HT Media Limited (HTMEDIA.NS) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. This is Amit Madaan from Investor Relations team, HT Media Group. I would like to welcome you all to our Q4 and Financial Year '21 Earnings Webinar. [Operator Instructions] I now hand over to Ms. Anna Abraham, Head, Investor Relations. Thank you. And over to you, Anna.

Thank you, Amit. A very good evening to everyone. On behalf of HT Media Group, I welcome you all to our earnings webinar to discuss the financial results of the fourth quarter and of the full year 2021. I would like to introduce my colleagues participating in the webinar today. With me is: Mr. Piyush Gupta, Group CFO; Mr. Sandeep Gulati, CFO of Hindustan Media Ventures Limited; Mr. Pervez Bajan, Group Controller; and the members of our Investor Relations team. I trust you had an opportunity to go through the financial results of Hindustan Media Ventures Limited, which was declared yesterday, and of HT Media Limited released earlier today. We will be taking you through the highlights of the same during the course of this call. Kindly note that our remarks will track with the presentation on the Zoom webinar, which is also available on stock exchanges and Investor Relations section of our website. We are now starting with the presentation. Before we move further, let me draw your attention to the disclaimer regarding forward-looking statements on Slide 2. Kindly keep this in mind as we progress during the call and for all remarks that's made during the course of the call. Slide 3 gives the Chairperson's comment on the performance of the company. And I quote, "Advertising revenue in our Print and Radio businesses and circulation revenue continue to improve. The Shine business has recorded healthy top line growth during the quarter. For the full year, despite the challenges posed by the pandemic, we posted a positive EBITDA, driven by better revenue performance in the second half of the year and cost efficiencies. As the financial year was coming to a close, the Indian economy was positioned favorably and seemed to be at the cusp of a strong recovery. Since then though, the situation has altered substantially with a sharp rise in COVID infections and mortalities. While I expect the impact of the second wave to affect our business performance in the first quarter of FY '22, my hope is that the recent drop in infections, the end of lockdowns and increased momentum in the vaccination program will gradually induce an economic recovery. We remain focused in our efforts to provide credible and engaging news, information and entertainment products to our audience despite the tough environment." Moving on, on Slide 3, we have the agenda for today and the areas we will cover. I will now hand over the call to Mr. Piyush Gupta to take you through the presentation on the company performance.

Thank you, Anna. Good evening, everyone. I hope everyone is safe and healthy in these trying times. I shall be taking over a quick snapshot of the Q4 and the FY '21 results. So as you can see in the table of contents, we'll be covering the consolidated performance. Just moving forward, as we can see, for the fourth quarter FY '21, we had a degrowth of 24% and the total consolidated revenue came at INR 398 crores vis-à-vis INR 525 crores same period last year. EBITDA came in at a positive INR 70 crores against INR 102 crores. And our EBITDA margins came very near to the last year's margin at 18%. Our PAT came at INR 19 crores and our PAT margin came at 5% for the fourth quarter. If we look at the full year picture, the total consolidated revenue came at INR 1,331 crores, which was a decline of 42%. EBITDA came at INR 90 crores, which was a decline of 76%, and our EBITDA margins came down to 7% from a 16% a year ago. Our PAT showed a substantial improvement and came at a negative INR 65 crores. I would like to draw your attention that last year, there was a substantial impairment on account of our Radio assets getting tested for impairment. And we have taken the charge in the last year's P&L. As a consequence, our PAT margin came at a minus 5% whereas net cash in this time grew to INR 1,141 crores. Some of the key highlights, which I have already articulated. Q-on-Q, we have seen a very substantial improvement in revenue and EBITDA performance as we transversed through the quarter. This is really a story of 2 halves. The first half, obviously, was sharply impacted. But the second half was a recovery, which you can see in the fourth quarter results. Q4 EBITDA, I've already spoken about. And liquidity improvement is something that we continue. And we have substantial liquidity on the balance sheet. Moving forward, if I now go to the business unit performance, let me just focus on Print here. So on the Print performance, for the quarter, we saw a decline of 22% with revenues coming at INR 233 crores and EBITDA at INR 48 crores, a decline of 44%. Our operating revenue at INR 297 crores were down 26% and operating EBITDA at INR 41 crores was down 39%. On a full year basis, the corresponding numbers are INR 717 crores of ad revenue, down 48%. Circulation revenue was down 33% at INR 180 crores, operating revenue at INR 956 crores, down 47%, and operating EBITDA at negative INR 6 crores, which was substantially down vis-à-vis the same period last year. Moving forward. Let me just spend a couple of minutes on the English Print business. So as you can see on the ad revenue, which is the top left bar that you see, in the fourth quarter, our revenue came to INR 118 crores, which was a 31% decline and is -- but however, if you see vis-à-vis -- sequentially previous quarter vis-à-vis the third quarter, it came virtually at the same level. Circulation revenue, there was on a yearly basis a decline of 62%. And sequentially, there was a growth of 27% from INR 4 crores to INR 5 crores. I have already spoken about the highlights, so I'll just move forward. As far as the Hindi business is concerned, you can see the improvement in ad revenues across both national revenues and local advertisers in the quarter. Improved ad volume share across our operating geographies during the year, this is a substantial achievement that we have managed our market shares and increased slightly. Advertising revival in key categories like FMCG, real estate and durables have happened in this quarter. And categories such as auto, education and retail were, however, muted. We continue to see pressure on our yields, which still bear down. And yields are, depending on market-to-market, 25% to 30% down vis-à-vis the same period last year. Moving on. Our Radio business, if you see the softness in operating revenue and profit as customer segments of radio are more adversely impacted in the pandemic, I'd just like to spend the time. Radio, we have seen much sharper declines than our Print business. And the recovery also has been much more muted and slow. As you can see, in the fourth quarter, also we have a decline of 41% with revenues coming at INR 24 crores and operating EBITDA at a negative INR 4 crores. We have done substantial cost actions to shore up our bottom line. But as all of you know, most of the costs locked into Radio business are statutory in nature. And there is a very little that we could do about it. On a full year basis, we had a decline of 63% on the top line and a substantial decline on the bottom line with operating margins becoming negative for the year. Moving forward. So that is the end of a quick snapshot. I will now like to open the floor up for questions and answers, please.

[Operator Instructions] The first question is from Sidhant Mattha.

So just wanted to know about basically we have seen the employee cost falling quarter-on-quarter. So is there some one-off? Or this run rate will be going in FY '22?

So Sidhant, let me give you a high level, then I'll request my colleague, Anna, to pitch in on to this thing. This is not a one-off. I'll just like to take you slightly back at the time of beginning of COVID. There were a couple of actions that we had fired at that point in time. One, we had looked at various productivity measures. And some of our employees, we had asked to leave. And at that point in time, we had also undertaken a restructuring of the salaries, whereby some portion of employee salaries were put into variable salaries, which was linked to the company's performance. Now that is not a one-off. I would say those productivities have already kicked in, and we are a much leaner organization. So I would say this trend is likely to continue. But on the numbers, I would request Anna to share her thoughts.

Yes. Just to add, there's two components, as Piyush said. There's been restructuring activities across the organization. The benefit of that will sustain and will continue. The variable component, however, we are -- it is linked to business performance. And with business looking up, we definitely hope to kind of be able to pay that to our people. And therefore, to some extent, this will not be sustainable if [ one says ] business performance improves from here on.

So basically, just wanted to ask one more thing. So basically, we were -- until the third quarter of FY '20, we were around INR 100 crores run rate for every quarter, then we went to INR 85 crores, INR 80 crores, INR 85 crores. And now we are down to INR 70 crores. Is that INR 70 crores very good until the business recovers?

No, it is not because there is some amount of reversals sitting in the quarter 4, which is linked to the nonpayment of -- decision on nonpayment of the payment on some of the variables onboard.

Okay. And my second question is regarding how is the outlook like. So basically, we have seen Delhi and other markets opening up. So how is the outlook compared to the last year June? Because -- is the second wave better -- like a lot of the companies are saying that the second wave recovery is faster. But just wanted to know out how the English and the Hindi sectors are performing in the market.

Okay. No, great question, Sidhant. Sidhant, the only point I'd like to say, it's very early to say. Though the Delhi markets and the Bombay markets are nearly open now, but I would say we will need reading for another 2 or 3 weeks to say whether the demand is coming back. As you can understand, the local revenues, which are really dependent upon the local businesses, will depend upon the situation on the ground. But the big national revenues at this point in time, they are trickling in very slowly, but that will depend upon the media and the campaign plans of the big national advertisers. So I would say it's too early to take a call on that. But I would like to believe that in the next 2 or 3 weeks, we should see a reasonable recovery. I can't say whether it will be very sharp or not.

Okay. And same for circulation because last year, we saw Bombay and Delhi and a lot of other cities where circulation stopped. But is the second -- in the second wave also the circulation stopped or the impact of the Q-o-Q decline is much lesser?

Good question, Sidhant. I think the disruption on circulation is nowhere as sharp as it was last year. So circulation drops, a little bit of drop has happened. But we are on a continuous program to basically go and re-recruit our readers. So I don't think we will have a sharp drop in copies as we saw in the first quarter of FY '21.

Okay. And my last question, about the Google showcase, if any numbers or any guidance or anything, any points you can share with us?

Not at this point, Sidhant, I think that's a contract which is still being negotiated and discussed. We will definitely come out with the filing the moment it is finalized. But it's still in the works, it's happening.

The next question is from Yash R.

My first question is with regards to HT misprint. We are seeing that there is a reduction in the other operating revenue. I mean, last year was pretty high. That was on account of forfeiture. So has it normalized now? And it is because of that, it is less?

Yes. So last year, we had substantial forfeitures in this -- in the same quarter. But we do have some forfeiture nowhere as close to what it was last year. So hence, you see the decline.

Okay. My second question is in connection to Sidhant, what he'd asked with regards to staff costs. Even in HMVL, there has been a reduction. So is it on account of variable as well as was the case in HT?

Yes, both. Rationalization and -- both.

Would you care to comment on the headcount? I mean, what has been...

No, no, no, we wouldn't want to comment on that, please.

The next question is from V.P. Rajesh.

This is Anish Jobalia. So my question was on the yield. So you had a opening comment, where you said that the yields are down by 25% to 30% versus last year. So I just want to understand, this commentary was for this quarter or was it for the full year, if you could clarify that.

Yes. So a good point. Anish, thank you. Thank you for the question. That's a great question. Look, I think the commentary was specifically as we exited the fourth quarter and the fiscal year '21. Just to remind you, in the first quarter when last year COVID had started, the volume itself had come down very, very sharply. At that point in time, it was foolhardy to discuss about yields. But as we exited FY '21, versus the same period last year, the yield was still under pressure to the extent of 25%, 30%. That's the point that I was trying to make. Sandeep or Anna, would you like to add to that?

Okay. This is Sandeep. So let me just give a little more commentary. So overall, the comment which Piyush made was applicable for both quarter as well as for the year. Because the impact was much more significant in the initial quarters of the year. As we kind of continuously made progress, that improvement came through. And then overall yield averages are also reaching to the similar levels.

Okay. So my follow-up question here is that, in the ad revenues, you have shown a decline of only 8%, right, over the last year? So when we share that 25% to 30%...

So volumes have grown pretty significantly. So that's a good news. So volumes have started coming back. And that's a good sign. And that's what we saw sequentially improving and that's giving us the confidence. And remember that what Piyush said initially, so while the volumes were also low in the first few quarters, and then as they started picking up, we actually started seeing a potential for taking the yields also higher. So it was moving in the right direction. Of course, we got hit by the recent pandemic now, but -- so maybe if the...

So basically, I mean, what you were trying to say is that versus the Q4 of last year, the volumes are higher by like around 18% to 20% than...

Yes, you're right.

So Anish, the volumes have clearly picked up. So we saw growth in volumes versus the previous year. But because of the yields, the revenue was still in the right line. And right now, it's not the time to talk about yield because the volume repair work will go up in the market. And I think it's another quarter before we see yield stabilizing at a reasonable level.

Okay. And sir, sorry, I mean, again I just wanted to clarify that I'm only speaking about the Hindi Hindustan.

Yes. We understood.

Okay. And sir, just one follow-up question around the yields. I mean, the kind of pressure that we are seeing, this 25% to 30%. I mean, if you move to other geography, so our core geographies are like this Bihar, Jharkhand and UP, Uttarakhand belt. So if we look at the other geographies, if we look at the other peers, their yield pressure is not as significant as what we have seen. So for us, like we know that our direct competition among the listed players is Dainik Jagran, right, Jagran Prakashan. So I'm just trying to understand that, what is happening that -- because I think this is typically led by competitive pressure or intensity of -- I mean, let's say, competitive intensity. So why is this happening in our belt versus the other geographies, other states, and specifically for our northern belt regions, this kind of pressure? Because what -- and as -- what -- or do you -- can you even think about that -- these yields that we were getting in FY '19 and FY '20 before COVID that can ever come back, I mean, because things have started improving on the yield side as well?

So let me just give you a high-level point, Anish. Anish, the yields of all our competitors are following the same trend line as we speak. We keep a reasonable track of our competition, so the yields are under pressure as far as Dainik Jagran is concerned, Dainik Bhaskar is concerned, Amar Ujala is concerned, and indeed, in the English market, Times of India is concerned. Will they improve? I think right now, most of the advertising which is coming, it's not good enough for us to take up a pricing action. So I would say none of us will take a pricing action at least for a quarter. And we will keep on watching the situation very closely. But maybe in a quarter's time, if the recovery is indeed reasonably good, we will be taking action here.

Sorry to harp on this a bit more, but I'd just like to close up a bit. But I'm saying that, let's say, in [ VR ], we are #1, right? So like in terms of increasing the intensity or giving more -- like not reducing the discounts which we were doing earlier to attract the advertisers because volumes came back so sharply, right, for us? So being a leader, why are we not closing down the yields versus earlier what you were doing?

Anna, would you like to add...

Yes. I just wanted to add, saying that unlike when it's business as usual, it is not competitive pressure which is driving yields. It's generally, market sentiment. So while -- so there is ad dollars overall, it's available only to a certain extent today because there are only a few categories which are firing, a lot of categories are not. And even the categories which are firing that is spending far less than they would normally do. And therefore, that is the reason why there is impact on pricing because these volumes are available only at a certain pricing, which is pan-industry and nothing to do with one player versus the other. And the results of the listed players are also out. And if you would -- their results also indicate a similar trend.

The next question is from [ Pawan Terulia ].

Sir, is there any specific reason why dividends were not considered like despite having a healthy balance sheet and declaring the same in the Board meeting intimation? So my question is specifically for HMVL.

Anna, would you like to take that?

So while things have not been as bad as it should be, it is not a very rosy picture at the end of it. So therefore, there is impact at the PAT level. PAT is substantially low. And that is the reason -- it has not been a position to kind of offer handsome dividends.

Okay. And also, in Note 7 of the HMVL result, like you are talking about recoverability of the financial assets. So do you have any nonperforming deposit, which is -- which you think is of concern, like in DHFL or some other company which is in trouble?

No. We have nothing like that at all.

That's great. And also, there is -- like other income in HMVL has decreased like by a lot, like from INR 31 crore average to around INR 13 crore. So any specific reason for that?

Well, in other income, I think the interest income is the reason. So it's a change in the interest income.

So is it going to continue in the future? Like your operating income was very good this time like I noticed that. But interest income, is it going to continue the same way as it was...

Look, I think, Pawan, I think interest income is a factor of the yield curve and the positioning of the debt mutual funds that we have in our treasury. If you look at on a full year basis, you can see that the interest income that your company has earned is pretty substantial. But in the fourth quarter, whatever movements have happened on the 10-year G-Sec and the various government securities, which have played out on other securities, is muting the interest income for the fourth quarter. But the right way to look at it is look at it in the context of full year. We obviously take calls on duration with our expectation where the market is going to go, what are the pronouncement the Reserve Bank will do. But obviously, we will not get it right all time. But saying that it will continue like this thing is absolutely wrong because there's a very healthy [indiscernible] sitting in your balance sheet. And we will have to play 1 quarter at a time here.

And just to add on, for the quarter-on-quarter variation, there's a base impact. Because base had a slightly substantial shift MTM gain last year, given some market anticipated changes to the rate position, which subsequently followed as well.

The next question is from [ Rahul N. ] Since there is no response, we'll move on to the next participant. The next question is from [ Mohit Kumra ].

I'm sorry, I'm going to go back to that whole dividend thing. But I'm a long-term shareholder. And you have INR 1,400 crore in cash on your account. I'm talking HMVL. And it's...

Mohit, it's INR 1,200 crores. The net cash is INR 1,200 crores.

I'm so sorry, INR 1,200 crores. And even if you paid your typical dividend of INR 1.20, which was very low because you were not generating very high returns on equity to start with even 4, 5 years ago, do you think it's fair to your shareholders that you can't pay out INR 9 crores or INR 10 crores out of INR 1,200 crores? How bad can things get? I mean, how bad can it get the -- or let me continue. Or if you give it -- give us any indication of -- I'm not trying to give ideas here. But just to use the capital properly, like a buyback, acquisition, anything. But I think your shareholders deserve more than a generic answer for this. What is going on in your mind? This is too much of cash. And I cannot -- see last year, I didn't raise this question because there was shock when COVID happened last year. So nobody knew whether the world was going to end, what was going to happen. But now we are used to it and not paying out INR 9 crores to your shareholders out of INR 1,200 crores, please.

Mohit, let me answer that in two ways. I don't want to give you a generic answer, but you can understand, I will try to be as specific as possible. But let me break it into two parts. Now first of all, saying that we are used to this particular situation, I really don't know. If you read the newspapers this morning, I mean, a lot of state governments and a lot of scientists and epidemiologists are already talking about a third wave. So I don't know whether we've seen the next of it -- sorry, whether we've seen the last of it. So that's one point I just want to make to paint the picture in the background. The second thing, Mohit, as you've understood, we have seen the volatility with a pandemic like this thing brings to a business like ours. Now there are two big variables in a business like ours. And of course, you analyze the business, you understand it better than us. One is the volatility on the revenue. The first quarter saw revenues go down by 8-0, 80%. And of course, by the end of the year, it was down to 24%, so substantially it could happen. So that's one volatility. The second is on the raw material side, which is the newsprint really that we procure. You've already seen the newsprint prices from $400. And right now, as we speak, and I'm just talking about the first quarter FY '22, we are talking about a $600 a metric ton, where dollar is already at INR 73. So I'm talking about a 50% to 60% volatility. Now if you just cost this out and keep it in perspective, the thinking that we have on capital allocation -- and look, I mean, I can't defend that why should we not give INR 9 crores or INR 10 crores. I think the only driving understanding there is that there is a safety cash to continue the business on a safe axis and take the advantage of any opportunity that presents itself of only a strong balance sheet will help you at that point in time. But that's not to say that we want to shortchange the shareholders, either majority or minority. It is just in these severe uncertain times that we have decided not to pay out any dividend. As far as the third part of your question, Mohit, whether we can do something for the shareholder, trust me, the intent is already there. You understand we are -- we have been on a journey on cleaning up our capital structure, our corporate structure. The first scheme that we had announced had already been approved by NCLT on 17th of June. The accounting has taken impact of that. We have already a second scheme, where we are trying to basically get substantial benefit for the shareholder. If all goes well, we wanted to create a situation, thereby most of these capital either can be deployed productively for long-term value creation of the shareholder. If not, it should be returned to the shareholders in whatever means and form. But I can't comment on these things because the second scheme itself is going through the process, which will take another 3, 4 months. And after that, we will be seeing what we can do. But the sheer uncertainty linked to COVID is something which we have seen last year, how it unfold and we really don't know what's going to happen further is the reason that we have decided not to pay a dividend. I don't know whether I have satisfied you, Mohit. But that's, unfortunately, all that I had on this one.

Okay. Yes. Partly satisfied because if your business gets so bad that you erode INR 1,200 crores, then maybe we should not be in business. But okay, anyhow, my second question is this, that the last time around, you spoke about a lot of this concept of ad-for-equity.

Yes.

Do you think you can give us a list of all the deals? I have searched around, and I've seen a few good ones, OYO and Mobikwik, was it, or something like that, INR 50 crores each. So it seems that you have at least INR 200 crores, INR 300 crores in deals like these ad-for-equities. Do you think your shareholders can have -- you don't have to give it to me right now. But even if you agree to it offline later on, do you think your shareholders can have a list of these ad-for-equity deals you have? Is it within our rights to -- or within...

No, we don't share that information. No, Mohit, we don't share that information, but I can tell you, the AFE portfolio is now much bigger than that. It's north of INR 500-odd crores. And there are some good deals, as you've said, Mobikwik and OYO are two deals that you've named. And one of the company is already filing a DRHP. So we hope to kind of realize that value back into the balance sheet as soon as possible.

So you said we have about INR 500 crores on this, around about...

This is at a consol level? It's a consol level...

Yes, I'm not talking HMVL, I'm talking at a consolidated level.

HMVL alone?

It's half and half. I mean, let's say, half and half, Mohit, broadly.

Okay, INR 250 crores.

Since this was the last question in the queue today, we come to the end of Q&A session. I now hand over to Piyush for closing remarks.

Thank you, Sankalp. Thank you. Thank you, shareholders and investors and analysts. I really appreciate you making the time. I really, really wish all the best of health to you. I know that, hopefully, we are out of this pandemic and business -- our business and our life should come back to normal. But I only dread if any other instance of this thing were to take place, I would request all of you to take caution. And I look forward to seeing you on the Q1 FY '22 call in 1.5 months' time. Until then, all the best. Thank you so much.