HT Media Limited (533217) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. This is Aaditya Mulani from the HT Media Group. I would like to welcome you all to our quarter 4 and full financial year FY 2023-'24 earnings webinar. [Operator Instructions] I now hand over to Ms. Anna Abraham, CFO, Hindustan Media Ventures Limited, and Head, Investor Relations, HT Media Group. Thank you, and over to you, Anna.

Thank you, Aaditya. Good afternoon, everyone. Welcome to our earnings webinar on the results for the fourth quarter and the full year financial year '23-'24. We would be discussing the results of Hindustan Media Ventures Limited announced yesterday and those of HT Media Limited, which were released earlier today. On the call today, we have Mr. Piyush Gupta, Group CFO; Mr. Pervez Bajan, Group Controller; and members of our Investor Relations team. Please be aware that our comments during this webinar will follow the presentation slides. These slides and the financial statements are accessible on the stock exchanges and on the Investor Relations page of our websites. This slide presents a disclaimer related to forward-looking statements. Kindly keep this in mind. In line with our usual practice, we do not issue specific guidance on revenue or earnings. Moving on, this slide gives our Chairperson's comments on the performance of company for the quarter, and I quote, "Reflecting on the past fiscal year, your company saw growth in revenue and marked improvement in operating profitability on the back of improved consumer spending and rising engagement. This was further supported in the last 2 quarters of the year by the festive season and heightened political activity ahead of national elections. Cost rationalization and primary input commodities, that is newsprint, enhanced the profitability of our Print business, which saw steady revenue from both advertising and circulation. Our Radio business recorded an increase in revenue and an improvement in profitability. In the Digital domain, our platforms Shine and OTTplay continued to expand, showing healthy revenue growth. Although investments in new business verticals moderated profitability for the year, we believe these to be critical for the future in an increasingly digital media landscape. We remain cautious about ongoing global conflicts, which could lead to potential disruptions to supply lines and impact commodity costs, and continue to be proactive in monitoring these issues to mitigate their impact on our operations. As we move forward, we remain steadfast in our commitment to our journalistic principles and recognize our role as a trusted source of credible and engaging news and entertainment. We appreciate your continued support, which is vital as we navigate the evolving media environment and seek new opportunities for growth. Thank you for your trust and partnership as we continue to build on this momentum." This slide gives the agenda for the day. We will start with an update on our consolidated performance followed by the business unit performance for the year as well in for the quarter. With this, I now hand over the call to Piyush.

Thank you, Anna. So good afternoon, everyone. We'll be tracking the presentation on the webinar. If you track the first slide, it gives us a consolidation -- consolidated financial summary. We can see our total revenue on a Y-o-Y basis for the fourth quarter went up 7% to INR 527 crores, and EBITDA increased substantially to INR 64 crores, which is a very good jump, with the margins coming at 12%. PBT went to INR 14 crores, which is a substantial improvement from the same period last year. If you look at on a full year basis, revenue was virtually flat with EBITDA showing marked improvement, and that improvement flowing through to the PBT line as well. Net cash remains healthy. As on exit 31st March, we are sitting with INR 884 crores of net cash balance. Moving on, we will now go into various segments and businesses. So a quick look at the Print business. Our ad revenues on a quarterly basis grew 9%, and our circulation revenues were down 6%. The total operating revenues coming out flat at INR 376 crores. Operating EBITDA showing an improvement of 219% and margins coming in at 12%. For a full year basis, on a flat revenue, we saw our operating revenue at INR 1,386 crores, which is down 3%, and EBITDA improving from a loss position last year to a INR 73 crores positive with the margins coming at 5%. If you break down the Print business in English and Hindi, our ad revenues are flat for the year with growth in key sectors like industrial, BFSI and IT, while auto, real estate and retail remained subdued. Circulation revenue improved for the full year on the back of higher realization per copy. On Hindi, a double-digit growth in ad revenue for the quarter with growth in most commercial sectors, except retail and auto. There was also a decline in circulation revenue on sequential and annual basis. If you look at our Radio business, we saw a strong quarter for Radio with revenue growth resulting in better operating EBITDA and margins with a growth of 31% on a quarterly basis and 9% on a full year basis. The Digital segment also recorded growth of 37% where revenues tracked to INR 43 crores on a quarterly basis. On a full year basis, they came to INR 154 crores with a 16% growth. Just before we move into the Q&A, you can clearly see that our Print business has performed very nicely on a consolidated basis, except for the investment that we're putting into our Digital business, notably OTTplay. Our Print business has come back very strongly, and we hope that we will consolidate our position from here onwards. With that, I hand it back to Anna.

Thank you, Piyush.

Thank you, Piyush. We will now begin the Q&A session. [Operator Instructions]

The first question is from the line of Rajesh Agrawal.

Myself, CA Rajesh Mangal Agrawal, from Bilaspur, Chhattisgarh. Hope I am audible?

Yes, Rajesh. You are audible. Please go ahead.

Yes. My first question is, sir, last time this operating profit in positive 16% shown in 2018. So I am a stockholder of you since 2022. And I am holding that stock right now also. So what do you think, when will be we are in the positive side of profit -- net profit -- operating profit? Sorry.

Rajesh, you're talking about the consolidated net profit, is that the question you're asking?

Yes. Yes, consolidated operating profit, yes.

Operating profit, got it...

Yes. Last time, this operating profit shown in positive in the year 2018, that is 16% operating profit, okay? And there are -- this operating profit is declining year-by-year, year-by-year, okay? So being an individual stockholder, I want to know that what is the management perception to bring back this -- our negative profit into positive operating profit?

I have understood, Rajesh. So let me -- so thank you for the question, Rajesh. So let me give you a perspective. Of course, 2018 -- you are comparing it with 2018 and your question is why is the net profit declining and what's the management's response thereof. There are 2 or 3 things, Rajesh. Of course, between '19 and '21, we had a bit of a COVID, and that obviously eroded a lot of [ profitability ]. Let's come back, but I'll go into the granular details. The second other thing is, which I was alluding towards earlier, is that your company at this point in time is investing behind digital properties, notably OTTplay, which basically is a media adjacency and a business of future. So now there are 2 reasons on the stand-alone business, and then I'll come to the OTTplay. Now on the stand-alone business, Rajesh, if you see, there is an improvement in this year versus last year, which is -- it's a slow recovery. So revenue, it's a marginal improvement. But on the bottom line, there's a substantial improvement. The reason for substantial improvement on the bottom line versus last year, and then I'll come to 2018 also, is basically a very robust control on all expenses, discretionary and commodity expenses. The newsprint costs, which last year was troubling us a lot, has moderated a little bit at this point in time, and you'll see the benefit flowing into the P&L. Of course, it is reversing track, and we will see what happens in FY '25. But however, the bigger question, Rajesh, when you are comparing it to 2018, is the market which came back post-COVID, the pricing power is in a bit of a pressure at this point in time for the entire sector and, of course, for us as well. Though the volumes have come back for Print and because you're like at consolidated business for Print, for Radio, but the pricing still hasn't come back. So we are trying very hard to take pricing, but you can understand in an area where the volumes are soft, you will only like to push the pricing that much. So we have our efforts to take the pricing. And once the pricing starts coming through, it will definitely come through to the bottom line. Now switching on to the investments that's going behind OTTplay, in the segment -- on our Digital segment, we've already noted and since last year, we've been indicating that the company is investing behind aggregating all the OTT platform because that part of the segment -- that segment of the market is growing very smartly. I'm happy to say, this year, the product market fitment on OTT has been done. Of course, it's taken a lot of investment. But going forward, the whole idea now that the product has been configured properly, what can we do to bring the revenues here? So once the OTT product unlocks, you will see the margins improving. And on the base business, which is our core business, which is Print, you will definitely see the margin improving because we will be pushing the pricing as we go into the FY '25. I hope I have managed to answer your question, Rajesh.

Sir, I want -- and second question is minute. In the note, sir, it is in land and building classified as noncurrent assets in September -- hello?

Yes, please, go ahead, Rajesh.

Yes. In the notes to accounts, the land and building classified as noncurrent asset. It is sold. And sir, I want to know, for how much this NCA, land and building, has been sold?

Well, we have been -- so I don't know the exact number, we can get back to you. It's about INR 8 crores to INR 10 crores. These are those land parcels, which are surplus kept in the company. We had some land parcel in Jaipur, et cetera, which was surplus, and that is the only piece which has been sold. So this has nothing to do -- this is just a surplus land that we have liquidated, which we have captured in the notes.

And last question is, sir, in investment property classified as noncurrent assets, some of the investment property, okay? In the year '23 -- 31st March '23, we have shown it as INR 38 crores -- INR 386 crores. And in 2024, we have shown it INR 357 crores, okay? So what is the nature of this property, sir -- investment property?

These are properties which are acquired as part of Ad for Equity business. And therefore, that also we continuously look for liquidation. So as and when we have a deal, it is shown as a held for sale and, therefore, comes under current.

But my question is this -- whatever amount we have sold, whether we have gained anything or we booked a loss on this...

No, no, Rajesh, on -- so as my colleague was explaining to you, it's under partnership for growth business, a vertical that we have. We continuously are looking for deals in the market whereby we purchase these, we get these properties under AFE and we sell them. In this year also, like last year, we made profit on these sales. I hope that's what your question was.

Next question is from the line of [ Mohit Kumra ].

This is Mohit Kumra. Can you hear me?

Yes, Mohit, please go ahead.

So my -- I am a HMVL shareholder. So all my questions are specifically directed to HMVL. And as a matter of fact, specifically directed to OTTplay now. How much are you -- now that you are self-admittedly settled with your business and all, how much are you willing to disclose about this business to your investors, as in what is the landscape of the business? How many competitors do you have, major competitors? Where do you stand in this aggregator business? How many subscribers do you have? Because the only information we have received is through some odd websites. Mr. Avinash Mudaliar has disclosed that he was trying for 1.5 million subscribers by the end of this year. Are we even close to that? So I just want to understand about this business because you've been very caged about it till now. So what can you tell us now?

No, we're not cagey at all. I mean if you go through the transcripts for the last year's goal, we've been guiding continuously that we've been investing behind our product to aggregate the OTT platforms. We've been definitely not giving out the numbers because that is competition sensitive. And as I was explaining to another investor prior to you, that this year, we basically managed to do the product market fitment, but the whole commercial box unlock will happen in this year. So this year, the investments have gone ahead. Next year, obviously, the investments will come down very sharply. But you will see the revenue clicking upward because the product is now already in the market. As a matter of fact, as far as the product is concerned, you can yourself check out the product on Google. But insofar as guiding the shareholders is concerned, I think we'll take another couple of quarters because right now, there is nothing to guide except for we have told you what the product is. We are trying to get a certain number of subscribers on our platform, get a certain level of renewal going, content which had to be aggregated with multiple content providers have already been aggregated for the last 1 year, and we are getting good deals there. Now basically, the repeat customers will come. And then we will basically showcase this to the -- to all our investors, but there is nothing being cagey about it. I think we've been [ guiding ] for the investor what it is about.

No, no, I apologize if you took offense to that specific word. What I meant by cagey was understandably cagey to start off with because you were just making your business. But now as an investor, if you go on to some weird site, MediaNews4U, and your CEO for HT Labs is giving out figures there, we wonder why you can't give those figures to us directly, as in how many users do you have?

So I'll tell you what -- so look, I wasn't aware of this whole stuff. Let me just pick up this juice or whatever, [ offer ] juice that works, media juice or whatever that is. Anyways...

MediaNews4U, it is.

MediaNews -- okay, MediaNews4U. Okay, fair enough. What we will do, however, give us a couple of quarters, so like the middle of this year, we will have a certain performance to demonstrate to our investors. At that point in time, we will come back and we will showcase how it has achieved and the performance will be for everyone. And this particular information, I mean, as Anna articulated in the beginning of the presentation, we don't make forward-looking statements. Now what has come on MediaNews4U, I mean, I really can't comment on that.

We are not asking you for forward-looking statements. I was just asking how many subscribers do you have as of now? And in your landscape, we understand -- see, you obviously delved deeper into it. We understand that there's Tata Play and Xstream and people like that. So we just basically wanted to understand where you stand in this landscape and how competitive are you. Because as per your statements for HMVL Digital segment, you made INR 13.65 crores last year. And the -- and lost INR 116.93 crores. By your previously positive statements, I am assuming that you have expensed all your future payments to these platforms already because you were saying there are very little expenses left now and so on and so forth. So am I correct in thinking that part at least?

Yes. So you are correct in thinking that. And to give you a color, I said in 6 months' time, we will come back. There's nothing to share right now. But you are absolutely right in thinking that we've expensed all the expenses here. We're not capitalizing stuff so that those numbers that we quoted are after charging of everything to the P&L.

Mohit, if I may add, see, the shape and color of this space, the competition can be seen in many cuts in our spaces. So we can say -- another person might say that some other people are competitive, et cetera. So it can be cut in many ways. What we have is a full disclosure of a separate segment in Hindustan Media Ventures Limited, it only has OTTplay. So you have the revenues to see, you have the cost to see. As Piyush said, all our investments are in the OpEx model and nothing is in the CapEx model. And therefore, that -- they do have sufficient indication upfront as to what is the level of investment we are doing as well as where are we in terms of the scale that we have achieved till now. Information on subscribers, et cetera, we see as competitively sensitive at this point of time, and we therefore do not see ourselves disclosing that, nor our plan on the same. Actually, in the near future, that could change as and when the business kind of shapes up because there are cost changes and pivots that will happen with any new business as it shapes up. So -- but the revenue is there for you to see, the entire investment is there for everybody to see.

Fair enough. Do you expect to be profitable in the next year or next 2 years, next 3 years for OTTplay, specifically?

No, we don't. We are looking to scale up the business, and therefore, we will not expect to be profitable. Having said that, our investments, we are looking to see it considerably reduced.

Just a corrigendum here. Next 2, 3 years, I think Anna is answering only for the next year, what happens the year after next, obviously, we have to become profitable at some point in time. But next year, we're definitely not going to be profitable.

And just as a -- once again, we ask this every time, and so there's a question for you to ignore again. Anything you plan to do with the cash back to the shareholders, buybacks, dividend, anything? You still have a considerable amount of cash with you.

Yes, we have a considerable amount of cash. But as I said last time, I have no further thing to add on to that. I think this -- most of this cash is going in constructing these new businesses. If they unlock, obviously, we will have an annuity steam coming back to our shareholders, majority and minority. But at this point in time, there's no dividend payout.

[Operator Instructions] The next question is from the line of Ketan Athavale.

Hello. Am I audible?

Yes, Mr. Ketan.

Yes, you're audible.

I'm Ketan Athavale from RoboCapital. My questions are related to HMVL, specifically this Digital business. So you said that our investment in the business will come down drastically. Will that happen from immediately this quarter? And by how much can we expect that investment to go down?

Well, it applies from this quarter. Unfortunately, we won't be able to give you the numbers. But as I said earlier, it will come down drastically because at this point in time, all the initial setup cost, which was costed out in last year's P&L will not repeat itself. It will now be operating expense from here on. So you can expect the investment, whatever we did last year, to be half this year, at least.

Half this year, okay. Got it. Right. And what were the newsprint prices in this quarter?

They were at an average of about INR 50,000.

INR 50,000, okay. And do you have any comments about NOTEF recommendation which we had gotten last, I think, last year?

So it is still with the government. We don't have a conclusive decision on it, and I think it will now get delayed to post-election.

Post-election, okay. Got it. Those were my questions.

[Operator Instructions] Next question is from the line of Gaurav Agarwal.

I'm Gaurav Agarwal. So I'm a private investor in Digicontent. My question is related to Digicontent, specifically. So nowadays, there is a lot of talk about most of these advanced countries wherein these tech giants are taking a part of the -- giving a part of the revenue to these news publishing companies like Canada and all, these things have -- there is a law which has been passed. So what are your views? Like can we see a similar sort of a scenario playing out well in India as well?

Yes. Well, Gaurav, thank you for the question. I can tell you that all these global companies are on a bilateral basis engaging with a lot of publishers, including ourselves. And together, whatever they have to pay for our content is being bilaterally discussed with them. However, unlike Canada, Australia, where there have been court cases and government strictures, they have none here. So these are all bilateral discussions, and those monies are coming in. But of course, will we get, subject to laws in our country, certain bigger amount of share of the revenue that -- or the cost that we put to create all the content which these guys are using for free? I mean time will only tell. But right now, they are bilaterally discussing with us, and some of amount or value is coming back into the P&L.

Okay. And my second question is, in fact, many of these AI/ML generative companies have been giving royalties or part of their -- sharing some amount of revenue as far as using the content from these news publishing companies. So is HT also part of planning or any of these agreements or anything is coming up here? Because in India as well, we are seeing a lot of these AI/ML software being built into.

So Gaurav, overall, the proprietary -- the importance of proprietary content and need for a payment for proprietary content is emerging, as Piyush said. So it will touch all aspects and not just even companies on AI, et cetera. But that's an evolving space, so we will have to wait and see how it [ completely fares ].

Okay. And my last question is, can you share the revenue breakup of the subscription and the ad revenue?

For Digicontent?

Yes.

No, we won't be able to share that.

Well, we won't be able to share that. But Gaurav, as you know, most of the revenue is ad revenue in nature. Of course, there's subscription revenue, which is building up year-on-year, but it will still be a small segment, which eventually will grow into a bigger piece.

Okay. So lately, I've seen Digi -- the Mint website being run within -- in the top 5 for the last month, as one [ bulletin ] had come in. So that -- does that ranking and all help you all in getting more higher ad rates? Or what's the projection like? You all expect similar set of website interaction...

From our side, what we can do is we can put out a good content. And basis our content, the readers come to us. And basis that, the rankings are done by various people, including Comscore, Google Analytics and so on and so forth. So as long as we will keep on generating good quality content, which is useful for our readers, we see no reason why we will not go strength to strength from here on.

The next question is from the line of Sakshee Chhabra. Please introduce yourself and ask your question.

This is Sakshee from Svan Investments. So my first question was on the English...

Sakshee, sorry, we can't hear you too well. Can you speak up, please?

What is the reason that we have not been able to see that sort of growth in the Print ad revenue for English, whereas on the Hindi, we've been able to grow that revenue at 16% in this...

Sakshee, I'm sorry, we couldn't hear you too well. So you will have to speak up and repeat your question.

Sakshee, can you hear us? Sakshee, are we audible to you?

I think her line dropped out. We'll move on to the next participant and wait for Sakshee to come back.

Hello?

Yes, Sakshee, can you hear us?

Yes, Sakshee, you're on mute.

Hello? Yes, I can hear you now.

Yes, you'll have to speak a bit louder, please.

Sakshee, we could not hear your question, so you will have to speak up and repeat your question.

Moving on to the next participant. The next question is from the line of [ Jay R. ] Mr. Jay? Please introduce yourself and ask your question. Mr. Jay? We'll try with Sakshee one more time. She is still raising her hand. Hello, Sakshee, if we are audible, can you please unmute yourself and ask your question?

Yes, you're audible now.

You'll have to speak a bit louder please.

Okay. So my question was actually on the English ad revenue. I just wanted to understand that why we were not able to grow that in this quarter?

So in this particular -- if you see, the full year numbers are similar for English and Hindi. In this particular quarter, there was a lot more government advertising in the Hindi markets, which has benefited Hindi [ vis-a-vis English ].

Okay. And I wanted to understand on the newsprint cost. So the cost that you mentioned of INR 50,000, was that for the full year or for the quarter?

That was for the quarter.

For the quarter, okay. And that was a decline of how much a percent from last quarter?

That would be about a 4% decline over -- on a sequential basis.

Okay. And have we seen that decline further in this month?

So we will, in quarter 1, also see a possible low single-digit decline further to that. And all these are consolidated numbers that I'm talking, not at an HMVL level. It's consolidated.

Okay. So you're seeing a further decline in this quarter, in Q1?

For the quarter, because we earlier -- we had some earlier contracts which is...

Sakshee, just to build on what Anna is saying, she's giving you a sequential decline quarter-on-quarter, which hopefully the trend should continue. But on a Y-o-Y basis, the decline is about 15% if you pick up the same quarter last year. But however, going forward, there seems to be a bit of a blip on the newsprint given the challenges in the Red Sea and, therefore, the transportation cost and, therefore, the sale. But we will see how that goes on, but what Anna has told you is the correct information.

The next question is from the line of Mr. Jay R., we shall try one more time.

So my -- I have a couple of questions with regards to HMVL's performance. Now though the ad revenue has increased by 16%, which I can see during the quarter, but may we know the reason behind the drop in circulation revenue? Is it because of a reduction in copies? And how much has that impacted?

So yes, circulation -- sorry, there's a bit of echo.

Mr. Jay, you will have to mute yourself, please.

So the circulation drop is impacted by drop in copies. There was heightened newsprint cost, as you know, for a large time for the Print business. And therefore, in the Hindi markets, everybody had raised the pricing a little bit, consequent to which, for all players, the copies have gone down a little bit from where it used to be prior to that. So most of the drop is linked to copies.

Okay. So what is the percentage drop in the copies, if we may know?

We would not want to share the exact details, Jay. But it's -- like I said, there is some RPC drop, but a large component is copies.

Well, it's marginal. It's not substantial, it's marginal. And some of the copies which were not productive enough due to the newsprint cost, we have rationalized for the time being. And now that the cost will be in more controllable range, we will see what we need to do next.

Okay. So are we planning on getting those copies back? Or what are we going to do about it?

It's always the plan. That's always the plan, but the copies have to be productive over mid to long term. But the plan always is to get the productive copies back and keep on going strength to strength.

Okay. So I just have one more question. Now it seems that consequent upon the ad revenue increasing, the circulation revenue marginally falling by 9%, there also seems to be a drop in the other operating revenue, which [indiscernible] and that's back to like INR 5 crores or INR 7 crores, that's very less.

Yes. So last time, other operating revenue also includes a component which is linked to our Ad for Equity business where if over a contractual period, if the ad burn commitment is not there, there is a certain amount of forfeiture, which we can take. Last year, that had a slightly higher component, which is why we are seeing the drop. But that's the reason for it.

Thank you. Thank you all. With this, we come to the end of the Q&A session. If you have any further queries, please reach out to the Investor Relations team. Our contact details are given in the investor presentation and are also mentioned on our websites. I now hand over to Piyush for closing remarks.

Thank you, Aaditya, and thank you to all the investors for taking the time to join the call. As we said, the Print business has definitely turned around in this year, but substantial amount of investments have gone behind the Digital product of OTTplay that we've been cultivating. All going per plan, we will be able to show you much better performance on OTTplay in between the coming year. That's what we have built out in the plan. And with that, we hope to see you in the next quarter and look forward to that. Thank you very much, and have a great day.