HT Media Limited (HTMEDIA.NS) Earnings Call Transcript

Good afternoon, ladies and gentlemen. This is Aaditya Mulani from the HT Media Group. I would like to welcome you all to our quarter 1 financial year 2026-'27 earnings webinar. [Operator Instructions] I now hand over to Ms. Anna Abraham, HT Media Group's Deputy CFO, Chief Financial Officer, HMVL, and Head of Investor Relations. Thank you, and over to you, Anna.

Thank you, Aaditya. Good afternoon, everyone, and welcome to this webinar. Today on the call with me are Mr. Piyush Gupta, Group CFO; Mr. Pervez Bajan, Head Financial Controllership and Taxation; and members of the Investor Relations team. We hope you've had an opportunity to review the results of Hindustan Media Ventures Limited and those of HT India Limited. We will be discussing the same at the webinar today. Please note that our discussion will follow the presentation slides, which, along with the financial statements, are available on the stock exchanges and in the Investor Relations section of our website. Before we start the presentation, kindly keep in mind the cautionary statement on this slide. We would not, as per usual practice, be giving any specific guidance on revenue or earnings projections. Moving on to Slide 3. This provides the Chairperson's message on the company's performance for the concluded fiscal quarter, and I quote. "We began the financial year on a steady note with consolidated revenue growing year-on-year and profitability improving in tandem. Print remains the anchor of the business with advertising revenue continuing to grow year-on-year and circulation revenue remaining resilient. The growth in profitability was achieved on the back of steady advertising revenue and disciplined cost management. However, elevated newsprint prices, a weaker rupee and global supply chain uncertainties are causes for concern going forward. Radio revenue remained broadly steady year-on-year. The segment is now operating on a leaner and more sustainable footprint following the surrender of licenses for certain nonviable stations. Digital revenue moderated during the quarter as we deliberately reset the portfolio around leaner, more focused offerings with the intent of driving sustainable and profitable growth. Beyond the quarter's operating performance, the Board approved a preferential issue last month, subject to regulatory and shareholder approval. The proposed issue is a proactive step towards strengthening the company's capital structure, streamlining its debt profile and providing capital for general business requirements. As we begin the financial year, your continued confidence and support remain central to our purpose. We remain focused on strengthening our core businesses, delivering trusted journalism and quality content, and creating sustainable long-term value for all our stakeholders". Moving on to today's agenda. We will begin with a performance update focusing on consolidated financial results, followed by an overview of our Print, Radio and Digital business segments. After the presentation, we will open for a Q&A session. With this, I now hand over the call to Piyush for the main presentation.

Thanks, Aaditya. Thanks, Ana. We will be tracking the webinar. So on your screen, you can see the consolidated financial summary. I'll recap. Operating revenue led the Y-o-Y top-line growth. Our sustained cost management resulted in margin expansion, and cash position remained robust. A quick deep dive into the numbers. As you can see, total revenue grew by 15%, coming at INR 497 crores, with EBITDA going up nearly 3x to INR 90 crores, with a margin expansion of 12 points. PAT improved substantially to INR 47 crores, and PAT margin also improved to 9%, and our net cash position remains a very healthy INR 942 crores. Now going into the business unit performance. Print: The segment revenue grew on the back of advertising performance. Circulation remained steady both annually and sequentially, and margins for the quarter were 13% despite high commodity rates. As you can see, the ad revenue grew 15% to INR 295 crores. [indiscernible] revenue was virtually flat at INR 52 crores. Operating revenue, therefore, was INR 376 crores, which is a 16% increase, and operating EBITDA improved substantially to INR 50 crores with a margin of 13%. Deep-diving a little into the Print segment. As you can see, the advertising revenue grew 12% to INR 156 crores versus the same quarter last year. And sequentially, there was a decline, but that season is sitting there. Circulation revenue grew 14% to INR 30 crores. Again, we saw an increase on a Y-o-Y basis, revenue coming to INR 139 crores and circulation revenue remaining flat. Radio, again, the top line was flat, with operating EBITDA coming at a negative INR 3 crores. Digital segment operating revenue was down by about 28%, and operating EBITDA was a negative INR 3 crores with a margin at negative 12%. With that, we come to the end of the presentation.

[Operator Instructions] The first question is from the line of Ranga Prasad.

It is indeed heartening to note that the management's decision to shut down loss-making verticals is bearing fruit. The losses from the discontinued operations have come down substantially. If the present trend is indicated, our company is on the road to sustained profitability. However, in this regard, I find one thing quite puzzling. The management's decision to go for a preferential offer of equity shares is conceivably to reduce debt. We had just indicated that our net cash position is very healthy at INR 922 crores. Even until the last quarter, the shareholders were, in fact, wondering whether the company plans to return some cash on hand to the shareholders. Now suddenly, the management has felt the need to raise additional equity capital. That too, through a preferential offer of equity shares at a lower rate of around INR 24, while the book value per share is around INR 70. This will result in a sharp fall in the book value per share in addition to diluting the share of the existing public shareholders by 15%. This is a time when the company is showing indications of getting into sustained profitability. The shareholders who have held on to their stake in the company are being diluted. If the company wanted to raise additional funds, the shareholders' interest would be better served if this came through a rights issue. That way, the stake in the company would not get diluted. I request the management to clarify as to why they prefer to raise additional funds through a preferential offer rather than through a rights issue. So, if at all possible, the ongoing preferential offer of equity warrants should be withdrawn in the interest of the public shareholders. Thank you. Some comments, please.

Okay. Thank you. Thank you for your comments, Mr. Prasad. So, on the first point where you commended the company for a wonderful performance. We thank you. And as we have been continuously indicating to the investors every quarter, we are carefully monitoring all our incubating businesses. And if they don't turn profitable, indeed, the company and the management will take a call, and hence, we have taken a call. You have already seen the profitability numbers improving in this quarter. And again, on a sustainable basis, we believe that they will go from strength to strength. So that's on point number one. On point number two, let me just lay out a couple of big points and then I'll request my colleagues to also jump into this one. We have a very substantially healthy balance sheet position with net cash at INR 922 crores, but you have to understand that all that cash is parked in HMVL. HT Media and Digicontent Limited, which is not here, where the preferential issue is being done, both indebted companies are running a net debt position. So at this point in time, though money can be given to HMVL shareholders in the way of dividends or buybacks and so on and so forth, there is no free cash or surplus cash sitting in either HT Media or Digicontent Limited. As you can see, those preferential issues have been only called for in HT Media and DCL. They have not been done in HMVL, which is already sitting on surplus cash. That's the point I'd like you to consider because what we are showing you, INR 922, is at a consolidated HT Media level, and this is not bifurcated between HT Media separately and HMVL separately. Coming on to the pricing and dilution, we don't believe that is the case because you have to understand that currently, the price-to-book ratio is less than 0.5. The pricing of the preferential issue has been done strictly on the basis of a SEBI formula, and the higher of 10-day or 90-day VWAP prices, and we have not put it on to any premium on that number. So, being the least controversial, we have just stuck ourselves to the SEBI formula, and that's how it is being priced. Once the preferential capital comes in, this money will be used to retire the debt; at least 1/3 of the debt, or 30% to 50% of the debt, will be retired, which will definitely be accretive to the EPS and long-term interest coverage ratio, our credit rating and so on and so forth. All the cash that is sitting in HMVL will be deployed as per the Board directions of HMVL. That's a separate listed company with a separate Board and a separate set of shareholders, minority and majority. So those guys will take the call. But HT Media, for all the business plans that it has, can definitely do with a lesser debt profile, and so can DCL. I would stop here. If there are any other questions, we can take that, or if my colleagues would like to jump in on any point, happy if they want to contribute.

There was a question about the rights issue also. So vis-à-vis, the rights issue would have meant a longer process. The preferential issue is a slightly shorter process. There is greater certainty of fundraising because there was a quantum that was being targeted to reduce the debt. It is not necessary that the same quantum would get put in through a rights issue. And in case of an unsubscription, the process works where the unsubscribed shares are given to an underwriter, which itself becomes a quasi preferential allotment with inferior pricing guidelines, actually vis-a-vis the pricing guidelines of the issue. So as a company, it was felt that the pref issue will deliver the requirement of --

Mr. Prasad, I think it's a faster process issue. 2 to 3 months faster gives you a greater certainty of fundraising, and there is no risk of us subscribing because you've already done our outreach and engaged with the investors and are pricing the issue on the basis of a SEBI formula. So I think those are the clear high notes of the point that my colleague just made. I hope that answers your question.

The next question is from the line of Urvil Bhatt.

Congratulations on a good set of numbers after such a long time. At least this call has something positive to look forward to. So I hope you will be able to keep up these numbers for the next 3 quarters also of this year.

Yes. Urvil, thanks for the kind words. Obviously, we do some forward planning, which we will. We don't give any forward guidance. But looking at various scenarios, we are very hopeful that we'll be able to keep up a good set of numbers going into the future as well.

Piyush, if you should keep these numbers for the next 3 quarters, we might end up with an earnings per share of 6. And on a book value of 70, the return on equity is still less than 10%. It is less than the cost of capital in our country. So even then I would say that we are not doing justice to capital in the company even at these profits that we are earning, but that is something for you all in the book to look at. Now coming to what Mr. Prasad said, I had given some thought to the preferential issue that you are raising. Now, the preferential issue pricing, while you might say that you have followed the SEBI guideline, legally, technically, you are right; there's a dimension to it. [indiscernible] dimension to the whole thing. Now the company is in HT Media; if I just value the stake in HMVL, that itself is INR 5 a share. It has INR 1,587 crores of net worth; if I divide that by INR 23 crores of shares outstanding, INR 51.75 is what I'm getting. Now, here you are, and you add all the businesses of HT Media also. And if you calculate the intrinsic worth of our company, it should be around INR 140 or INR 150 a share. Now the promoters are issuing a preferential issue at INR 24.7, which, according to me, is ridiculous. You are basically telling me that my company is valued at INR 24 a share. And at INR 24 a share, we are less than INR 1,000 crores. When mine is INR 1,500 crores to INR 1,600 crores. So the whole thing is totally out of whack. Now the voting has opened, and I have voted against the resolution for myself and family members. I would say, seriously, preferential issue- even if SEI is right, it is a reputation issue, and we should withdraw the preferential issue, or at least I would say the preferential issue has to be priced above INR 100. And you have to show that the promoters are following the highest standards of corporate governance. So look, this is not meant to be a question, okay? But I would request the Board and the promoters to withdraw the preferential issue and listen to our shareholders. Okay. So let me consider my feedback. And just one more thing. There are many other things in which you can raise capital. There are so many loss-making businesses. There is Shine. There is a whole lot of options available. So I would say that I'm not seeing in your justification to Mr. Piyush that you all have considered other options. If other options are making losses or not giving adequate return on capital, I am telling those businesses should be sold, and we should remain in media.

Yes. No, I think that's a very fair point. So Urvil, let me attempt to engage with your question at 2 or 3 different levels. One is why this preferential issue is good or not, the anti-s of that from a company point of view? Second, you raised a question about the moral dilemma of moral ethics, et cetera, at the promoter level, and third, other ways of unlocking capital, so to say. Look, I totally take your point that SMBL- you're basically dividing the net worth by the total number of outstanding shares comes to a certain number, but the market is valuing it at 1/3 that number. And that's been a perpetual challenge. And on various calls, even before this call, I think the company's frustration but we don't react to short-term share prices. But for the longest time, it has been less than 0.5x the book value. So we all understand the share has been priced under, but really, there's nothing that we can do with it. The second point that you have to consider, and you have to read it in conjunction with this whole stuff, is why are we doing this pref issue in those companies? So things which are in our control is we can retire the debt that the promoters are bringing in at exactly the same terms and conditions, capital till their regulatory max in the company, which means they are wholeheartedly subscribing to the same formula in which all the third-party shareholders are bringing in capital. And this will help the company improve the EPS in the short term and, of course, give it more flexibility to deploy capital on various ventures that they want to do going forward. Now, coming into this whole thing of various other ways of unlocking capital, I think Mr. Ranga Prasad did mention, and I'll just reiterate, I mean, on the OTT play, we have been directing all the investors that we will sooner rather than later take a call, and we took all stakeholders along with this. You've seen SIMCard 31st March 2026; we have taken that decision. And hence, you are seeing the improvement in the financial position on this in the first quarter results, which is sustainable and will go forward. All the other things that you are saying, we don't give any forward statement. But I think you should not presume that the company is not looking at all other options available to maximize the capital, cut losses, or increase EPS, et cetera. All those options are on the table, and they are being discussed right up to the Board level. So saying that, from the highest level of morality or ethics, et cetera, et cetera, someone is short-changing. I think the only way that you can talk about a share price is the existing share price in the stock market. I mean, we all understand it's an undervalued share, but really, I can't do much because that's not where the market is valuing us. So we are doing whatever is in the best possible interest of the company and within our means, raising fresh capital to retire debt, give us capital flexibility to invest in businesses, which can create long-term sustainable value for all shareholders, majority or minority. I'll stop there if you've got any questions; happy to take those.

Can I seek a clarification question on this? Can I ask one more question, please? Whenever we have discussed share price, you have always reiterated that we are not bothered about the share price. We are not looking at the share price. We just want to keep on doing the right things in this business. Now I am saying that when convenient, you are then moving to the share price as per SEBI regulations. So I'm saying there is no consistency in the statements. The second thing is that a couple of years ago, I had asked this question in the AGM on debt: why are we taking debt? And I was told that we are not using debt in the business. And we are using debt only for treasury purposes. If we are taking money on treasury, why should we not show that treasury operation on the debt side? So this is the first time I am coming to know that you are using debt in the business. And the Chairperson herself has said that we are debt-free and we are not using debt for any business purpose.

Urvil, yes, so let me just answer that. I think we publish our balance sheet every year for HT Media, HMVL, Digi Content Limited, and all the companies. I think is there debt sitting in HT Media? It has been sitting for the last 3 to 4 years. It is not fresh information that I'm giving here. In this particular call, we are showing a combined net cash position. Hence, you see the numbers that you see. But this is not fresh information. That has been building in HT Media for the last 4, 5 years post-COVID because of the English operations and radio operations, et cetera, et cetera. So this is not any fresh information. And we are just trying to retire the debt. So I stop here.

Having said that, we are not using that for treasury. I'm just saying that consistency is not there. The Chairperson herself has said. Go back to the minutes of the AGM. She herself made the statement.

That is a comment from HL perspective or consolidated number perspective. HTML, that argument cannot hold, and I will look at the [indiscernible].

Piyush please convey our shareholders' message to the Board, and even if we are a minority voting against the resolution should at least be introspected.

No, no. We respect that, Urvil. I can only tell you this. We are raising capital to retire debt, improve EPS, which will be helpful to everyone. We have priced the issue with SEBI. The only other thing we would have done is priced at a premium, which would have meant the dilution for everyone else. We have not gone down that route. I think I stopped there, and that's basically the only objective in the company which has a net debt position; the company which has cash, we're obviously not raising any capital fresh.

The next question is from the line of Rohan.

This is Rohan from Asset PMS. Sorry, I joined the call a little late, so I'm not sure if this was covered before. I just wanted to speak regarding the other income jump that we've had in HMVL. I just wanted to know what the nature of that income is. Is it treasury gains? Or is it like one-off M2Ms on our investments? So it will be helpful to know what it is and, like, what we can expect other income to be going forward because it's a significant part of the P&L.

In HML, the other income, there is a substantial portion, which is on treasury. And this time, there is also profit on sale of assets, which we have got; both are a reflection. The treasury gains are a function of the movement towards the end of the quarter, which has helped us have substantial gains. There is volatility in the market, as you know, Rohan, so we cannot predict it because the adverse global situation and the market in the U.S. also tend to have a dependency on how we move in Indian markets as well. But we are positioned well to make the best of the situation as things stabilize.

So this current quarter's other income gain, a significant part of that, you're saying also is M2M gains on our investments, yes?

So treasury gains are basically mutual funds and an NAV-based process and not an MTM valuation-based process.

Yes, I got that. But what about the investments that we hold? Is that towards --

No, no, it is treasury, and it is actual realized profit on sale of [indiscernible]

And just my other question is on our print EBITDA margins. I see that that's come down Q-on-Q. I assume because of high newsprint costs. I just wanted to know if you could give us a little more color on how you see newsprint costs going forward? Like how would it affect the EBITDA margin for the rest of the year, say, if newsprint costs remain the same and do we hedge? Or are there some cost mitigation measures that we take, or maybe any newspaper cost increases, price increases on circulation that we do? So it will be helpful to know that.

So let me give you a slightly high-level question; see if that answers your question. Newsprint for our print business is really the single biggest cost line item; depending on the price, it varies anywhere between 25% and 40% of the entire bill of materials, including direct and indirect costs. At this point in time, post-COVID, I'm saying post-COVID because COVID was a time when the newsprint prices per metric ton had reached their highest because of supply chain disruptions also. After that, it has come down very substantially. But after that, this is the highest peak that we have seen at about $650 to $700 a metric ton. We believe that the prices peak and should plateau at this level before they start coming down. But obviously, as a commodity, no one can predict that's our best estimate. So we believe if the prices don't go any further adverse from here on, we should be able to maintain our margins on the print business on the operating side very, very clearly. But newsprint, as I have always pointed or directed the investor community, that print unlike other commodities; it doesn't have a forward market. So there is no way that you can with certainty predict the forward prices. So it is what it is. What is also not helping is dollar is also at a lifetime high. And all the newsprint is priced in U.S. dollars, so that's effectively a double whammy on that line item. But hopefully, we believe it's already peaked and should at some point in time start coming down, which will only help the margins. I hope that answers your question.

Sure. So I mean the EBITDA margin that we had this quarter for print, which is around 13%. Should we expect that sort of baseline?

[indiscernible] but I told you what the vulnerabilities are. So let's say, if the dollar goes to 100 and the commodity goes to 700, then we will have a margin dilution. But from a modeling exercise perspective, I think that's a fair assumption to take.

Yes. In Q2 per se, as we look at it, there is a slightly higher newsprint price vis-a-vis Q1. Exact margins will be a function of the categories and the pricing we get, which may or may not offset that.

Sure. And would you consider taking the cover price hike if warranted?

See, Rohan, I think over time, the papers, for example, are well priced right now. Now, over time, as commodity prices increase, as everybody has taken a price increase, a further price increase would be a little difficult. We do take actions on the volume side to the extent possible without compromising on the product or reach when there are such situations, but pricing per se, we may not have.

The next question is from the line of Piyush Sharma.

Congrats on a good set of numbers. Ad revenue has grown by around 15-odd percent at the print level in English and HMVL. So what has driven the business this time? Because what we're hearing is that this was a difficult quarter. But in spite of that, we are showing mid-double-digit growth. So what's contributed? Is it on account of volume? Or is it on account of pricing that we've increased?