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Kotak Securities
HMVL (Buy)
CMP: ₹293.70
Target: ₹344
Hindustan Media Ventures’ daily Hindustan has four editions and 113 sub-editions across the Hindi belt. In the past nine months, Hindustan has added 58 lakh readers to its readership base. A bulk of this growth has come from Uttar Pradesh where Hindustan has added 41 lakh readers in this nine month period. Hindustan now has a 30 per cent share of readership in Uttar Pradesh, with a total readership of 1.28 crore in UP. The recently concluded UP elections were hard fought and shall likely have a positive impact on HMVL’s 4QFY17 earnings (UP/ Uttarakhand being about 40 per cent of the company’s advertising revenues/ circulation). Further, we think that a common party’s government at the State and Centre and the high contribution of UP to parliamentary seats is likely to, at least, help expectations of stronger (economic) growth from UP in the long-term, aiding valuations.
Meanwhile earnings visibility in the near- / medium-term shall be helped by cost cutting initiatives underway, and positive impact of elections (UP/Uk to be followed by Delhi MCD elections, which will have relatively modest impact). We raise our valuation target on HMVL to 12X FY18E PER (11XFY18E PER earlier), and raise our price target to ₹344 (₹316 earlier).
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