Detailed Rationale

CRISIL Ratings has reaffirmed its ‘CRISIL AA-/Stable/CRISIL A1+’ ratings on the debt programmes of HT Media Ltd (HTML).

 

Consolidated operating revenue remained largely flat at Rs 1,695 crore and the company reported operating EBITDA losses of ~Rs 69 crore in fiscal 2024. Although, the operating performance was weaker than expectations on account of elevated newsprint prices (accounting for ~30% of the operating costs) and higher-than-expected investments in the digital segment, the company has improved its performance, in the last two quarters of fiscal 2024, in the print and radio business and loss reduction in the digital segment. Net cash position (net of debt) remained strong at Rs 884 crore (including other quoted investments in market linked debentures and perpetual bonds and inter-corporate deposits), thereby sustaining the robust financial risk profile. In fiscal 2025, it is expected that operating performance will improve on the back of lower newsprint prices (compared to average in fiscal 2024), reduction of losses in digital segment and measures to control costs. CRISIL Ratings expects (based upon understanding of industry, peers and other variables impacting the company such as prices of key raw materials) consolidated EBITDA (including spends on digital) to touch Rs 20-30 crore in fiscal 2025. However, a lower-than-expected performance would be a rating sensitive factor.

 

The ratings continue to reflect the strong market position of HTML's flagship English daily, Hindustan Times (HT), in the National Capital Region (NCR), and the established market position of its Hindi daily, Hindustan. The ratings also factor in HTML's healthy financial flexibility with a strong liquidity of ~Rs 1,632 crore as on March 31, 2024. These strengths are partially offset by continued weak operating profitability and susceptibility to volatility in newsprint prices and economic downturns.

Analytical Approach

CRISIL Ratings has combined the business and financial risk profiles of HTML and its subsidiaries. This is because the entities, collectively referred to as the HTML group, are in related businesses and have common promoters.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

• Established market position of flagship publications and presence across the media and entertainment businesses: HT Media has been able to maintain its market position in key markets which are: for English print Hindustan Times – Delhi, Mumbai, and Chandigarh and for Hindi print Hindustan's leading position in Uttarakhand, Bihar, Jharkhand, and Uttar Pradesh, and its strong market position in the NCR region should continue to support HTML’s overall business risk profile.

 

While print remains the largest segment for HTML, the company has diversified into other media and entertainment businesses over the years. It has presence in radio broadcasting through brands such as Fever, Nasha; and Radio One through its subsidiary, Next Mediaworks Ltd. It also owns various digital businesses including Shine (jobs portal housed in HTML), VCCircle (database for digital news housed in Mosaic Media Ventures Pvt Ltd), and OTTplay (OTT aggregator platform housed under HMVL)

 

• Strong financial flexibility: Capital structure of the company draws support from the sizeable gross liquidity of ~Rs 1,632 crore (including other quoted investments in market linked debentures and perpetual bonds and inter-corporate deposits), as on March 31, 2024, which comfortably exceeds the total gross debt of ~Rs 748 crore. The company also has unquoted investments of Rs 297 crore and investment properties of Rs 357 crore further aiding financial flexibility. Gearing is estimated at ~ 0.39 time as on March 31, 2024, and should remain stable over the medium term. While Interest coverage ratio has been impacted due to the operating loss in the previous fiscal, same should improve this fiscal. Nevertheless, the financial risk profile should sustain, aided by healthy treasury income and strong financial flexibility. In the previous fiscal, the company’s operating expense had increased due to higher investments in digital business. The same is expected to moderate this fiscal with significant improvement in operating revenue in the digital segment. That said, higher-than-expected investments in the digital business having a bearing on the overall financial flexibility, will remain a key monitorable.

 

Weaknesses:

• Exposure to volatility in newsprint prices and economic downturns: A substantial share of operating income is derived from advertisement (ad) revenue, which is strongly linked to economic activity and is affected by economic cycles. Recessionary cycles and uncertain market conditions lead to a slowdown in spending, constraining the ad revenue for print as well as radio media.

 

In addition to linkages with overall economic activity and corporate spending, the operating cost of the company also depends on movement in newsprint prices, which account for ~30% of the operating cost. Newsprint prices have softened in the last fiscal, from their peak in the second quarter of fiscal 2023 and are expected to remain stable in fiscal 2025 barring unforeseen materiality. Thus, operating margin for the print segment is expected to improve this fiscal.

 

Movement of newsprint prices, sustenance of recovery in ad revenue and their impact on the operating profitability of the company going forward will remain a key monitorable.

 

• Continued weak operating profitability: On a consolidated basis, the company’s operating revenue decreased slightly to Rs1,695 crore in fiscal 2024. Further, the company incurred EBITDA losses of Rs. 69 crore in fiscal 2024 compared to EBITDA losses of Rs 118 crore in fiscal 2023.

 

With the expectation of softening of newsprint prices and improvement in ad revenue, operating profitability of the print business should recover this fiscal. The operating margin of the radio business too remains subdued, albeit improving, to the pre-pandemic levels due to high statutory costs of operating in multiple frequencies in metro cities, despite continued rebound in revenue over last two fiscals.

 

Nonetheless, continued investments in digital business and modest operating margin of the radio business are expected to continue to have bearing on overall profitability of the company in the near term.

Liquidity: Strong

HTML’s strong liquidity is driven by cash and equivalent of ~Rs 1,632 crore (including other quoted investments in market linked debentures and perpetual bonds and inter-corporate deposits), as on March 31, 2024, and estimated net cash accrual at around Rs 150 crore per fiscal over the medium term. Available liquidity, healthy treasury income and accruals should suffice to cover debt repayment obligations and capex outlays over the medium term.

Outlook: Stable

CRISIL Ratings believes HTML’s profitability should improve on the back of improving performance of print business and cost control on digital business. Further, the financial risk profile should remain supported by strong liquidity.

Rating Sensitivity Factors

Upward factors:

• Sustained revenue growth, along with improvement in operating margin (excluding interest and treasury income) sustaining over 10%
• Significant and sustained growth in revenue, in the radio and digital business, along with improvement in operating profitability

 

Downward factors:

• Weakening of market position and operating performance in the print segment due to competition, leading to lower-than-expected ad revenue.
• Delay in improvement in consolidated operating profitability leading to consolidated operating EBITDA lower than Rs 20 crore and net cash accrual lower than Rs 150 crore
• Net cash falling below Rs 600 crore (excluding other quoted investments in market linked debentures and perpetual bonds and inter-corporate deposits) either because of a relatively large, debt-funded capex or acquisition.

About the Company

Hindustan Times Ltd (HTL), a KK Birla group company, which holds 69.51% stake in HTML as on March 31, 2024, demerged its print media business into HTML in July 2003. Hindustan Times, the leading English daily that was inaugurated by Mahatma Gandhi in 1924, is HTML's flagship product. Other major publications include Hindi daily Hindustan and business paper Mint. HTML has presence in the FM radio space through Fever FM, Punjabi Fever, Radio Nasha and Radio One; and has internet (job & professional upskilling) portal shine.com, along with tech intelligence, news and research platforms under Mosaic Digital. The company also has forayed into the growing OTT space with its own aggregator platform OTTplay.

Key Financial Indicators (Consolidated)

As on/for the period ended March 31	Unit	2024	2023
Operating revenue	Rs crore	1,695	1,711
Profit after tax (PAT)	Rs crore	-91	-252
PAT margin	%	-5.4	-14.7
Adjusted debt/adjusted networth	Times	0.39	0.37
Adjusted interest coverage	Times	1.52	NM

    NM: Not meaningful. Financial numbers mentioned in this report are CRISIL Ratings adjusted numbers and may not be directly comparable with company financials

Any other information: Not Applicable

Annexure - Details of Instrument(s)

ISIN	Name of the instrument	Date of Allotment	Coupon Rate (%)	Maturity Date	Issue size (Rs.Crore)	Complexity Level	Rating assigned with outlook
NA	Debentures*	NA	NA	NA	4	Simple	CRISIL AA-/Stable
NA	Commercial paper	NA	NA	7 to 365 Days	500	Simple	CRISIL A1+
INE501G07013	Debentures	31-Dec-2021	5.95%	31-Dec-2024	96	Complex	CRISIL AA-/Stable

*Not yet placed by the company

Annexure - List of Entities Consolidated^

Name of entity	Extent of consolidation	Rationale of consolidation
Hindustan Media Ventures Ltd	Full	Related business and common promoters
HT Music and Entertainment Company Ltd	Full	Related business and common promoters
HT Mobile Solutions Ltd	Full	Related business and common promoters
HT Overseas Pte. Ltd	Full	Related business and common promoters
HT Noida (Company) Ltd	Full	Related business and common promoters
Next Mediaworks Ltd	Full	Related business and common promoters
Next Radio Ltd	Full	Related business and common promoters
Mosaic Media Ventures Pvt Ltd	Full	Related business and common promoters
HT Content Studio LLP	Joint venture	Joint venture

^List of consolidated entities as per last filed results