Hindustan Media Ventures (HMVL) reported healthy results for 3QFY2015, both on the top-line and bottom-line front. The top-line growth was healthy mainly due to decent growth in advertising and circulation revenue. On the operating front, the company’s performance was modest; however, higher other income boosted profitability.
Healthy growth in ad and circulation revenue:
HMVL registered a double-digit growth in advertising revenue, ie of 11% yoy to ~`152cr, on back of increase in advertising yields and volumes. Further, the company reported an ~11% yoy growth in circulation revenue to `51cr on back of higher circulation as well as realization per copy.
Despite flat operating margin, PAT grew ~27%:
Despite a modest operating performance, HMVL posted a growth of ~27% yoy to `37cr on the earnings front for the quarter, owing to higher other income and lower taxes.
Outlook and valuation:
Going forward, we believe that the company would perform well, both on the top-line and bottom-line fronts on back of strong recovery in the Indian economy. Further, we expect strong growth in both advertising and circulation revenue due to the company’s strong presence in the states of Uttar Pradesh, Uttarakhand, Bihar and Jharkhand. The Management has also indicated that the company is focusing on operational efficiencies to ensure revenue growth, thus leading to profit growth. Moreover, the company has a strong balance sheet which would make HT Media more capable for future expansion plans. Hence, we recommend a Buy rating on the stock with a target price of `292.
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