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MOSL: HT MEDIA (Neutral)-GST impacts ad growth, cost efficiencies lead to margin beat-Maintain EPS estimates and TP

​HT Media: GST impacts ad growth, cost efficiencies lead to margin beat; Maintain EPS estimates and TP

(HTML IN, Mkt Cap USD0.3b, CMP INR88, TP INR90, 2% Upside, Neutral)

• EBITDA up 24%, above estimate; PAT nearly doubles: EBITDA rose 24% YoY to INR799m, 21% above our estimate of INR657m, despite the revenue disappointment, as HT Media's cost-efficiency efforts bore fruit. Opex levers more than cushioned the impact of subdued ad/circulation performance. PAT grew 86% YoY to INR416m, significantly above our estimate of INR236m, largely due to EBITDA beat flowing through.
• Print ad and circulation growth disappoints: Revenue fell 3% YoY to INR5.99b (est. of INR6.24b). Ad revenue declined 10% YoY to INR4.07b (est. of INR4.5b) as volumes were impacted in the month leading to GST roll-out. English ad revenue fell 16% YoY to INR2.29b, while Hindi ad revenue remained flat YoY at INR1.78b (4% miss). Circulation revenue remained flat YoY at INR770m (est. of INR800m). Radio revenue grew 30% YoY to INR430m (est. of INR398m), mainly on increased inventory sale from new radio station launches and also growth in existing stations. Like-to-like radio business growth fell 7% YoY (new stations contributed INR120m in 1Q).
• EBITDA margin expands ~290bp YoY, significant beat: Despite the GST impact (which put brakes on ad/circulation growth), HTML more than salvaged margins (+290bp YoY) to 13.3% (est. of 10.5%), as its cost-efficiency drive across all opex items helped it report healthy margin expansion.