Hindustan Media Ventures Limited (HMVL) is one of the leading print media companies engaged in the printing and publishing of ‘Hindustan’, the second largest newspaper daily of India based on total readership. Apart from the newspaper, they also publish two magazines namely ‘Nandan’ and ‘Kadambini’ which, however, do not contribute much to their top line. HMVL has been named by Forbes as one of the ‘Best Under A Billion’ companies in the Asia-Pacific region. It is one of the 35 Indian companies that have found a place on Forbes Asia’s list of 200.
Their Newspaper ‘Hindustan’, covers news across the entire spectrum of international, national and local news relating to politics, business, entertainment, sports and other general interests. The first edition of ‘Hindustan’ was published on April 12, 1936 from Delhi and the reach of their newspaper now extends to six regions, namely, Uttar Pradesh, Uttarakhand, Bihar, Jharkhand, Mohali and Delhi NCR. Over the past few years, they have made significant investments in Uttar Pradesh and have opened new printing locations in Agra, Meerut, Allahabad, Kanpur and Bareilly to add to the existing printing facilities at Varanasi and Lucknow.
- They continue to strengthen their position in relatively lower penetrated states of Uttar Pradesh and Uttarakhand where they have seen good growth in readership in the last few years. Further, they have been consolidating their leadership in the states of Bihar and Jharkhand.
- They are focusing on growing adoption of the new Hindustan app launched in January, 2016. This will further help increase the advertising revenue.
- In the last three years, while their sales have grown by a modest 13.79%, their profit has grown by 28.81%. This highlights improvement in margins by a great extent.
- The EBITDA margin has improved from 21.20% in FY2013 to 28.40% in FY2016. The net profit margin in the same period has increased from 12.70% to 18.40%.
- They have maintained an ROE of approximately 20% over the last 10 years (ROE- 10 Years: 18.99%, 5 Years: 19.72%, 3 Years: 19.77% & FY2016: 20.89%.
- Strong balance sheet (net cash of Rs. 643 Cr.) makes HMVL capable of funding its expansion. Their Debt to Equity Ratio as on date is around 0.13. This coupled with good cash position can help them take advantage of various opportunities for expansion without increasing debt to unmanageable levels.
At current market price of Rs. 269, the stock is available at a PE of about 10.90. Given the level of potential scalability of business with improving economic scenario (in the long term) and improving business efficiency, the stock appears to trade much below its intrinsic value.