AnalyseWise - HMVL Detailed Investment Note

Hindustan Media Ventures (HMVL)
Initial Investment Note
28th September 2014
Caution: This report is written keeping in mind an investment horizon of 3-5 years.
Current Price: `156 Market Cap: `1,142 Cr Our View: BUY

Investment Thesis & Company Overview
Business Model & Economics Of Print Media Business
Why Hindi Print Media Over English?
Why HMVL In Hindi Print Media?
Challenging Market Price Of HMVL
Summary Of Opportunity & Recommendation
Appendix: Detailed Financials & Shareholding
HMVL – Initial Investment Note
28th September 2014

Page 01
Investment Thesis:
Highly profitable business with presence of moat, high earnings growth potential, and a reasonable probability of re-rating.
Dear Clients, In this period of euphoria, where numerous small and mid cap stocks have doubled / tripled in the last 6 months and some have even risen 5-10 times, its very easy to fall into the temptation and join the party. While the dramatic rise in the prices of some stocks is supported by a great underlying business with high earnings growth potential and a healthy balance sheet, there are many stocks with mediocre businesses, poor management, and weak financial profile who are enjoying a free ride. Our experience shows that, it is this latter category of mediocre stocks, that do the maximum damage to an investor’s wealth, when bought at unjustified prices during general market euphoria such as the one prevailing now. Thankfully, under such charged market conditions, we have found a business which is not only sound fundamentally, but also available at attractive valuation. The company is Hindustan Media Ventures Limited (HMVL), engaged in the business of publishing Hindi newspaper “Hindustan” and Hindi magazines. Company Overview: Hindustan Media Ventures (HMVL) is a part of the HT Media Group (75% ownership in HMVL). HT Media publishes the English daily “Hindustan Times”, Business daily “Mint” and also runs the FM radio channel “Fever 104” and job portal “Shine.com”. Smt. Shobana Bhartia, daughter of the renowned industrialist Mr. K.K Birla is the promoter / chairman of the HT Media Group and Hindustan Media Ventures. HMVL was de-merged from HT Media and got listed separately in Jul-10 when it raised `270 crores by offering 16.27 million primary shares (22.2% stake) at an offer price of `166, valuing the company at `1,218 crore (67.2x trailing PE).

HT Media
Hindi Print Business
English Print Business
Radio
Online portals & other biz.
Hindustan Media Group Businesses
Source: HT Media company websites, NSE, BSE
HMVL publishes the Hindi daily newspaper “Hindustan” which is the 2nd largest Hindi newspaper in India with a total readership base of 1.42 crores (Source: IRS 2013). “Dainik Jagran” published by Jagran Prakashan is the #1 Hindi newspaper with total readership of 1.55 crores. HMVL Regional Presence, Readership, and Rank
Region
Readership in Lacs (IRS 2013)
# Rank
Bihar
Jharkhand
Delhi NCR
Uttar Pradesh
Uttarakhand
42.7
14.0
10.6
72.0
4.3
#1
#1
#2
#2
#1
Source: HMVL Investor Presentation, IRS 2013
•FY14 Revenue: `2,021 Cr
•FY14 PAT: `207 Cr
•Current MCap: `2,583 Cr
•FY14 Revenue: `730 Cr
•FY14 PAT: `111 Cr
•Current MCap: `1,142 Cr
Page 02

Flagship Daily
Supplement for
Learning English
Children’s Magazine
Youth Supplement
Education Supplement
Job Search Supplement
Women Centric
Supplement
Health Supplement
Bollywood Supplement
Monthly Cultural &
Literary Magazine
Source: HMVL Annual Report
Page 03
Key publications of HMVL:

28th September 2014

Business Model & Economics Of Print Media Business Have you ever wondered, how can newspaper companies afford to sell newspapers at a subscription price which is less than what you make by selling them to a scrap paper dealer? The fact is that newspaper companies are not in the business of making money by selling newspapers, rather they make most of their money by selling space in newspapers to advertisers. They are in the business of displaying advertisements. Revenue Sources:
Revenue Sources
Circulation Revenue (20%-40% )
Advertising Revenue (60%-80%)
Circulation Revenue
Realization per copy
# copies sold
Advertising Revenue
Rate per unit space
Space sold
Circulation Revenue:
•Circulation revenue is the revenue generated from end users (i.e. individual readers) by selling newspaper to them.
•Key drivers are number of copies sold and average realization per copy.
•Circulation revenue comprises of 20-40% of total revenue for typical Hindi print media companies.
Page 04

Page 05
•Circulation revenue is generally immune to economic slow down compared to advertising revenue which is directly linked to economic growth. People don’t stop reading or demand lower prices for newspaper during an economic slowdown.
•Also, higher proportion of circulation revenues acts as a cushion for a newspaper company as it can reduce cover prices of its newspapers to combat competition from a new player who enters a market by offering very low cover prices. Advertisement Revenue:
•Newspapers are the most popular & economical medium for local advertising in specific district or state which is not possible with television. Television is usually preferred for nation wide advertising campaign.
•Main drivers of advertisement revenue for print media companies are the volume of space sold and advertisement yield i.e. advertisement rate per unit space.
•Volume of space sold: The higher the volume of advertising space sold, higher will be the advertising revenue. Newspaper companies can increase the volume of space available for sale to advertisers by increasing the number of pages in the daily, but they cannot increase the pages beyond a certain level. Other strategy is to increase the ratio of advertisement space to news content, but it will lead to deteriorating reading experience as most of the newspaper will be covered with advertisements rather than news content. Therefore it is not a sustainable long term strategy.
•Advertisement yield: It refers to the rate charged by newspaper companies to advertisers per unit space occupied in the newspaper. It can be viewed as the pricing power of the newspaper.
•Higher advertisement yield compared to competitors and an ability to hike the advertising rates regularly without hurting volume of space sold exhibits the bargaining power and leadership position of a newspaper in a region. Advertisement yield is dependent primarily on two factors: 1. Reach of the newspaper, which is measured as number of people reading a newspaper. IRS (Indian Readership Survey) measures this metric periodically.

Advertisement Yield (Rate per unit area)
Demographics of Readers
# Readership
Page 06
2. Demographic characteristic of the readers like occupation, annual income, gender, age group etc. Purchasing power of the reader as measured by annual income remains by far the biggest driver of advertisement rates.
Major Expenses:
Major Expenses (% Operating Expenses)
Cost of paper (Newsprint) (40%-50%)
Employee Cost (15%-20%)
Newsprint Cost
USD INR rate
Intl’ Prices
Cost of paper (Newsprint cost):
•This is by far the biggest expense for print media companies accounting for about half of the operating expenses. Due to insufficient domestic production, significant quantity of newsprint is imported in India to meet the demand. International newsprint prices and value of rupee against dollar decide the cost of import. (Appreciating rupee reduces and depreciating rupee increases import cost )
•Since paper is a pure commodity, newsprint prices exhibit cyclical characteristics. Periods of high prices are followed by periods of low prices.

•When the newsprint prices are low, print media companies achieve tremendous operating margin expansion, which are not sustainable.
•Similarly, when newsprint prices are at the peak, the margins of print media companies are depressed.
•Therefore, it is extremely important to understand the operating margins over a complete cycle and use the normalized margins as reference for sustainable profitability of a print media company.
•Current newsprint prices are at their peak and therefore expected to fall leading to margin expansion for the print media companies.
Page 07
20,000
22,000
24,000
26,000
28,000
30,000
32,000
34,000
36,000
38,000
40,000
4QFY09
1QFY10
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
Quarterly Newsprint Prices Trend
`Per Metric Ton
Newsprint prices expected to soften from current peak levels
Note: Effective newsprint cost for DB Corp taken as proxy for newsprint prices. Source: DB Corp quarterly results filings

Moat / Competitive Advantage In Newspaper Business In the newspaper business, the market leader which has the maximum readership base in a region is the preferred partner for local advertisers, commands maximum ad rates and therefore enjoys the maximum profitability. Heavy dependence on advertisement revenues in this business means that top players takes most of the value and remaining players struggle to remain profitable. Due to the fixed pool of advertising revenue available in a region, a new player has to take away the advertising revenue from its competitors. This is not possible unless a newspaper has a wide and demographically desirable readership base. In order to encourage readership, new players typically offer their newspapers at extremely low subscription prices in the beginning. With almost zero advertisement revenues and meagre circulation revenues, the entrant has to burn a lot of cash towards printing copies which don’t yield any revenue. Even if it garners a high readership base due to its extremely low cover prices, it cannot offer those unrealistic rates forever. Once it raises its prices to comparable levels, it has to ensure that readers stick to its newspaper which is dependent primarily on its quality of editorial content and overall packaging & appeal. It typically takes 4-5 years for a new player who is successful in breaking into a new market and command a stable and wide readership base to become break even at EBITDA level. Most new entrants don’t reach that point and keep burning cash and finally exit the market. Therefore newspaper is a region specific business in which not more than 1 or 2 players can thrive profitably at the same time. The incumbent players usually continue to harvest profits for long periods. The ability to earn excess returns over a long period of time is what defines a company with a sustainable moat or competitive advantage. Leading newspaper companies definitely make it into this coveted list.
Page 08

Attractive economics of the print media business is vindicated by the high margins and return ratios of the major Hindi print media companies as depicted in the charts below.
Margins and profitability: HMVL
16.9%
16.0%
17.7%
20.7%
2011
2012
2013
2014
EBITDA Margin
Source: Company filings
40.6%
37.2%
44.3%
55.2%
2011
2012
2013
2014
Pre-tax Return on Capital Employed
Margins and profitability: DB Corp
42.8%
31.7%
33.1%
40.0%
2011
2012
2013
2014
Margins and profitability: Jagran Prakashan
29.2%
21.9%
18.8%
21.3%
2011
2012
2013
2014
EBITDA Margin
45.4%
21.6%
14.3%
26.7%
2011
2012
2013
2014
23.8%
23.8%
26.9%
2011
2012
2013
2014
EBITDA Margin
31.9%
Page 09

Note: Pre-Tax Return on Capital Employed is defined as following : Pre-tax return on capital employed gives an indication of how much return a business generates as a whole before tax, on the total capital (both shareholder’s and lenders) which is employed in the core business. Ideally, we should use the post-tax return on capital employed, but when the effective tax rates are different across companies, it doesn’t show the true picture of each company’s profitability. In order to remove the effect of differential tax rates, we use pre-tax return on capital employed, to ensure we are comparing apples to apples. We usually look for a post-tax return on capital of at least 20%, which translates into a pre-tax return on capital of 31% assuming a normal corporate tax rate of 35% as applicable in India. As opposed to Return on Capital Employed, Return on Equity (Net Profit / Shareholder’s Equity) gives the return generated on the capital invested by the shareholder’s only. It is important to not get carried away by high Return on Equity without assessing the capital structure of the company. Because ROE can be boosted by employing a high amount of debt compared to shareholder’s equity . A company which achieves high ROE by employing moderate amount of debt is always preferable to one which employs a large amount of debt.
Earnings Before Interest and Tax (EBIT)
Shareholder’s Equity + Total Debt – Liquid Financial Assets
Which is computed as
Page 10
Pre Tax Operating Profit
Capital Employed In Core Business

28th September 2014

9.0%
12.3%
10.6%
5.4%
Total Market
Vernacular
Hindi
English
Advert. Revenue CAGR 11-14
Circulat. Revenue CAGR 11-14
Total Revenue CAGR 11-14
6.5%
9.1%
7.4%
3.7%
Total Market
Vernacular
Hindi
English
8.1%
11.2%
9.4%
4.8%
Total Market
Vernacular
Hindi
English
English print media has lagged the growth of the overall print media market because of the following structural reasons:
•English newspapers are usually popular in Tier 1 cities where the literacy rate and penetration rate (% literate who read newspapers) is already high. Therefore the scope for increase in circulation is limited.
•Online news portals and apps are becoming preferred medium for news consumption for the time bound and busy urban individual. On the other hand, the scope for growth in Hindi and Vernacular print media is immense because of lower literacy and penetration rates. Due to the resilient rural economy and higher growth in per capita income of individuals in the non tier 1 cities, companies are spending more on advertisements in these regions as exhibited by the ad revenue growth of 10.6% and 12.3% between 2011-14 for Hindi and Vernacular print media compared to only 5.4% for English. The difference between ad rates in English and Hindi newspapers has also narrowed down over the years from ~7x to 3x now on account of non tier 1 cities outpacing the tier 1 cities in terms of purchasing power growth.
Source: FICCI-KPMG Indian Media and Entertainment Industry Report 2014
Page 11

There are only three listed Hindi print media players in India including HMVL.
A brief snapshot of the other two listed players is given below:
DB Corp: Publishes 6 newspapers in 4 languages across 14 states in India.
• Key Newspaper Brands:
• Leadership position in Chandigarh, Haryana, Madhya Pradesh and Chattisgarh.
• DB Corp also engaged in radio business through 94.3 MY FM, present in 17 locations
• Key financials and other metrics:
Jagran Prakashan: Publishes 12 newspapers in 5 languages across 15 states in India.
• Key Newspaper Brands:
• Key financials and other metrics:
Dainik Bhaskar is #3 Hindi daily
with total readership of 1.29 crores
according to IRS 2013. Hindustan
replaced Dainik Bhaskar as #2
player in 2013
Key Metrics ` Crores
FY14 Revenue 1,860
FY14 PAT 307
Current Market Cap 6,648
Revenue Split FY2014
Advertising 76%
Circulation 17%
Other 6%
Dainik Jagran is #1 Hindi daily in India
with total readership of 1.55 crores
according to IRS 2013. Dainik Jagran
enjoys #1 position in the biggest Hindi
market of Uttar Pradesh
Key Metrics ` Crores
FY14 Revenue 1,699
FY14 PAT 226
Current Market Cap 3,962
Revenue Split FY2014
Advertising 70%
Circulation 21%
Other 9%
Page 12

-0.7%
8.0%
26.6%
14.6%
14.7%
13.3%
11.6%
13.7%
12.2%
11.6%
12.2%
12.3%
Growth Comparison of Key Income Statement Items: CAGR FY11-14
Advertisement Revenue
Circulation Revenue
Total Revenue
8.1%
11.7%
13.8%
Gross Profit
EBITDA
EBIT
0.5%
7.5%
20.1%
-0.9%
6.6%
22.3%
Profit Before Tax
Profit After Tax
Earnings Per Share
2.5%
5.8%
27.5%
-0.3%
5.5%
27.5%
Source: Respective company filings
Page 13

Key Observations:
•Although, HMVL has grown in line with its peers in terms of revenues, it has outperformed its peers by a wide margin in terms of bottom line viz. operating profit (EBIT) and Earnings Per Share growth.
•EBIT has grown at a CAGR of 22.3% between FY11 and FY14 compared to 6.6% for DB Corp and a de-growth of 0.9% for Jagran Prakashan
•EPS has grown at a CAGR of 27.5% compared to 5.5% for DB Corp and a de-growth of 0.3% for Jagran Prakashan. Why has the bottom line of HMVL outperformed the topline?
•HMVL was present significantly only in Bihar, Jharkhand and Delhi NCR prior to 2005.
•It was #1 in Bihar and Jharkhand and #2 in Delhi behind Nav Bharat Times.
•Until 2005, Hindustan’s presence in UP was limited to just two editions – Lucknow & Varanasi which was non-meaningful compared to the pan state presence of the leaders Jagran Prakashan (#1) and Amar Ujala (#2).
•In 2005, HMVL decided to focus on expanding in the largest Hindi print advertisement market, Uttar Pradesh by launching further editions in the major cities.
•10 new editions were rolled out in succession – Agra in July 2006, Kanpur in August 2006, Dehradun in May 2008, Meerut in October 2008, Haldwani and Allahabad in January 2009, Bareilly in October 2009, Gorakhpur in December 2010, Aligarh in December 2011 and Moradabad in February 2012.
•Over the course of 7 years, HMVL prudently expanded, recording a six-fold increase in circulation. With 12 editions now, Hindustan covers the entirety of these two states.
•Advertisement revenue from UP/UK grew from a mere `19 Crores in FY07 to `152 Crores in FY13 growing at a CAGR of 41%.
•HMVL also overtook Amar Ujala as the #2 player in UP with a readership of 72 lacs according to the IRS 2013.
Page 14

71
212
37
92
19
152
0
50
100
150
200
250
300
350
400
450
500
FY07
FY13
Bihar & Jharkhand
Delhi NCR
UP and Uttarakhand
Advertisement Revenue (`Cr)
217.6
636.3
As mentioned earlier, newspaper business is such that one needs to first invest in printing copies, and then once the optimum number of newspaper copies and readership is reached, companies start monetizing them through sale of advertisements. But initially, the ad rates that can be charged by an entrant are significantly lower compared to top players, due to which the ongoing expense of printing copies is not offset by the revenue generated by advertisement and subscription. Overtime, as the newspaper gains loyalty, it can charge much better advertisement rates and earns more revenue per copy of newspaper while the cost of producing a newspaper copy pretty much remains the same (assuming same newsprint cost). Therefore, most of the increase in revenue flows directly to the bottom line leading to margin expansion.
Source: HMVL Investor Presentation
HMVL Advertisement Revenue By Region
Page 15

This phenomenon is called operating leverage, and is usually seen in companies with
fixed operating costs which are independent of the revenue generated.
HMVL Income Statement; Operating leverage at play
Year Ending March; [` Crores] 2011 2012 2013 2014 CAGR 11-14
Income Statement
Daily Circulation (Million) 2.02 2.20 2.35 2.40 5.9%
Realization Per Copy (`) 1.70 1.71 1.84 2.08 7.0%
Advertisement Revenue 374.1 439.2 460.1 530.0 12.3%
Subscription Revenue 122.3 134.8 155.3 178.2 13.3%
Other Operating Revenue 19.7 22.6 20.9 21.6 3.0%
Total Operating Revenue 516.2 596.6 636.3 729.7 12.2%
Newsprint & Ink Cost 224.5 256.7 264.8 300.4 10.2%
Gross Profit 291.6 340.0 371.5 429.3 13.8%
(Increase) / Decrease in inventories -0.2 0.1 -0.2 0.1 NM
Employee Benefit Expense 63.6 73.4 80.4 86.6 10.8%
Other Expenses 140.9 171.2 178.7 191.4 10.8%
EBITDA 87.4 95.3 112.6 151.2 20.1%
Depreciation & Amortisation Expense 16.4 19.4 21.7 21.6 9.4%
EBIT 70.9 75.9 90.9 129.7 22.3%
Interest Expense 4.5 3.3 5.3 5.7 8.4%
Non Operating Income 9.7 19.1 28.5 30.6 46.7%
Profit Before Tax 76.2 91.7 114.0 154.6 26.6%
Total Tax Expense 22.6 26.4 29.5 43.4 24.3%
Effective Tax Rate 29.6% 28.8% 25.9% 28.0%
Profit After Tax 53.6 65.3 84.5 111.2 27.5%
Earnings Per Share 7.3 8.9 11.5 15.2 27.5%
Margin Analysis 2011 2012 2013 2014
Gross Margin 56.5% 57.0% 58.4% 58.8%
EBITDA Margin 16.9% 16.0% 17.7% 20.7%
EBIT Margin 13.7% 12.7% 14.3% 17.8%
PBT Margin 14.8% 15.4% 17.9% 21.2%
PAT Margin 10.4% 11.0% 13.3% 15.2%
Cost Analysis as % Operating Revenue 2011 2012 2013 2014
Newsprint & Ink 43.5% 43.0% 41.6% 41.2%
Employees 17.0% 16.7% 17.5% 16.3%
Printing & Service Charges 6.7% 6.4% 5.8% 5.2%
Advertising & Sales Promotion 4.3% 4.2% 5.0% 4.8%
Consumption of Stores & Spares 3.3% 3.0% 3.3% 3.1%
News Services & Despatches 2.1% 1.9% 2.0% 1.8%
Power & Fuel 1.8% 1.8% 1.7% 1.6%
Other Operating Expenses 4.5% 6.9% 5.4% 5.2%
Depreciation & Amortization 3.2% 3.3% 3.4% 3.0%
Source: HMVL Annual Report, AnalyseWise Analysis
Page 16

A good example of business with operating leverage is a stock exchange. Its revenues depend on value/volume of transactions traded, but its major expense of technology and employee costs is pretty much fixed. If an exchange is able to increase its volume/value of transactions, its revenue will increase but the cost of technology and employee wont change much. Thus, most of the revenue increase flows to profit. Operating leverage is not necessarily positive in all the situations. It is beneficial if a company can increase its revenue consistently. But in the case of loss of revenue, the fixed operating cost will still need to be serviced leading to operating losses. HMVL has benefitted from operating leverage due to improving advertisement yield in Uttar Pradesh and Uttarakhand while the expense of printing copies has been more or less constant. UP market far from mature for HMVL; Enough room for margin expansion: Although the margins of HMVL have expanded over the last few years, its primarily on account of narrowing losses in UP & Uttarakhand. HMVL achieved breakeven in UP at EBITDA level during 2QFY14. UP contributes to about ~26% revenue of HMVL. During our interaction, the company has indicated current EBITDA margin of ~7-8% in UP and expects to achieve 10% margin in FY15 and 20% in FY16. HMVL commands ad rates which are ~0.6 times the rates of former #2 player Amar Ujala. The gap between the advertisement yields of HMVL and Amar Ujala is expected to reduce going forward as HMVL benefits from the latest IRS 2013 results. Thus, margin expansion in UP will be driven primarily by increase in ad rates. The subdued margins in UP is also vindicated from the fact that the FY14 consolidated EBITDA margin of HMVL is still ~20-21% compared to ~27% for DB Corp (Jagran Prakashan has much lower margins because of heavy investment in Nai Duniya newspaper acquired in FY12 and also in internet portals and outdoor advt. biz. Prior to FY12, Jagran enjoyed margins of 29% as shown in the chart on next page). HMVL management has guided towards consolidated EBITDA margin of 25% by FY16 compared to current EBITDA margin of 20.7%.
Page 17

60
70
80
90
100
110
120
130
140
150
160
Apr 11
Aug 11
Dec 11
Apr 12
Aug 12
Dec 12
Apr 13
Aug 13
Jan 14
May 14
Sep 14
HMVL
DB Corp
Jagran Prakashan
16.9%
16.0%
17.7%
20.7%
31.9%
23.8%
23.8%
26.9%
29.2%
21.9%
18.8%
21.3%
2011
2012
2013
2014
HMVL
DB Corp
Jagran Prakashan
HMVL EBITDA margin still below peers as UP market not matured yet
Share price performance – Apr-11 to Current (Rebased to 100)
Share Price CAGR
EPS CAGR
6.2%
27.5%
11.0%
5.5%
-0.7%
-0.3%
Trailing PE (Current)
Trailing PE (Apr-11)
10.3x
20.9x
17.5x
19.5x
16.3x
18.2x
Source: Bombay Stock Exchange, Company Filings
Source: Company Filings, AnalyseWise Analysis
Despite rapid earnings growth of 28% from FY11-14 and headroom for further growth driven primarily from UP, HMVL stock has only returned 6% p.a during this period and trades at ~10x PE which is at a significant discount to peers. Why?
Page 18
Share Price Rebased to 100

9.8%
6.0%
2.2%
HMVL
Jagran
DB Corp
Free Cash Flow Yield (FCF / EV)
As it is not prudent to base undervaluation or overvaluation of a company based on a single metric, lets look at how HMVL is valued relatively to its peers on a wide range of metrics.
Comparison of HMVL versus peers on different valuation metrics
10.3x
17.2x
20.9x
HMVL
Jagran
DB Corp
Trailing Price to Earning
1.9x
4.1x
6.2x
HMVL
Jagran
DB Corp
Trailing Price to Book
4.8x
11.0x
12.8x
HMVL
Jagran
DB Corp
Trailing EV/EBITDA
Source: Company Filings, NSE, BSE, AnalyseWise Analysis
From the above charts, it is clear that HMVL is trading at a steep discount to its peers not only from PE basis but also on cash flow, book value and EBITDA basis. Its interesting to note that HMVL is providing a free cash flow yield of almost 10% based on its current enterprise value, which is greater than the yield of 9% available on a fixed deposit. Additionally, if we buy HMVL at the current price, our FCF yield (based on our buying price which is locked) will keep on increasing as the free cash flow of HMVL increases in the future. Whereas in the case of an FD, the interest yield remains fixed. The most important question to ask here is why is it trading at such low valuations?
Page 19

225
256
306
395
-12
2
62
55
60
-292
-188
-101
2011
2012
2013
2014
HMVL
DB Corp
Jagran
13.7%
13.5%
10.4%
7.9%
28.1%
44.0%
46.3%
43.4%
50.2%
62.1%
26.0%
57.8%
2011
2012
2013
2014
HMVL
DB Corp
Jagran
Answer: Because, HMVL is paying out a very small amount of its profits (~8%) as dividends compared to its peers who are distributing 40-50% of profits as dividends. Moreover it is sitting on a cash pile (including short term investments) of `420 Crores as of Jun-14 which is significantly higher than peers. HMVL has indicated its priority of using this cash pile for an acquisition rather than distributing it as dividends.
Dividend Payout Ratio of HMVL vs. peers is the lowest
Net Cash Position ( `Crores) of HMVL vs. peers is the highest
Page 20

“Value Traps & How To Avoid Them” Although, it’s a positive to find stocks which look undervalued on different metrics, but its extremely important to understand the reason behind that undervaluation. Sometimes, companies which look cheap statistically may not actually be a bargain. They may be suffering from several issues like unethical promoters, high debt, lack of future growth etc. Such companies are called “value traps” and are cheap for the right reasons and may always remain so. This is one of the common mistakes new investors make when they look for bargains in the market and end up buying value traps. But some companies are genuinely undervalued in the market. Some of the common reasons being:
•Small Size: Many small companies having a sound business model and strong financials trade cheaply because they are too small to be covered by analysts. But once these companies grow to a certain size in terms of revenue & market cap, they attract analyst and as well as institutional investor attention leading to strong re-rating.
•Over-reaction on sector specific developments: Sometimes, market over-reacts on developments in specific sectors which have a temporary impact on the sector companies. For e.g. hike in cigarette excise duty may lead to punishing of cigarette stocks or increase in interest rates by RBI may lead to correction in Banks, Infrastructure and other interest rate sensitive sectors. The key thing to understand here is if the nature of impact on the sector is temporary or permanent. Understanding the reason behind undervaluation helps investors avoid value traps and also in identifying key triggers for unlock of value. The investor can keep track of the key triggers and take hold / sell decisions accordingly in the future. Other way of investing in statistically cheap stocks is to hold a large basket of such stocks instead of one or two, so that the overall result is satisfactory even if some of the stocks turn out to be value traps. When buying a basket of statistically cheap stocks, an investor need not worry about the reason behind undervaluation of each stock. But investors must ensure that stocks in the basket are from different sectors to diversify the sector risk.
Page 21

The market is clearly not in favor of the current dividend sharing policy of the
company and also seems to be pricing a misuse of cash by HVML, through a bad
acquisition. These factors have led to HMVL trading at a steep discount to its peers.
HMVL Balance Sheet: Cash and Liquid Investments Rich (~37% of MCap)
Page 22
Year Ending March; [` Crores] 2011 2012 2013 2014
Balance Sheet
Share Capital 73.4 73.4 73.4 73.4
Reserves & Surplus 305.6 360.7 434.9 535.8
Shareholder's Equity 379.0 434.1 508.3 609.2
Non-Current Liabilities
Deferred Tax Liabilities 3.6 5.0 6.6 6.5
Trade Payables 1.6 2.5 0.0 0.0
Total Non Current Liabilities 5.2 7.5 6.6 6.5
Current Liabilities
Short-Term Borrowings 20.5 26.3 3.2 20.3
Trade Payables 76.4 65.1 60.3 76.2
Other Current Liabilities 41.8 36.8 37.9 50.3
Short-Term Provisions 10.0 11.7 12.2 11.9
Total Current Liabilities 148.8 140.0 113.7 158.7
Total Liabilities 154.0 147.4 120.3 165.2
Total Equity And Liabilities 532.9 581.5 628.6 774.3
Non-Current Assets
Tangible Assets 163.0 184.4 176.5 168.2
Intangible Assets 1.7 1.7 1.6 1.2
Capital Work-In-Progress 0.6 7.3 1.0 11.0
Intangible Assets Under Development 0.0 0.1 0.0 0.0
Non-Current Investments 0.0 5.3 125.0 125.0
Long-Term Loans And Advances 5.7 3.8 4.4 23.5
Other Non-Current Assets 0.5 0.3 5.1 8.2
Total Non-Current Assets 171.5 202.9 313.5 337.0
Current Assets 0.0 0.0 0.0 0.0
Current Investments 189.0 207.3 152.8 243.6
Inventories 24.2 31.5 32.4 33.0
Trade Receivables 77.1 78.0 79.1 93.3
Cash And Bank Balances 35.7 43.5 28.4 26.0
Short-Term Loans And Advances 29.3 12.0 12.4 23.1
Other Current Assets 6.2 6.1 9.9 18.3
Total Current Assets 361.5 378.6 315.0 437.3
Total Assets 532.9 581.5 628.6 774.3

Challenging The Market Price:
Financial Projections: Assuming HMVL doesn’t utilize cash on balance sheet
Key Assumptions
Page 23
FY Ending March; [ ` Cr] 2014A 2015E 2016E 2017E 2018E 2019E
CAGR
2014-19
Income Statement
UP & UK Revenue 240.8 276.9 318.5 366.2 421.2 484.4 15.0%
Bihar Revenue 364.9 397.7 433.5 472.5 515.0 561.4 9.0%
Delhi NCR Revenue 124.1 135.2 147.4 160.7 175.1 190.9 9.0%
Total Revenue 729.7 809.8 899.3 999.4 1,111.3 1,236.6 11.1%
EBITDA 151.2 176.7 206.7 242.3 282.5 313.0 15.7%
EBITDA Margin 20.7% 21.8% 23.0% 24.2% 25.4% 25.3%
D&A 21.6 28.3 31.5 35.0 38.9 43.3 15.0%
EBIT 129.7 148.3 175.2 207.4 243.6 269.7
EBIT Margin 17.8% 18.3% 19.5% 20.7% 21.9% 21.8%
Interest Expense 5.7 5.7 5.7 5.7 5.7 5.7 0.0%
Non Operating Income 30.6 34.2 40.1 47.4 56.4 66.7 16.9%
PBT 154.6 176.8 209.7 249.1 294.3 330.8
Total Tax 43.4 61.9 73.4 87.2 103.0 115.8 21.7%
Tax Rate 28.0% 35.0% 35.0% 35.0% 35.0% 35.0%
PAT 111.2 114.9 136.3 161.9 191.3 215.0 14.1%
PAT Margin 15.2% 14.2% 15.2% 16.2% 17.2% 17.4%
FY Ending March; [ ` Cr] 2014A 2015E 2016E 2017E 2018E 2019E
CAGR
2014-19
Free Cash Flow
Cash Flow From Operations 113.3 123.7 144.7 169.6 197.8 219.1 14.1%
Capex 42.7 47.4 52.6 58.5 65.0 72.3 11.1%
Free Cash Flow 70.6 76.3 92.1 111.2 132.8 146.8 15.8%
Revenue Growth 2014A 2015E 2016E 2017E 2018E 2019E
UP & UK NA 15.0% 15.0% 15.0% 15.0% 15.0%
Bihar & Jharkhand NA 9.0% 9.0% 9.0% 9.0% 9.0%
Delhi NA 9.0% 9.0% 9.0% 9.0% 9.0%
EBITDA Margin 2014A 2015E 2016E 2017E 2018E 2019E
UP & UK 4.5% 8.5% 12.5% 16.5% 20.0% 20.0%
Bihar & Jharkhand 30.0% 30.0% 30.0% 30.0% 30.0% 30.0%
Delhi 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
FCF Related Assumptions 2014A 2015E 2016E 2017E 2018E 2019E
CFO as % EBITDA 74.9% 70.0% 70.0% 70.0% 70.0% 70.0%
Capex as % Revenue 5.8% 5.8% 5.8% 5.8% 5.8% 5.8%
Other Assumptions 2014A 2015E 2016E 2017E 2018E 2019E
D&A as % Revenue 3.0% 3.5% 3.5% 3.5% 3.5% 3.5%
Yield on Cash & Investments 8.7% 8.0% 8.0% 8.0% 8.0% 8.0%
Tax Rate 28.0% 35.0% 35.0% 35.0% 35.0% 35.0%

Key Assumptions and Rationale:
•UP & UK revenues expected to grow at 15% from FY14-19E driven by increase in advertisement yield as HMVL benefits from latest IRS result. Current yields in UP are ~0.6x times that of former #2 Amar Ujala and ~0.4x times the leader Jagran.
•Bihar, Jharkhand & Delhi NCR being mature markets expected to grow at a conservative rate of 9%.
•Implied consolidated revenue growth comes at ~11%, although company has indicated growth closer to 15% for the next few years.
•HMVL has indicated UP & UK EBITDA margins of 10% in FY15 and 20% in FY16. We have remained conservative and assumed 20% margins will be achieved in FY18. Although, one may argue about the likeliness of HMVL achieving 20% margins? With the recent margin expansion in the region and favorable IRS numbers, we believe occurrence is likely but have assumed a longer timeline as compared to the company.
•EBITDA margins expected to remain stable at 30% in Bihar & Jharkhand and at 25% in Delhi NCR.
•Yield on cash and investments assumed to be 8% as most of the investments are in Fixed Maturity Plans and Debt funds. Yield assumed slightly less than historical to account for potential rate cuts by RBI.
•Effective tax rate assumed at 35% compared to historical rate of 28%. This is because historically interest income on investments in FMP’s and Debt funds was non-taxable if yield was less than inflation. But post the recent budget, that criteria only applies if the instruments are held for more than 3 years. Considering that HMVL is looking for potential acquisition, it is unlikely that it will tie up the funds for 3 years.
•Cash flow from operations assumed at 70% of EBITDA in line with historical trend.
•Capex assumed in line with historical at 5.8% revenue. Entirely maintenance capex.
•Our projections assume HMVL carries its operations in existing regions and doesn’t invest in new regions. We also assume that the company doesn’t utilize the cash on the balance sheet and invests them in debt funds as done historically.
Page 24

Valuation:
We value the business of HMVL fundamentally using a DCF (discounted free cash flow)
analysis. HMVL has completed its cash investments in UP & UK. The other markets of
Bihar, Jharkhand and Delhi NCR are already mature. Therefore, according to us free
cash flow is the ideal tool to understand value generated by current operations.
The operating business of HMVL
is worth 1,237 crores based on
our DCF valuation. At current
market value of 1,142 crores, we
are not only getting net cash of
420 crores for free but also
getting the operating business
at a discount of 75 crores to its
intrinsic value.
DCF Valuation Output
Page 25
DCF Valuation (INR Crores) 2014A 2015E 2016E 2017E 2018E 2019E 2024E
Cash From Operations 113.3 123.7 144.7 169.6 197.8 219.1 321.9
Cash Investment In Operations 42.7 47.4 52.6 58.5 65.0 72.3 106.3
Free Cash Flow 70.6 76.3 92.1 111.2 132.8 146.8 215.7
Present Value Multiplier 0.88 0.77 0.67 0.59 0.52 0.27
Present Value of Free Cash Flows 66.9 70.9 75.0 78.6 76.2 58.2
Total Present Value of FCF till 2019 367.7
Total Present Value of FCF from 2020-24E 325.0
Continuing Value (CV) post 2024E 2,019.3
Present Value of CV 544.7
Value of Operating Business (Enterprise Value) 1,237.4
Net Cash 419.8
Value of Equity 1,657.2
Shares Outstanding (Crores) 7.34
Value Per Share (INR) 225.8
Current Share Price (INR) 155.6
Margin of Safety 31.1%
Key Assumptions
Discount Rate 14.0%
FCF Growth Rate From FY19E-24E 8.0%
Terminal Growth Rate of FCF after 2024E 3.0%
0.0
400.0
800.0
1,200.0
1,600.0
2,000.0
PV of FCF
FY15E-19E
PV of FCF
FY20E-24E
PV of FCF
Post FY24E
Total Value
Of Operations
Net Cash Tota Value of
Equity
HMVL Valuation Output Summary
Source: AnalyseWise Analysis
`Crores
367.7
325.0
544.7 1,237.4
419.8 1,657.2

Note to Clients:
Margin of safety is not the same as the potential upside in the stock. In HMVL’s case
the margin of safety is 31.1% which means that even if the intrinsic value of the stock
falls by ~31% due to lower FCF than expected, we would not have overpaid for the stock.
So 31% is the cushion we have for unforeseen business slowdown or any other value
destroying factor.
Conversely it means that there is a potential upside of 45.1% as the current price
becomes equal to the intrinsic value of `225.8. Once the stock reaches the intrinsic
value , we can expect a return equal to the discount rate which we have used that is
14%.
So the total return will come from two sources: a. closing of gap between market price
and intrinsic value and b. increase in intrinsic value as the business grows in the
future which we assume to be 14% (discount rate which we have used).
Sensitivity Analysis of Margin of Safety
A negative terminal growth
rate of 8% (post FY24) in
free cash flow and a
discount rate of 18% is
required to justify the
current market price of
HMVL.
Page 26
31.1% -8.0% -4.0% 0.0% 2.0% 3.0% 4.0% 5.0% 6.0%
12% 24% 29% 35% 40% 42% 45% 49% 53%
14% 16% 20% 25% 29% 31% 34% 36% 39%
16% 8% 11% 16% 19% 21% 23% 25% 27%
18% 0% 3% 7% 9% 11% 12% 14% 16%
Discount Rate
Terminal Growth Rate
Reverse DCF: Implied Perpetual Growth Rate In Current Free Cash Flow
Implied FCF Growth Rate ` Cr
Current Equity Value 1,142.0
Net Cash 419.8
Current Firm Value 722.2
FCF (FY14A) 70.6
Discount Rate 14.0%
Implied Perpetual Growth Rate in FCF 4.2%
Current market price
implies a perpetual growth
rate of 4.2% in the current
FCF of HMVL which is very
conservative considering
sector economics and
growth potential.

0.0
200.0
400.0
600.0
Current Share
Price
Difference
Between Value
and Price
Intrinsic Value
Increase In
Intrinsic Value
During Next 5
Years
Intrinsic Value
After 5 Years
Page 27
Summary Of Expected Return
Price `
155.6
70.2
225.8
209.0
434.8
Expected return of 23% for a holding period of 5 years
Rate of increase in intrinsic value assumed equal to discount rate of 14%
Upside of 45% due to closing of gap between market price and intrinsic value
Summary of DCF Valuation and our thoughts on current price:
•We arrive at an intrinsic value of `226 per share compared to current price of `156 per share. Current price is at a discount of 31% to intrinsic value.
•As a sanity check, our intrinsic value of `226 per share implies a PE of 14.9x based on FY14A EPS compared to a PE of 18-20x for peers of HMVL.
•Core operating business of HMVL is worth `1,237 Crores.
•Therefore, at current market cap of `1,142 Crores, we are not only getting cash and investments worth `420 Crores for free but also getting the operating business at a discount of `88 Crores.
•Reverse DCF indicates that the market is incorporating a perpetual growth rate of 4.2% in FY14 FCF, which according to us is highly conservative.
•At the current price, market is discounting a worst case scenario in terms of cash utilization. Any ways we are not paying anything for the cash held by HMVL.

Key Risks:
•Inability to maintain margins in its leading markets: DB Corp has entered Bihar through its Patna edition launched in Jan-14 which will increase competitive intensity. According to HMVL, advertisement revenues in Bihar come primarily from the state government for which a newspaper needs to have a pan state presence. HMVL feels it will take a while for DB Corp to establish pan Bihar presence and become a genuine threat. Meanwhile HMVL has cut its cover price in Patna to fend off the competition. To the credit of HMVL, it has successfully tackled similar competition from DB Corp and Jagran Prakashan in the past in Jharkhand.
•Slower traction in Uttar Pradesh: Inability to increase advertisement yields in UP and UK leading to slower or no margin expansion.
•Emergence of geo-targeted advertising technology on television where the same channel can broadcast different advertisements in different locations in which it is being watched. For e.g. Zee Cinema in Maharashtra and Uttar Pradesh may air different ads at the same time. We feel that newspapers offer a different proposition to advertisers compared to television. Also, this technology is yet to gain traction and if it does pose threat to the business of newspapers, it wont happen overnight. There will be enough time to monitor the developments and take appropriate action (like selling the stock) before a lot of damage if done.
•Grossly overpaying for an acquisition leading to destruction of value.
Page 28

Summary of opportunity
•HMVL is a stable asset engaged in Hindi newspaper business available at an attractive valuation due to lack of clarity on the use of huge pile of cash on its balance sheet (cash and equivalents account for 37% of market cap)
•The company possesses moat characteristics and is expected to grow its earnings by ~14% in the next 5 years. Growth driven primarily from Uttar Pradesh and Uttarakhand which are its newer markets.
•Trades at only 10x PE compared to 17-20x for peers.
•High probability of re-rating if it utilizes cash prudently through a smart acquisition or distributes it to shareholders via dividends.
•The company can’t do a buyback as promoters ownership is at the maximum permissible limit of 75%.
Recommendation:
•We recommend our clients to buy “Hindustan Media Ventures” at the current market price of `156.
•Current market price offers a margin of safety of 31% based on our DCF valuation.
•Our clients can expect a return of ~23% excluding dividends over a period of 5 years.
•Possibility of further upside if company prudently uses cash which will lead to re- rating of the stock by the market.
•More importantly, the downside risk at the current price is very limited.
Page 29

Appendix:
Detailed Annual Financials of Hindustan Media Ventures:
Page 30
Year Ending March; [` Crores] 2011 2012 2013 2014 CAGR 11-14
Income Statement
Daily Circulation (Million) 2.02 2.20 2.35 2.40 5.9%
Realization Per Copy (`) 1.70 1.71 1.84 2.08 7.0%
Advertisement Revenue 374.1 439.2 460.1 530.0 12.3%
Subscription Revenue 122.3 134.8 155.3 178.2 13.3%
Other Operating Revenue 19.7 22.6 20.9 21.6 3.0%
Total Operating Revenue 516.2 596.6 636.3 729.7 12.2%
Newsprint & Ink Cost 224.5 256.7 264.8 300.4 10.2%
Gross Profit 291.6 340.0 371.5 429.3 13.8%
(Increase) / Decrease In Inventories -0.2 0.1 -0.2 0.1 NM
Employee Benefit Expense 63.6 73.4 80.4 86.6 10.8%
Other Expenses 140.9 171.2 178.7 191.4 10.8%
Ebitda 87.4 95.3 112.6 151.2 20.1%
Depreciation & Amortisation Expense 16.4 19.4 21.7 21.6 9.4%
EBIT 70.9 75.9 90.9 129.7 22.3%
Interest Expense 4.5 3.3 5.3 5.7 8.4%
Non Operating Income 9.7 19.1 28.5 30.6 46.7%
Profit Before Tax 76.2 91.7 114.0 154.6 26.6%
Total Tax Expense 22.6 26.4 29.5 43.4 24.3%
Effective Tax Rate 29.6% 28.8% 25.9% 28.0%
Profit After Tax 53.6 65.3 84.5 111.2 27.5%
Earnings Per Share 7.3 8.9 11.5 15.2 27.5%
Year Ending March 2011 2012 2013 2014
Margin Analysis
Gross Margin 56.5% 57.0% 58.4% 58.8%
EBITDA Margin 16.9% 16.0% 17.7% 20.7%
EBIT Margin 13.7% 12.7% 14.3% 17.8%
PBT Margin 14.8% 15.4% 17.9% 21.2%
PAT Margin 10.4% 11.0% 13.3% 15.2%
Cost Analysis as % Operating Revenue
Newsprint & Ink 43.5% 43.0% 41.6% 41.2%
Employees 17.0% 16.7% 17.5% 16.3%
Printing & Service Charges 6.7% 6.4% 5.8% 5.2%
Advertising & Sales Promotion 4.3% 4.2% 5.0% 4.8%
Consumption Of Stores & Spares 3.3% 3.0% 3.3% 3.1%
News Services & Despatches 2.1% 1.9% 2.0% 1.8%
Power & Fuel 1.8% 1.8% 1.7% 1.6%
Other Operating Expenses 4.5% 6.9% 5.4% 5.2%
Depreciation & Amortization 3.2% 3.3% 3.4% 3.0%
Interest Expense 0.9% 0.6% 0.8% 0.8%

Page 31
Year Ending March; [` Crores] 2010 2011 2012 2013 2014
Balance Sheet
Share Capital 57.1 73.4 73.4 73.4 73.4
Reserves & Surplus 18.2 305.6 360.7 434.9 535.8
Shareholder's Equity 75.4 379.0 434.1 508.3 609.2
Non-Current Liabilities
Deferred Tax Liabilities 2.8 3.6 5.0 6.6 6.5
Trade Payables 0.0 1.6 2.5 0.0 0.0
Total Non Current Liabilities 2.8 5.2 7.5 6.6 6.5
Current Liabilities
Short-Term Borrowings 135.0 20.5 26.3 3.2 20.3
Trade Payables 0.0 76.4 65.1 60.3 76.2
Other Current Liabilities 114.6 41.8 36.8 37.9 50.3
Short-Term Provisions 2.5 10.0 11.7 12.2 11.9
Total Current Liabilities 252.1 148.8 140.0 113.7 158.7
Total Liabilities 254.9 154.0 147.4 120.3 165.2
Total Equity & Liabilities 330.2 532.9 581.5 628.6 774.3
Non-Current Assets
Tangible Assets 140.9 163.0 184.4 176.5 168.2
Intangible Assets 0.0 1.7 1.7 1.6 1.2
Capital Work-In-Progress 14.9 0.6 7.3 1.0 11.0
Intangible Assets Under Development 0.0 0.0 0.1 0.0 0.0
Non-Current Investments 31.2 0.0 5.3 125.0 125.0
Long-Term Loans & Advances 0.0 5.7 3.8 4.4 23.5
Other Non-Current Assets 0.0 0.5 0.3 5.1 8.2
Total Non-Current Assets 189.3 171.5 202.9 313.5 337.0
Current Assets 0.0 0.0 0.0 0.0 0.0
Current Investments 0.0 189.0 207.3 152.8 243.6
Inventories 16.4 24.2 31.5 32.4 33.0
Trade Receivables 71.5 77.1 78.0 79.1 93.3
Cash & Bank Balances 27.1 35.7 43.5 28.4 26.0
Short-Term Loans & Advances 25.9 29.3 12.0 12.4 23.1
Other Current Assets 0.0 6.2 6.1 9.9 18.3
Total Current Assets 141.0 361.5 378.6 315.0 437.3
Total Assets 330.2 532.9 581.5 628.6 774.3

Page 32
Year Ending March 2011 2012 2013 Current
Key Cash Flow Metrics
Free Cash Flow (` Crores) 27.8 26.6 73.0 70.6
FCF As % Operating Revenue 5.4% 4.5% 11.5% 9.7%
FCF As % EBITDA 31.8% 27.9% 64.8% 46.7%
FCF As % Market Cap 3 Month Post FY End 2.7% 2.9% 7.8% 6.2%
FCF As % Enterprise Value 3 Month Post FY End 3.3% 3.9% 11.6% 9.8%
Year Ending March; [` Crores] 2011 2012 2013 2014
Cash Flow Statement
Cash Flow From Operating Activities
Profit Before Tax 76.2 91.7 114.0 154.6
Adjustment For Depreciation & Amortization 16.4 19.4 21.7 21.6
Adjustment For Non Operating (Income) / Expense -2.9 -1.4 -15.1 -21.2
Adustment For Working Capital Changes -13.4 -13.3 -11.5 1.1
Direct Taxes Paid -19.1 -24.2 -28.4 -42.8
Net Cash Flow From Operations 57.1 72.3 80.7 113.3
Cash Flow From Investing Activities
Capex -29.3 -45.7 -7.7 -42.7
Net (Investment) / Divestment In Financial Assets -157.9 -31.5 -66.6 -90.9
Income From Financial Assets 1.9 17.5 16.6 16.1
Divestment Of Assets 0.0 0.7 0.2 0.1
Net Cash Flow From Investing -185.3 -59.0 -57.5 -117.3
Cash Flow From Financing Activities
Issue Of Equity 270.0 0.0 0.0 0.0
Buback Of Equity 0.0 0.0 0.0 0.0
Issue Of Debt 20.4 5.8 -23.1 17.1
Repayment Of Debt -135.0 0.0 0.0 0.0
Equity Issue Expense -13.8 0.0 0.0 0.0
Interest Expense -4.6 -2.7 -5.0 -5.2
Dividend Paid 0.0 -7.3 -8.8 -8.8
Tax On Dividend 0.0 -1.2 -1.4 -1.5
Net Cash Flow From Financing 137.0 -5.4 -38.3 1.6
Change In Cash & Equivalents
Net Increase In Cash & Cash Equivalents 8.8 7.8 -15.1 -2.4
Cash & Cash Equivalents At Beginning Of The Year 26.9 35.7 43.5 28.4
Cash & Cash Equivalents At End Of The Year 35.7 43.5 28.4 26.0

Page 33
Top Shareholder % Ownership
Promoter HT Media 75.0%
Reliance Mutual Fund 8.4%
HDFC Mutual Fund 2.9%
Azim Premji 1.2%
Kotak Mahindra Mutual Fund 1.0%
Others 11.6%
Total 100.0%
Shareholder Category % Ownership
Promoter HT Media 75.0%
Mutual Funds 13.0%
Financial Institutions / Banks 0.8%
Foreign Instiutional Investors 1.5%
Corporate Bodies 5.8%
Individuals 3.5%
Total 100.0%
Shareholding Details as of June-2014
Source: Company Filings
Disclaimer: This report is intended for the use of AnalyseWise Investment Advisor’s clients only. No part
of this report can be reproduced, retransmitted without the consent of AnalyseWise Investment Advisors.
Any party found guilty of breaching the copyrights will be subject to proceedings under Copyright
Infringement Act.
Year Ending March 2011 2012 2013 2014
Working Capital Efficiency
Inventory Turnover 9.3x 8.1x 8.2x 9.1x
Recievables Turnover 6.7x 7.6x 8.0x 7.8x
Payables Turnover 2.9x 3.9x 4.4x 3.9x
Inventory Days 39.4 44.8 44.7 40.0
Recievables Days 54.5 47.7 45.4 46.7
Payable Days 124.2 92.7 83.2 92.6
Cash Conversion Cycle (Days) -30.4 -0.1 6.8 -5.9
Return Ratios
Return On Beginning Equity 71.1% 17.2% 19.5% 21.9%
Return On Average Equity 23.6% 16.1% 17.9% 19.9%
Return On Ending Equity 14.1% 15.1% 16.6% 18.3%
Pre-Tax Return On Average Capital Employed 43.4% 40.1% 44.4% 58.9%
Pre-Tax Return On Capital Employed 40.6% 37.2% 44.3% 55.2%
Post-Tax Return On Capital Employed 26.4% 24.2% 28.8% 35.9%
Actual Post Tax Return On Capital Employed 28.6% 26.5% 32.8% 39.7%
Du Pont Analysis
PAT Margin 10.4% 11.0% 13.3% 15.2%
Asset Turnover 1.0x 1.0x 1.0x 0.9x
Leverage 1.4x 1.3x 1.2x 1.3x
Return On Equity 14.1% 15.1% 16.6% 18.3%

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