Its bigger competitors Jagran Prakashan and DB Corp are trading at higher prices
Hindustan Media Ventures Ltd (HMVL), the publisher of Hindi daily ‘Hindustan’, is coming out with an initial public offer (IPO) on 5 July 2010. The company has fixed the price band at Rs162-Rs175 per share and plans to raise Rs270 crore through this IPO. Rating agency CRISIL has assigned ‘IPO Grade 4’ to the issue. The issue closes on 10 July 2010. HT Media Ltd will dilute up to 23% in its subsidiary HMVL post the IPO. HMVL’s businesses include Hindi daily ‘Hindustan’ and magazines ‘Nandan’ and ‘Kadambini’. It also has printing facilities and personnel transferred from HT Media on 1 December 2009.
‘Hindustan’ is the third-largest daily in India with a readership of 11,89,000 in the first quarter of 2010, according to the Indian Readership Survey (IRS). It has the largest readership in key Hindi-speaking markets of Bihar and Jharkhand, although these markets have lower purchasing power. The company expects that with 69% of the Indian population being rural, readership will increase further with increase in literacy levels.
HMVL’s price earning ratio (P/E) at the lower band of Rs162 stands at around 15.5 times its March 2011 expected EPS. Some of the listed newspaper businesses including its much bigger competitors Jagran Prakashan and DB Corp are trading at a slightly higher forward PE of 18-21.
HMVL’s five group companies—HT Digital Media Holdings Ltd, HT Burda Media Ltd, Firefly e-Ventures Ltd, HT Mobile Solutions Ltd and Metropolitan Media Company Private Ltd—have incurred a combined loss of Rs29.9 crore in FY2010. With the IPO money, the company will purchase second-hand plant and machinery of Rs3.1 crore, will set up new publishing units costing Rs66 crore and will upgrade existing plant and machinery for Rs55 crore. HMVL’s advertising revenue was Rs104.2 crore in FY10 while its total income stood at Rs166.90 crore. It has a debt of Rs135 crore which was taken to take over the businesses from HT Media. The IPO money will be used to retire this debt. HMVL reported a net profit of Rs13.9 crore for the year ended March 2010.
There are 41 criminal proceedings pending against the company’s promoter HT Media and the employees and ex-employees, relating to defamation and obscenity charges under the Indian Penal Code and 109 outstanding litigations pertaining to income-tax, civil, and other categories. Edelweiss Capital Ltd and Kotak Mahindra Capital Company Ltd are the lead book running managers to the issue.
— Moneylife Digital Team