IPO ANALYSIS: HINDUSTAN MEDIA VENTURES LIMITED – SOARING CIRCULATION, STRONG BRAND EQUITY - INVEST

One of the leading print media company, which publishes, among others, ‘Hindustan‘, the third largest daily newspaper in India, in terms of Readership, with a Readership of 9.3 million readers. ‘Hindustan‘ began publication in 1936, during freedom movement and has been one of India‘s eminent Hindi newspaper dailies for over 70 years. ‘Hindustan‘ has the largest Readership in key Hindi-speaking markets of Bihar and Jharkhand, with a strong and growing presence in Delhi NCR and the states of Uttar Pradesh and Uttarakhand. It is one of the fastest growing Hindi daily newspapers in India.

‘Hindustan‘is presently printed at 16 locations in the states/regions of Uttar Pradesh, Bihar, Jharkhand, Uttarakhand, Punjab and Delhi NCR. The distribution of newspapers takes place through a multi-tiered network of agents and vendors.

They also publish two Hindi magazines, ‘Nandan‘, a children‘s magazine, and ‘Kadambini‘, a general interest magazine. The company also operates the website, www.livehindustan.com, which focuses on providing news in Hindi with regional content.

ISSUE DETAILS:

ISSUE OPENS/CLOSE ON	05-07-10 / 07-07-10
ISSUE SIZE/FV	RS 300 CR/ RS 10
PRICE BAND	RS 162-175
BRLMS	EDELWEISS,KOTAK MAHINDRA
PROMOTERS	H T MEDIA LIMITED

  

FINANCIALS - RS IN CRORES

	08	09	31-12-09
REVENUE	16.85	17.73	52.14
NET PROFIT	0.28	0.19	3.57
EPS	0.70	0.28	5.11
RONW	2.54%	1.74%	21%

OBJECTS:

The objects of the Issue are to raise funds for (1) setting up new publishing units (Rs 66cr) (2) upgrading existing plant and machinery (Rs 55cr) (3) prepayment of loans (Rs153cr)
CHALLENGES:


The Indian newspaper and magazine industry, particularly the Hindi newspaper and magazine industry, is intensely competitive. In each of the markets, the company faces competition primarily from other newspapers and magazines for circulation, readership and advertising. In addition, there is competition from other alternative forms of media including, but not limited to, television broadcasters, magazines, pamphlets, flyers, radio broadcasters and internet websites. These other forms of media compete with newspapers for advertisers and for the time and attention of the readers. Ad-spend by the advertisers and the ability to attract new advertisers is influenced largely by the circulation and readership, the geographical reach, readership demographics of the newspapers and the preference of advertisers for one media over another. Pricing in the short term may be affected by the Circulation of the newspapers and magazines among the readers which is an important source of revenue for the Company since its derives significant revenues from subscriptions and sales. In addition, circulation and readership significantly influence ad-spend by advertisers and the advertising rates in the newspapers. Circulation and readership is dependant on the quality and reach of the publications and the loyalty of the existing readers. Circulation in the Indian market is also largely affected by price and, therefore, the circulation of the newspapers may be adversely affected if the company fails to meet any price competition.

Changes in technology may render the current technologies obsolete or require the company to make substantial capital investments.

STRENGTH:

• Hindustan – Strong brand recognition.

• Emerging as a leading Hindi daily with leadership in key markets.

• Ability to successfully launch ‘Hindustan’ daily - in new markets.

• Strong relationship with Advertisers.

• Ability to provide local, national and international news with quality editorial content.

• Credible editorial team.

• Modern and advanced printing and technology infrastructure.

• Synergies with HT Media Limited.

• Strong management team.



RECOMMENDATIONS – INVEST

HMVL is a professionally run company and focuses a lot on adopting good corporate governance practices. It is a subsidiary of HT Media, which has been acknowledged as one of the top 25 companies adopting good corporate governance practices for 2009 by the Institute of Company Secretaries of India. HMVL draws its governance practices from HT Media itself and is expected to have similar robust board practices. HMVL
has a completely different senior and second line of management.