY13 490 67 13.6 41 %qoq 4.3 (15.5) (258) (18.0)

BUY
CMP Target Price
Investment Period
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 2,257 (643) 0.5 150/82 62,343 2 18,675 5,676 HTML.BO HTML@IN

`96 `113
12 months

Source: Company, Angel Research

For 2QFY2013, HT Media reported a weak performance on the earnings front. The companys bottom-line declined by ~24.1% yoy to `33cr on account of margin pressure due to sluggish top-line performance and increase in raw materials cost and staff costs. Key highlights for the quarter: The company reported a subdued top-line growth of 4.5% yoy to `511cr due to a 1.4% yoy decline in advertising revenues to `364cr, offset by a healthy 11.0% yoy rise in circulation revenue to `56cr (on account of higher circulation and increase in cover prices). In terms of other segments, the radio segment contributed `20cr and HT Burda contributed `21cr to the top-line. On the operating front, the OPM contracted by 331bp yoy to 11.1% due to a 6.9% yoy increase in raw material costs and 21.8% yoy increase in staff costs. Outlook and valuation: At the current market price, HT Media is trading at 11.6x FY2014E consolidated EPS of `8.3. We maintain our Buy recommendation on the stock with a target price of `113, based on 14x FY2014E EPS (at ~15% discount to our target multiple for Hindi print media players). 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 7.8 12.9 10.5

Abs. (%) Sensex HTML

3m 8.4

1yr 10.1

3yr 9.7

(1.4) (33.2) (23.3)

FY2011

FY2012

FY2013E

FY2014E

1,776 25.7 181 31.1 18.7 7.7 12.5 1.7 15.9 15.8 1.0 5.4

2,003 12.8 165 (8.6) 14.3 7.0 13.6 1.6 12.0 10.8 1.0 7.6

2,111 5.4 173 4.6 15.0 7.4 13.0 1.4 11.3 11.3 0.9 5.7

2,272 7.6 194 12.1 15.1 8.3 11.6 1.3 11.4 11.4 0.8 5.0
Amit Patil 022-39357800 Ext: 6839 amit.patil@angelbroking.com

Please refer to important disclosures at the end of this report

HT Media | 2QFY2013 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

2QFY13 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 33 24 1.4

2QFY12 489 182 37.3 85 17.4 151 30.9 419 70 14.4 9 23 23 61 0 61 12.5 14 23.0 47 10 3 44 24 1.9

% yoy 4.5 6.9 21.8 3.0 8.5 (19.6) 8.8 3.9 6.1 (23.1) (23.1) (23.9) (22.9)

1QFY12 490 178 36.3 92 18.7 154 31.4 423 67 13.6 10 22 21 55 0 55 11.3 13 23.2 43 9 2

% qoq 4.3 9.6 12.8 1.5 7.4 (15.5) (5.1) 10.0 16.6 (15.4) (15.4) (17.0) (14.9)

1HFY2013 1,001 373 37.2 195 19.5 310 30.9 877 123 12.3 20 46 45 102 0 102 10.2 24 22.9 79 8 5

1HFY2012 983 355 36.1 173 17.6 295 30.0 823 160 16.3 15 45 39 139 0 139 14.2 38 27.5 101 10 6 95 24 4.1

% chg 1.7 5.0 12.8 4.8 6.6 (23.0) 31.4 3.6 16.5 (26.4) (26.4) (38.6) (21.8)

(24.1) (24.1)

41 24 1.7

(18.0) (18.0)

74 24 3.1

(22.4) (22.4)

October 12, 2012

HT Media | 2QFY2013 Result Update

Top-line grew by 4.5% yoy

During the quarter, the company reported a subdued top-line growth of 4.5% yoy to `511cr. The top-line was affected by a decline in advertising revenues by 1.4% yoy to `364cr, although it was offset by a healthy 11.0% yoy rise in circulation revenue to `56cr. The reason for the decline in ad revenues can be attributed to decline in ad rates as well as lower ad spends by advertisers due to slowdown in GDP growth. The healthy growth in circulation revenue can be attributed to hike in cover prices and increased circulation.

Exhibit 2: Subdued top-line growth

600 500 400 (` cr) 300 200 100 431 2Q11 462 3Q11 467 4Q11 495 1Q12 489 2Q12 522 3Q12 493 4Q12 23 29 25 23 13 13 6 -1 490 1Q13 511 2Q13 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 11.0%

60 50 40
(` cr) 9 4 (2) (13) 21 7 3 8 11

Exhibit 4: Advertising revenue declines 1.4% yoy

25 20 15
(` cr)

500 400 300

17 27 20

30 25 20 17 12 10 3 (3) (1) 15 10 5

10
(%)

30 20 10 42 2Q11

5 -

200 100 329 369 362 384

(5) 47 3Q11 47 4Q11 49 1Q12 51 2Q12 50 3Q12 48 4Q12 53 1Q13 56 2Q13 (10) (15)

369

407

374

373

364

(5)

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

Circ. revenue (LHS) Source: Company, Angel Research

yoy growth (RHS)

Ad revenue (LHS) Source: Company, Angel Research

yoy growth (RHS)

In the digital segment, the company continues to gain traction. The digital segment achieved a 35.7% yoy revenue growth to `13cr. The radio segment registered a robust growth of 26.8% yoy to `20cr on account of price hikes in radio ad rates undertaken in the previous quarters. HT Burda contributed `21cr to the top-line.

October 12, 2012

2Q13

HT Media | 2QFY2013 Result Update

OPM remains under pressure

On the operating front, the EBITDA margin declined by 331bp yoy to 11.1% due to 6.9% yoy increase in raw materials cost and 21.8% yoy increase in staff costs. In the past few quarters, the company is experiencing margin pressure due to losses in digital business and emerging markets, sluggish ad revenue growth on account of slowdown in GDP growth and increase in newsprint costs in INR terms due to depreciating rupee. The company has undertaken measures such as hike in cover prices and increasing pagination efficiency among others to improve margins.

Exhibit 5: OPM contracts yoy to 11.1%

70.0 60.0 50.0
61.7 64.3 64.7 65.1 62.7 64.1 63.0 63.7 61.8

Exhibit 6: Net profit declines yoy

50 40 30 20 10 39 2Q11 48 3Q11 53 4Q11 51 1Q12 44 2Q12 48 3Q12 5 22 4Q12 41 1Q13 33 2Q13 10 11 11 11 10 9 9 7 14 12 10 (%) 8 6 4 2 -

30.0 20.0 10.0 2Q11 15.0

18.8

18.1

18.2

14.4

13.9

9.8

13.6

11.1

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

(` cr)

(%)

40.0

OPM

Gross margins

Recurring PAT (LHS)

NPM (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Net Profit declines by 24.1% yoy

In terms of earnings, HT Media posted a 24.1% yoy decline in its bottom-line. During 2QFY2013, it stood at `33cr as against `44cr in 2QFY2012 due to OPM pressure. The digital segment is still making losses (about `22cr in 1HFY2013) but is expected to be a growth engine for the company going forward.

October 12, 2012

HT Media | 2QFY2013 Result Update

Investment rationale
New businesses continue to grow, expect OPM of ~15% over FY2012-14: 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. In terms of other segments, HT Medias digital businesses continued with their growth momentum during the quarter (35.7% yoy rise in digital segment revenue in 2QFY2013 albeit on a lower base). The companys job portal, Shine, has ~5.2mn engaged candidates and is expected to achieve a positive EBITDA in the current year. HTCampus has become EBITDA positive in 1QFY2013. The radio segment and HT Burda contributed `20cr and `21cr respectively to the top-line in 2QFY2013 and are expected to continue with the good performance. Going forward, we believe reduction in losses of emerging editions and cooling of newsprint costs in INR terms will help HT Media to post a margin of ~15% over FY2012-14.

Outlook and valuation

At the current market price, HT Media is trading at 11.6x FY2014E consolidated EPS of `8.3. We maintain our Buy recommendation on the stock with a target price of `113, based on 14x FY2014E EPS (at ~15% discount to our target multiple for Hindi print media players). 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.

Exhibit 7: Peer valuation

Company HT Media Jagran DB Corp Reco Buy Buy Accum Mcap (` cr) 2257 3041 3981 CMP (`) 96 96 217 TP (`) 113 112 236 Upside (%) 18 16 9 P/E (x) FY13E 13.0 15.5 19.5 FY14E 11.6 13.5 15.9 EV/Sales (x) FY13E 0.7 2.2 2.3 FY14E 0.6 1.9 2.1 RoE (%) FY13E 11.3 25.2 20.3 FY14E 11.4 26.3 21.4 CAGR # Sales 6.5 10.8 10.9 PAT 8.3 12.5 11.3

Source: Company, Angel Research, Note:^ denotes consensus data, #denotes CAGR for FY2012-14E

Exhibit 8: Angel vs. consensus estimates

Top-line (` cr) Angel estimates Consensus Diff (%)
Source: Company, Angel Research

FY2013E 2,111 2,114 (0.1)

FY2014E 2,272 2,335 (2.7)

EPS (`) Angel estimates Consensus Diff (%)

FY2013E 7.4 7.6 (2.6)

FY2014E 8.3 9.3 (10.8)

October 12, 2012

HT Media | 2QFY20 Result U a 013 Update

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

140% 120%
Sensex HT Med dia

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
9x 13x 17x 21x

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

Apr-11

Oct-10

Oct-11

Apr-12

Dec-10

Aug 11 Aug-11

Dec-11

Feb 11 Feb-11

Feb-12 Feb 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 readership. The compan is a market leader in De (Hindusta Times), Bih and . ny t elhi an har Jharkhand (Hindustan) and has eme erged as a s strong conten nder in the fin nancial daily segme (Mint). ent

Octobe 12, 2012 er

Aug-12 Aug 12

Oct-12

Jun-11

Jun-12

HT Media | 2QFY2013 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) 2,111 2,111 2,111 5.4 1,793 863 380 550 318 10.7 15.0 96 222 13.5 10.5 36 70 27.2 255 9.1 255 77 30.0 179 6 173 173 4.6 8.2 7.4 7.4 4.6 2,272 2,272 2,272 7.6 1,928 942 398 588 344 8.4 15.1 105 239 8.1 10.5 25 70 24.5 284 11.3 284 85 30.0 199 5 194 194 12.1 8.5 8.3 8.3 12.1

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

October 12, 2012

HT Media | 2QFY2013 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 advances 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 1,371 593 778 27 805 870 79 1,067 194 242 632 733 334 22 2,031 1,495 698 797 36 833 890 85 1,182 242 260 680 759 423 22 2,167 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 1,561 1,608 142 297 (22) 2 4 2,031 47 1,743 1,790 147 247 (22) 2 4 2,167 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

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

October 12, 2012

HT Media | 2QFY2013 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 49 109 157 255 96 (81) (27) 77 36 204 (95) (38) (133) 0 (49) 12 (27) (34) 36 157 194 284 105 (41) (38) 85 0 225 (133) (20) (153) 0 (50) 12 (38) (24) 48 194 242

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

October 12, 2012

HT Media | 2QFY2013 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) (2.4) 6.2 (0.5) (2.6) 9.7 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 61 122 24 1.5 35 61 117 28 1.6 0.8 2.4 13.5 15.5 15.2 15.8 21.0 15.9 10.8 15.8 12.0 11.3 16.1 11.3 11.4 16.2 11.4 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 10.5 0.7 2.3 16.6 0.1 (0.5) 9.0 10.5 0.7 2.3 16.8 0.1 (0.5) 8.7 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 7.4 7.4 11.4 0.4 68.4 8.3 8.3 12.7 0.4 76.1 112.5 25.3 2.7 0.3 1.9 29.1 2.1 16.4 10.8 2.3 0.4 1.8 10.2 1.8 12.5 8.5 1.7 0.4 1.0 5.4 1.0 13.6 8.8 1.6 0.4 1.0 6.7 1.0 13.0 8.4 1.4 0.4 0.9 5.7 0.9 11.6 7.6 1.3 0.4 0.8 5.0 0.8 FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E

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

October 12, 2012

10

HT Media | 2QFY2013 Result Update

Research Team Tel: 022 - 3935 7800

E-mail: research@angelbroking.com

Website: www. angelbroking.com

Disclaimer
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

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%)

October 12, 2012

11