H T Media Q1 FY27 earnings call

H T Media reported a strong Q1 FY27, with total revenue growing 15% year-on-year to INR 497 crore. EBITDA saw a significant increase, going up nearly 3x to INR 90 crore, accompanied by a 12-point margin expansion. The company's PAT improved substantially to INR 47 crore, with the PAT margin reaching 9%. A healthy net cash position of INR 922 crore was also maintained, reflecting overall improved financial health.

The Print segment remained the anchor of the business, with operating revenue increasing 16% to INR 376 crore. Advertising revenue grew 15% to INR 295 crore, while circulation revenue remained virtually flat at INR 52 crore. The segment achieved an operating EBITDA of INR 50 crore with a margin of 13%, demonstrating resilience despite high commodity rates. English Print advertising revenue grew 12% to INR 156 crore, and circulation revenue increased 14% to INR 13 crore.

In contrast to Print, the Digital segment experienced a moderation, with operating revenue down by about 28%. This resulted in a negative operating EBITDA of INR 3 crore and a negative 12% margin, as the company deliberately reset its portfolio for leaner, more focused offerings. The Radio segment's topline remained broadly steady, but it recorded a negative operating EBITDA of INR 3 crore, following the surrender of licenses for certain non-viable stations to achieve a leaner footprint.

Management announced a preferential issue of equity shares for HT Media Limited and Digicontent Limited, aiming to retire 30-50% of their debt. While the consolidated net cash position is INR 922 crore, management clarified this cash is primarily in HMVL, whereas HT Media and DCL are indebted. Analysts, notably Ranga Prasad and Mehul Pathak, raised concerns about the pricing of INR 24.7 per share, arguing it was significantly below the estimated intrinsic worth of INR 140-150 per share and would dilute public shareholders by 15%, suggesting a rights issue as a fairer alternative. Management defended the pricing as compliant with SEBI formula and the preferential route as faster and more certain for fundraising.

Newsprint remains the single largest cost item for the Print business, accounting for 25-40% of the bill of material. Prices have peaked at $650 to $700 a metric ton, exacerbated by a high dollar exchange rate, creating a 'double whammy.' Management believes prices should plateau or decline, which would help maintain the 13% Print EBITDA margins. However, the absence of a forward market for newsprint makes price prediction challenging.

The 15% Print ad revenue growth was primarily driven by pricing and yield improvement efforts, rather than just volume. Management highlighted that government advertising rates increased in November last year after seven years, contributing to this growth. Commercial revenues also saw a combination of volume and pricing benefits, with volumes holding steady, indicating a strategic focus on yield.

The company demonstrated disciplined cost management, with consolidated employee salaries reducing from INR 111 crore in the previous year to INR 99 crore this quarter. This reduction was attributed to 'driving efficiency' and 'right-sizing the organization' across both HT Media Limited and Hindustan Media Ventures Limited, contributing significantly to the overall improvement in profitability and margin expansion.