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MOSL: HT MEDIA (Neutral)-Demonetization continues to impact revenue-maintain EPS and TP

​HT Media: Demonetization continues to impact revenue; maintain EPS and TP

(HTML IN, Mkt Cap USD0.3b, CMP INR82, TP INR85, 3% Upside, Neutral)

• EBITDA up 4%, but below estimate; PAT down 33%: EBITDA rose 4% YoY to INR731m, 7.5% below estimate of INR791m, led by revenue disappointment, both on the ad and circulation front. Opex levers marginally cushioned the impact of subdued ad/circulation performance. PAT declined 33% YoY to INR256m, but came in above est. of INR233m largely due to higher-than-expected net other income.
  
• Print ad and circulation growth disappoints: Revenue fell 7% YoY to INR5.85b (est. of INR6.54b). Ad revenue fell 13% YoY to INR4.07b (est. of INR4.38b) due to sustained demon hangover. English ad revenue declined 21% to INR2.33b (7% miss), while Hindi ad revenue grew 3% to INR1.74b. (12% miss). Circulation revenue was at INR757m (est. of INR775m). English circulation fell 8% YoY to INR205m (est. of INR223m), while Hindi circulation grew 3% YoY to INR552m (in-line). Radio revenue grew 44% YoY to INR445m (est. of INR405m), mainly on increased inventory sale from new radio station launches. Like-to-like radio business growth was in high-single-digits YoY.
  
• EBITDA margin expands 135bp YoY, marginal miss: Despite the demonetization impact (which put brakes on ad/circulation growth), HTML largely managed to salvage margins YoY (4QFY17: 12%; +135bp and 40bp lower than estimate) as it reduced raw material (-10% YoY) and other costs (-15% YoY) by lowering pagination and rationing its SG&A expenses.