4QFY2012 Result Update | Media

May 24, 2012

HT Media
Performance Highlights
(` cr) Revenue EBITDA OPM (%) PAT 4QFY12 494 48 9.8 23 4QFY11 467 84 18.1 54 % yoy 5.8 (42.9) (831)bp (57.8) 3QFY12 522 73 14 48 %qoq (5.3) (33.7) (418)bp (53.0)

BUY
CMP Target Price
Investment Period

`113 `148
12 months

Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Media 2,666 0.5 175/107 34,237 2 16,222 4,921 HTML.BO HTML@IN

Source: Company, Angel Research

Moderate top-line growth: For 4QFY2012, HT Media reported a modest performance on the revenue front. The companys top line grew by 5.8% yoy to `494cr. However, pressure on OPM due to increased newsprint costs and other expenses pulled down the companys earnings by ~58% yoy to `22.6cr Key highlights for the quarter: During the quarter, the company witnessed modest top-line growth of 5.8% yoy due to moderate circulation revenue growth and sluggish ad revenue growth of 3%. OPM contracted by 831bp yoy due to higher newsprint costs yoy and a ~500bp yoy increase in other expenses. In terms of other segments, radio reported operating loss ~`1.4cr in spite of a sharp hike in advertising rate. The digital business also reported operating loss of ~`8cr mainly on account of Shine, HTMLs job portal. Consequently, the bottom-line registered a ~58% yoy decline to `22.6cr. Outlook and valuation: At the CMP, HTML is trading at 10.7x FY2014E consolidated EPS of `10.6. We maintain our Buy recommendation on the stock with a revised target price of `148, based on 14x FY2014E EPS (at ~15% discount to our target multiple for Hindi print media players). Downside risks to our estimates include 1) any further rise in newsprint prices, 2) competition becoming fierce and 3) higher-than-expected losses/increase in the breakeven period of the new launches. 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 11.3 12.1 7.8

Abs. (%) Sensex HTML

3m (9.5) (21.4)

1yr (9.9) (27.6)

3yr 16.8 4.9

FY2011 1,776 25.1 180.9 31.1 17.9 7.7 14.7 2.0 15.9 14.8 1.6 9.0

FY2012E 2,003 12.8 165.5 (8.5) 14.3 8.3 13.7 1.8 14.0 13.2 1.4 7.6

FY2013E 2,255 12.6 212.1 28.1 16.3 9 12.6 1.6 13.4 13.8 1.1 7.0

FY2014E 2,555 13.3 249.5 17.7 16.7 10.6 10.7 1.4 13.8 14.9 0.9 5.6
Amit Patil 022-39357800 Ext: 6503 amit.patil@angelbroking.com Sourabh Taparia 022 3935 7800 Ext: 6872 sourabh.taparia@angelbroking.com

Please refer to important disclosures at the end of this report

HT Media | 4QFY2012 Result Update

Exhibit 1: Quarterly performance

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

4QFY12 494 183 37.0 90 18.2 173 35.1 446 48 9.8 10 25 18 31 0 31 6.2 8 26.4 23 5 1 22 24 0.9

4QFY11 467 165 35.3 77 16.4 141 30.2 383 84 18.1 7 22 15 70 0 70 15.0 17 23.7 54 11 1 53 24 2.3

% yoy 5.8 10.8 17.1 22.8 16.5 (42.9) 45.9 13.5 19.9 (56.2) (56.2) (51.1) (57.8)

3QFY12 522 187 35.9 94 17.9 168 32.2 449 73 13.9 8 22 22 64 0 64 12.3 16 25.1 48 9 (0)

% qoq (5.3) (2.5) (4.1) 3.3 (0.7) (33.7) 24.8 13.3 (18.1) (52.1) (52.1) (49.5) (53.0)

FY2012 2,003 723 36.1 356 17.8 637 31.8 1,716 287 14.3 36 92 75 234 0 234 11.7 63 26.7 172 9 6

FY2011 1,776 620 34.9 301 16.9 523 29.5 1,444 332 18.7 25 84 34 257 0 257 14.5 71 27.7 186 10 5 181 24 7.7

% chg 12.8 16.6 18.4 21.7 18.8 (13.6) 46.9 8.7 120.6 (8.9) (8.9) (12.2) (7.7)

(58.5) (58.5)

48 24 2.1

(54.4) (54.4)

165 24 7.0

(8.5) (8.5)

May 24, 2012

HT Media | 4QFY2012 Result Update

Moderate top-line growth at 5.8% yoy

During the quarter, HTML posted modest top-line growth of 5.8% yoy to `494cr, driven by mix of circulation as well as ad revenue growth. Circulation revenue recorded muted growth of 3% yoy to `48.3cr, aided by new launches in Moradabad and Aligarh, but pulled down on account of aggressive cover prices. Circulation during the quarter stood at ~41 lakh copies per day. During the quarter, advertising revenue also recorded muted growth of 3% yoy to `373.6cr on account of slowdown in advertisements from the real estate and financial sector, which are major contributors to HTMLs ad revenue.

Exhibit 2: Moderate top-line growth

600 500 400 (` cr) 300 200 100 4Q10 1Q11 2Q11 3Q11 4Q11 Consolidated Top-line 1Q12 2Q12 3Q12 4Q12 yoy growth (RHS) 374 403 431 462 467 494 489 522 35 494 30 25 (%)
(%)

20 15 10 5 0

Source: Company, Angel Research

Exhibit 3: Circulation revenue aided by new launches

60 50 40
(` cr)

Exhibit 4: Advertising revenue posted muted growth

25 500 400 (` cr) 300 200 100 302 329 329 369 362 384 371 407 374
30 25 20 15 10 5 -

43

47

42

47

47

49

51

50

48

20 15 10 (5) (10) (15)

(%)

30 20 10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

Circ. revenue (LHS)

yoy growth (RHS)

Ad revenue (LHS)

yoy growth (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

May 24, 2012

4Q12

HT Media | 4QFY2012 Result Update

During the quarter, HTML undertook 50% hike in the advertising rate of its radio business. In spite of the sharp hike, top-line of radio business declined by 24% yoy to `19.6cr. Management expects revenues to bounce back in the next quarter since the new rates are at par with competition. During 4QFY2012, the digital business contributed `13.4cr as against `10.7cr in 4QFY2011, on account of healthy pipeline of domestic printing orders.

OPM under pressure yoy due to higher newsprint prices

HTML posted a 169bp yoy contraction in its gross margin due to higher newsprint price, further compounded by the depreciating rupee. Operating margin contracted by 831bp yoy to 9.8% during the quarter, due to a ~500bp yoy increase in other expense on account of increased advertising expense for new launches, `15cr forex loss and a provision of `23cr for investments. In terms of segments, the print segment registered margin contraction, while the radio and digital business registered negative operating profit.

Exhibit 5: OPM contracts by 831bp yoy

80.0 70.0 60.0 50.0
64.7 68.4 69.1 67.7 64.7 65.1 61.9 64.1 63.0 61.7 64.3

Exhibit 6: Recurring PAT declines sharply

50 40 (` cr) 30 20 10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 14 12 10 (%) 8 6 4 2 4Q12

(%)

40.0 30.0 20.0 10.0 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 15.5 18.8 21.5 19.5 15.0 18.8 18.1 17.8 13.7 13.9

9.8

OPM

Gross margins

Recurring PAT (LHS)

NPM (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Recurring PAT declines by 58% yoy

In terms of earnings, HTML posted a 58% yoy decline in recurring PAT. During 4QFY2012, it stood at `22.6cr as against `53.6cr in 4QFY2011 due to pressure on OPM. The companys radio business reported loss in spite of a sharp hike in advertising rate, while the digital business reported loss since Shine, HTMLs job portal, is still EBITDA negative.

May 24, 2012

HT Media | 4QFY2012 Result Update

Exhibit 7: Segmental performance

Y/E March (` cr) Revenue Printing Radio Internet Unallocated Total Revenue Less: Inter segment Less: Other Op Inc Total Net sales EBIT Printing Radio Internet Unallocated Total EBIT EBIT Margin (%)
Source: Company, Angel Research

4QFY12 462 20 13 1 497 3 494 44 (1) (8) (11) 23 4.7

4QFY11 434 26 11 0 470 3 467 74 5 (10) (5) 64 13.7

% chg 6.7 (23.8) 25.0 202.6 5.6

FY2012 1,886 74 44 6 2,010 7 -

FY2011 1,670 70 32 14 1,785 9 1,776 286 7 (41) (5) 248 13.9

% chg 12.9 6.0 38.1 (58.1) 12.6

5.7 (41.2) (127.4) (20.8) 120.6 (63.8) (897.9)

2,002 282 (4) (40) (42) 195 9.7

11.6 (1.5) (1.2) 701.3 (21.3) (417)

Investment rationale
Steady circulation and ad revenue growth expected: HTML recorded subdued circulation revenue during the quarter. However, it is expected to report steady circulation revenue growth as the company consolidates its position in U.P. and Mumbai and increases its cover price. Also, ad revenue is expected to bounce back with other sectors such as automobiles, garments, entertainment and consumer durables contributing to growth instead of finance and real estate sectors, which are slowing down. New businesses continue to grow, expect OPM of ~16% over FY2012-14: In terms of operating performance, HTMLs new businesses continued to grow during the quarter (70% rise in printing revenue at HT Burda). Revenue contributed by the radio segment is also expected to rise due to advertising rate hike. The digital business is expected to take off over the next few years. HTMLs job portal, Shine, has a total database of ~85 lakh and is expected to achieve positive EBITDA over the next year. Going forward, we believe continuous improvement in ad yields will help HTML to post margin of ~16% over FY2012-14.

Outlook and valuation

At the CMP, HTML is trading at 11x FY2014E consolidated EPS of `10.6. We maintain our Buy view on the stock with a revised target price of `148, based on 14x FY2014E EPS (at ~15% discount to our valuations for Hindi print media players). Downside risks to our estimates include 1) any further rise in newsprint prices, 2) competition becoming fierce and 3) higher-than-expected losses/increase in the breakeven period of the new launches.

May 24, 2012

HT Media | 4QFY20 Result U a 012 Update

Exhibit 8: Peer valuation t

Compa any HT Me edia Jagran n DB Co orp Reco Buy Buy Buy Mcap M (` cr) 2,666 2 2,598 2 3,659 3
^

CMP (`) 113 82 200

TP (`) 148 137 269

Upside (%) ) 31 67 35
#

P/E (x) FY13E 12.6 12.6 15.0 FY14E 10.7 10.6 12.6

EV/Sales (x) E FY1 13E 1.1 2.1 2.2 FY14E 0.9 1.9 1.9

RoE (%) FY13E 13.4 34.6 24.1 FY14E 13.8 1 37.7 3 24.4 2

CAG # GR Sales 12.9 10.2 13.6 PAT 19.4 21.2 20.8

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

Exhibit 9: Angel v consensu estimates t vs. us s

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

FY2013E 2,255 2,239 0.7

FY2014 4E 2,55 55 2,46 66 3. .6

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

FY201 13E 9.0 9.0 -

FY2 2014E 10.6 10.9 (2.7)

Exhibit 10: Return of HT Med vs. Sense t n dia ex

140% 120% Sensex HT M Media

Exhib 11: Onebit -year forward P/E band d

25 50 20 00 Share Price (`) 15 50 10 00 50 5 12x 15x 18x 1 21x x

100% 80% 60% 40% 20% 0% Nov-10 May-11 Nov-11 Mar-11 Jul-10 Jul 10 Mar-12 Jan-11 Sep-10 Sep-11 Jan-12 Jul-11

0 May-10 May-11 Nov-10 Nov-11 Mar-10 Mar-11 Mar-12 Jul 11 Jul-11 Jan-10 Sep-10 Jan-11 Sep-11 Jan-12 Jul-10

Source: Company, Ange research el

Source Company, An e: ngel research

May 24 2012 4,

HT Media | 4QFY2012 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
Source: Company, Angel Research

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 25.1 1,450 671 301 478 317 26.9 17.9 84 233 30.0 13.2 24 48 18.6 257 34.9 257 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 1,716 723 356 637 287 (9.5) 14.3 92 195 (16.2) 9.8 36 75 32.0 234 (8.9) 234 63 26.7 172 6 165 165 (8.5) 8.3 8.3 8.3 7.9 2,255 2,255 2,255 12.6 1,886 927 372 587 369 28.5 16.3 97 271 38.8 12.0 16 78 23.4 333 42.2 333 100 30.0 233 21 212 212 28.1 9.4 9.0 9.0 8.6 2,555 2,555 2,555 13.3 2,128 1,062 424 642 427 15.9 16.7 105 323 19.0 12.6 14 88 22.2 396 19.0 396 119 30.0 277 28 249 249 17.7 9.8 10.6 10.6 17.7

May 24, 2012

HT Media | 4QFY2012 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 Total Liabilities APPLICATION OF FUNDS Net Block incl. CWIP Goodwill Investments Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Misc. Exp. not written off Total Assets 772 304 698 71 232 396 540 158 1,233 841 475 671 109 200 362 576 95 2 1,413 824 760 756 115 242 398 604 152 1,736 804 2 832 891 157 232 502 635 257 1,895 823 2 832 1,191 289 343 560 801 390 2,048 825 2 832 1,480 457 388 634 852 628 2,286 47 802 849 (7) 371 21 1,233 47 0 924 971 22 402 18 1,413 47 0 1,255 1,302 130 312 (9) 1,736 47 1,400 1,447 136 346 (35) 1,895 47 1,637 1,684 170 202 (9) 2,048 47 1,872 1,919 198 177 (9) 2,286 FY2009 FY2010 FY2011 FY2012E FY2013E FY2014E

Source: Company, Angel Research

May 24, 2012

HT Media | 4QFY2012 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
Source: Company, Angel Research

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 FY2012E FY2013E FY2014E 257 84 (41) (6) 71 51 274 (70) (284) (354) 180 (90) 10 (6) 86 7 109 115 234 92 (81) (39) 72 33 167 (72) (72) (144) 0 34 11 (16) 39 42 115 157 333 97 77 (26) 100 (7) 374 (112) 0 (112) 0 (144) 12 (26) (130) 132 157 289 396 105 (70) (36) 119 1 277 (106) 0 (106) 0 (25) 14 (36) (3) 168 289 457

May 24, 2012

HT Media | 4QFY2012 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) (1.8) 9.9 (0.5) (2.2) 12.7 (0.5) (2.5) 16.8 (0.6) (2.6) 22.7 1.6 48 60 142 24 1.4 31 63 142 (4) 1.5 30 52 115 8 1.6 30 61 123 14 1.6 30 61 122 16 1.7 30 61 114 24 1.6 0.8 2.4 13.5 15.5 15.2 14.8 19.6 15.9 13.2 19.7 14.0 13.8 20.5 13.4 14.9 22.6 13.8 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 13.2 0.7 2.1 19.9 0.0 (0.3) 13.8 11.8 0.8 2.3 20.2 0.1 (0.5) 11.0 12.0 0.7 2.5 20.7 0.1 (0.5) 10.1 12.6 0.7 2.7 23.5 0.1 (0.6) 10.3 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 8.3 8.3 11.9 0.4 63.2 9.0 9.0 13.2 0.5 71.6 10.6 10.6 15.1 0.5 81.7 132.8 29.9 3.1 0.3 2.2 33.8 2.4 19.3 12.8 2.7 0.3 2.1 11.8 2.1 14.7 10.1 2.0 0.3 1.6 9.0 1.6 13.7 9.5 1.8 0.4 1.4 7.6 1.5 12.6 8.6 1.6 0.4 1.1 7.0 1.3 10.7 7.5 1.4 0.4 0.9 5.6 1.0 FY2009 FY2010 FY2011 FY2012E FY2013E FY2014E

May 24, 2012

10

HT Media | 4QFY2012 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%)

May 24, 2012

11