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Hindustan Media Ventures Ltd. (NSE:HMVL) is a leading print and media organization in India. It is a subsidiary of HT Media Limited. The company has a history dating back to 1918. From modest beginnings as ‘The Behar Journals Limited', today HMVL has grown manifold to become the third largest daily of the country with almost 9 million readers. The company changed its name in 2008 to Hindustan Media Ventures Ltd. to better reflect the expanded scope of its business activities. Today, the company has 20 printing facilities, 20 editions, and a strong presence across predominantly Hindi reading states in India.
It acquired Hindi business from HT Media comprising of Hindi daily newspaper, Hindustan and magazines Nandan and Kadambini, which are popular in the country. Hindustan is the second largest read newspaper in India.
HMVL Positives
i) Wide coverage of Hindi Daily - As one of the fastest growing Hindi newspaper in a country with a population of 130 crores, Hindustan covers news across the entire spectrum of international, national and local news relating to politics, business, entertainment, sports, and other general interests. It has a wide reach extending to six regions, Uttar Pradesh, Uttarakhand, Bihar, Jharkhand, Mohali, and Delhi NCR. The newspaper has dominant market shares in the states of Bihar, Jharkhand, Uttarakhand, Delhi, and UP.
HMVL’s Product Portfolio
Source: Annual Report 2018
ii) Popular in the Hindi heartlands - Hindustan Media Ventures Ltd has maintained an unparalleled position in the print media space, with a total readership base of 5.24 crore. The company has a strong brand recall and enjoys strong loyalty from its readers. The brand is trusted for providing unbiased reporting and thought provoking news to its readers. It has become one of the most popular Hindi newspapers read in the Hindi heartlands of India. Its magazines Nandan and Kadambini are popular Indian magazines with a 50 year old legacy.
iii) Should Benefit from India’s Growth Story - The Indian economy is growing and is set to benefit on the back of strong structural reforms. The Media and Entertainment industry should also grow in line with the economy. The Indian Media & Entertainment Industry is expected to grow at a CAGR of 11.6% between CY 2016-20. Rising literacy rates, growing disposable income and increasing readership among the youth have helped the country’s print media industry to grow. The parliamentary elections in April-May should act as a strong tailwind for HMVL. CRISIL is estimating print media profits to go up in the next fiscal year, driven by the upcoming elections and some softening of newsprint prices.
iv) Strengthening its leadership position in India - The company is taking various initiatives focusing on increasing its readership base and strengthening its leadership position in the market. It launched new products targeting to improve offline audience engagement. It is also expanding its footprint and has set a new facility in Purnia and a new printing line in Patna.
v) Growth in advertising revenues - Hindustan Media Ventures’ revenues are derived majorly from advertising revenue and subscriptions to its newspapers/ magazines. The print media advertising revenue is poised to grow on the back of the general election this year. It is expected that print will attract a greater share of the political campaigning during the times of election. This growth will also be supported by readers’ quest for genuine news in the era of growing fake news. Regional/ language newspapers are witnessing a sharp growth in India. Moreover, a majority of the local advertisers still prefer putting up an advertisement in the regional newspaper because they do not have a presence in the digital and television mediums.
Risks
a) Increasing raw material cost - Raw material cost increased by 2.5% during the last year due to volatility in newsprint supplies. HMVL’s net margin is largely dependent on the newsprint price. Any price increase in this item will directly affect the top line growth.
b) Changes in technology - As internet penetration becomes deeper in India, people tend to go paperless. Most of the urban population today, prefer to read news on their phones rather than a physical newspaper. Digital disruption is fast catching on the print media industry.
c) Increasing competition in key markets - HMVL competes with the likes of Dainik Bhaskar, Dainik Jagran, Amar Ujala and other leading national and regional publishers both physically as well as electronically.
Valuation
Hindustan Media Ventures has a market capitalization value of INR 801 crores. It is trading at 4.6 times its earnings which is cheaper when compared to the industry PE of 11x. The company was listed in 2010. The stock is trading near INR 109 level. The stock performance has been dismal over the last two years. However, it has started to gain momentum during the last one month and should continue to perform well, driven by the hype around the General Election this year.
HMVL Stock Performance last Month
Source: Money Control
It has successfully grown its earnings per share at 16% CAGR over the last five years. HMVL has a strong balance sheet and low debt level. The company is growing its cash balance each year but has failed to distribute this cash to its shareholders either in the form of dividend growth or share buyback, which has led to resentment among the shareholder community.
Conclusion
Hindustan Media Ventures has a good presence across both print and digital media. A wide range of supplement offerings, sticky readership base, and relationship with a strong media conglomerate are huge competitive advantages for HMVL. The media company’s investment into digital media and expansion into other geographies could be near term growth drivers. The company is also in a position to use the excess cash intelligently towards making strategic acquisitions which could help it grow in the future. The General Election this year could help the stock gain some momentum. Investors could use this as a good opportunity to build a position.
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