Key Rating Drivers & Detailed Description

Strengths:

• Established market position of publications:

Hindustan Times had an average daily circulation of about 7.38 lakh copies during July-December 2022, as per circulation audit by the Audit Bureau of Circulation (ABC). Hindustan, HT Media’s Hindi daily had an average daily circulation of about 16.66 lakh copies for the same period.

HT Media has been able to maintain its market position in key markets which are: for English print – Delhi, Mumbai, and Chandigarh and for Hindi print – Delhi NCR, Patna, Ranchi, and Kanpur. 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.

• Strong financial flexibility: Capital structure of the company draws support from the sizeable gross liquidity of ~Rs 1,373 crore as on March 31, 2023, which comfortably exceeds the total gross debt of ~Rs 707 crore. Gearing is estimated to be ~ 0.37 time as on March 31, 2023, 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 strong financial flexibility. While capex requirements have largely been moderate so far, it has stepped up in last fiscal, as the company invested for refurbishing some plants and machineries. Company’s operating expense have also increased in last fiscal due to higher investments in digital business. Same is expected to continue even in this fiscal. Higher-than-expected investments in the digital business having a bearing on the overall financial flexibility, will remain a key monitorable.

Weaknesses:

• Continued weak operating profitability: On a consolidated basis, the company reported operating revenue growth of 14% on-year in fiscal 2023. Despite recovery in revenue, the company made EBITDA losses of Rs. 123 crores compared to EBITDA of Rs. 33 crores in fiscal 2022. This was due to elevated newsprint prices and business development expenses incurred in the digital business in fiscal 2023. The operating margin of the radio business too remain subdued, though has considerably improved in last one year, due to high statutory costs of operating in multiple frequencies in metro cities, despite continued rebound in revenues over last two fiscals.

With the expectation of softening of newsprint prices, operating profitability of the print business should recover in this fiscal year. That said, continued investments in digital business and modest operating margin of the radio business is expected to continue to have bearing on overall profitability of the company in the near term.

• Exposure to volatility in newsprint prices and economic downturns: A substantial share of operating income is derived from ad revenue, which has a strong linkage 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. As newsprint accounts for approx. 30-35% of the operating cost, operating margin is susceptible to volatile newsprint prices and foreign exchange rates. After steep rise in the last fiscal, newsprint prices have now started to soften over last few quarters which should support improvement in profitability of print business in the near term. Movement of the newsprint prices, and their impact on the company’s operating profitability will however continue to remain a key monitorable.

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