Hindustan Media Ventures Ltd (HMVL) is one of the leading print media companies in India and produces the second-most read newspaper in the country. The company has been a market leader in the states of Jharkand, Bihar and Uttarakhand and ranks among the top rung in Uttar Pradesh and Delhi. HMVL is a subsidiary of the New Delhi-based HT Media Group and its flagship Hindustan newspaper covers the news across the entire spectrum of international , national and local news relating to politics , sports , entertainment, business and other general interests. The first edition of Hindustan was published in April 1936 from Delhi and the reach now extends across six states with 4 editions and 113 sub editions. From the perspective of the advertisement industry, Uttar Pradesh is the largest market with a size of over Rs 1,200 crore and HMVL has started to increase the advertisement rates it charges to corporates. FMCG and e-commerce advertisers may lead advertising revenue growth and higher yields and lower newsprint costs should improve operating profit margins. It has been consistently moving up the readership ladder over the last couple of years replacing Dainik Bhaskar’s claim to the the number one spot in strength of readership. The Q2FY2016 results have been quite encouraging, both in volume and yield terms and this augers well for the company. The standalone total income from operations was Rs 227 crore with a net profit of Rs 45 crore, while other income for the last quarter was Rs 3.44 crore. Most analysts expect revenue of HMVL to grow at a compounded rate of over 10% for FY 16-17 and EBIDA to clock a growth of over 18% during the same period. From a valuation perspective the company stock currently quoting at Rs 280 is not too expensive and merits an addition in the individual portfolio for healthy profitable returns. The Rs 10 face value stock has a healthy book value of Rs 100 and with a market cap of Rs 2,000 crore and EPS of Rs 22, the PE works out to around 13. With the industry PE around 18, the HMVL stock has a lot of room for further appreciation. Considering the leadership position in the Hindi heartland, consistent growth, clean balance sheet and healthy return ratios, the HMVL stock can easily achieve a target price of Rs 350 with an upside of 25% for a holding period of 9-12 months time horizon.
The BSE Sensex slipped 248 points to 25,638 levels while the NSE Nifty declined 82 points to close at 7,781 levels for the week gone by. There are many headwinds for the market in the near term and the markets will probably breathe more easily once the US Federal Reserve action is out of the way in mid December.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.