Print Industry Coverage

November 18, 2009 | Print
November 18, 2009 | Sector Reprot
Initiating Coverage Analysts’ Name

Naval Seth
Print Media Sector naval.seth@icicisecurities.com

Karan Mittal
karan.mittal@icicisecurities.com
Regional - the way to go…
The Print Media sector has started gaining momentum after witnessing a Comparative return metrics
setback in FY09 due to the economic slowdown coupled with newsprint 1M 3M 6M 12M
prices peaking at $960/tonne. We have seen a selective recovery in the HT Media 10.0 33.5 110.6 130.6
sector with companies with a regional focus finding solace in rising Deccan Chronicle 2.8 54.7 173.2 254.1
advertisement spends and declining newsprint prices ($560/tonne) in the Jagran Prakashan 7.9 20.0 123.4 146.4
current fiscal. High cost inventory is already out of the system & is
expected to aid margins from Q3FY10E. However, accelerated revenue
growth in core businesses would be seen post FY10E. We expect our print HT Media (HTMED) REDUCE
universe to post revenue CAGR of 11.8% and EBITDA CAGR of 36.6% over CMP Rs 138
FY09-12E. With highest margins & additional contribution from IPL, TP Rs 125
Deccan Chronicle (DC) is our top pick. We initiate coverage on DC and HT Upside % -9%
Media with STRONG BUY and REDUCE rating, respectively. Being a pure Market Cap Cr 3230
regional player, we reiterate our BUY rating on Jagran Prakashan.
FY09 FY10E FY11E
Rising ad spend Revenue Rs Cr 1347 1448 1613
Advertisement is the major revenue driver for the media industry, EBITDA Rs Cr 88 272 318
contributing ~65% of total revenue of print companies. Over the past EBITDA % % 6.5 18.8 19.7
three years, advertisement is expected to have grown at a CAGR of PAT Rs Cr 0.9 123 163
17.1%. Although the recent past has yielded mixed results, the long- EPS Rs 0.0 5.3 6.9
term scenario looks positive for the Indian advertisement industry. P/E x 3566.3 26.2 19.9
India is still under penetrated and behind developed nations and even EV/EBITDA x 39.0 12.7 10.7
China when compared on advertisement to GDP ratio. This indicates
further potential for rise in ad spend for the Indian media industry.
Advertisement revenue in the print Industry is expected to grow at a
Deccan Chronicle (DECCHR) STRONG BUY
five year CAGR (FY08-13E) of 10.0% led by expansion in emerging
CMP Rs 152
sectors like organised retail, telecom, insurance, BFSI and education.
TP Rs 186
Growing regional focus Upside % 23%
The Indian print industry is highly fragmented with over 60,000 Market Cap Cr 3705
newspaper published in 22 languages. According to IRS, Hindi FY09 FY10E FY11E
newspapers have highest penetration followed by English, Marathi, Revenue Rs Cr 968 1120 1253
Tamil and Telugu. In the backdrop of consumption shifting to smaller EBITDA Rs Cr 300 502 550
towns and villages, the industry has seen various vernacular launches EBITDA % % 31.0 44.8 43.9
in order to increase circulation and shield against seasonal downturn PAT Rs Cr 142 317 322
in national advertising in the recent past. In total, 14 of the top 15 most EPS Rs 5.8 13.0 13.2
read dailies in the country are either Hindi or vernacular. In the recent P/E x 26.1 11.7 11.5
economic slowdown, national players were the most impacted while EV/EBITDA x 11.9 6.5 5.5
their regional counterparts did not really face the heat. Going forward,
we expect companies with a regional focus like Jagran Prakashan to
outpace their national counterparts in terms of print revenue growth.
Jagran Prakashan (JAGPRA) BUY
Outlook and recommendation CMP Rs 119
Print media companies have exhibited a diverse trend in the recent TP Rs 134
past, with regional players posting robust revenue growth while their Upside % 12%
national counterparts have witnessed a decline in advertisement Market Cap Cr 3590
revenue. We believe regional players would continue to outperform FY09 FY10E FY11E
the overall print industry as demand in Tier II and Tier III cities and Revenue Rs Cr 823 930 1057
towns has proved to be more resilient to the slowdown. EBITDA Rs Cr 157 276 335
We advise cherry picking among media companies with a preference EBITDA % % 19.0 29.7 31.6
for companies with higher regional exposure. We maintain Jagran PAT Rs Cr 92 167 201
Prakashan as BUY and initiating coverage on HT Media with REDUCE EPS Rs 3.0 5.5 6.7
rating. Deccan chronicle with highest operating margin and additional P/E x 39.2 21.5 17.8
contribution from IPL is rated as STRONG BUY. EV/EBITDA x 22.3 12.0 9.4
ICICIdirect | Equity Research
1 | Page
Table of Content Page
1) Print Media Industry-Macro Environment 3

a) Rising ad spend 5
i) Advertisement in print 6
b) Growing regional focus 8
i) Localization of content 10
ii) Hindi and vernacular space – a cheaper option 10
iii) Regionalization – resulting in intense competition 11
c) Increasing penetration – next driver for circulation 11
d) Newsprint prices cool off 12
e) Diversification to de-risk core business 14
2) Risk and concerns 15

3) Financials 16
4) Valuations 18
Companies:
1) HT Media 21
a) Investment rationale 24
i) Regional advertisement – the next growth driver 24
ii) Hindustan – going strong 24
iii) Hindustan Times – second largest English daily 27
iv) Mint – gaining momentum 30
v) Circulation to inch up going forward 31
vi) Radio 32
vii) Online ventures – still in investment mode 33
b) Risk and concerns 35
c) Financials 36
d) Valuations 39
2) Deccan Chronicle 46
a) Investment rationale 49
i) Deccan Chronicle – King of the South 49
ii) Major revival in ad revenue post FY10E 51
iii) IPL – the golden goose 52
iv) Odyssey – in expansion mode 54
v) Sieger Solution – Halt on expansion 55
b) Risk and concerns 56
c) Financials 57
d) Valuations 61
3) Jagran Prakashan 67
a) Valuations 70
2 | Page
Macro environment
The print media industry is characterised by high fragmentation and

regional dominance. The country has over 60,000 newspapers printed in
22 languages. According to various Indian Readership Surveys (IRS),
more than 85% of the country’s total print publications are in Hindi and
other vernacular languages. Moreover, all dailies have managed to gain
dominance only in specific regions.
Although it is the second largest print market in the world with a

readership base of over 255 million, the Indian market, given its
population base, is still under penetrated. Urban penetration stands at
85% while that for rural markets stands at a mere 33%. According to IRS,
about 359 million people in India can read and understand at least one
language but do not read any publication. With such low penetrations,
we believe a huge growth opportunity lies ahead for print companies,
especially in vernacular markets.
Exhibit 1: Indian demographic metrics Low readership in rural India

Urban Rural Total implies huge growth potential for
Population (Millions) 268 584 852 regional/Hindi print media
Literacy % 83% 62% 68%
Readership (% of literates) 42% 21% 29%

Source: IRS R1 2009, ICICIdirect.com Research; Age group 12+
The print industry has grown to Rs 173 billion in FY08, registering a three
year CAGR (FY05-08) of 13.8%. Advertisement contributes ~63% to the
total revenue while ~37% is contributed by circulation revenue.
Exhibit 2: Indian print media industry – Revenue break-up
300
250 The print industry has grown to

91.7 Rs 173 billion in FY08, registering
200 85.7 a three year CAGR (FY05-08) of
Rs billion
79.5
150 69.1 74.1 13.8%. Advertisement contributes
60.2 64.2 ~63% to the total revenue while
53.7
100 47.7 174.3
~37% is contributed by
136.5 153.6 circulation revenue.
100.2 108.4 114.8 123.8
50 84.9
69.4
0
FY05 FY06 FY07 FY08 FY09E FY10E FY11E FY12E FY13E
Ad Revenue Circulation Revenue
Source: FICCI report2009, ICICIdirect.com Research
3 | Page
Exhibit 3: Print industry
300
250 20.6
18.9 ~92% of the total print revenue
200 17.6
16.2 is contributed by newspapers
Rs billion
13.9 14.9
12.1 while smaller portion of ~8% is
150
10.3 by magazines
9.1 245.4
100 198.5 220.4
158.7 169.0 181.8
128.3 148.3
50 108.0
0
Newspaper Magazine
Source: FICCI report 2009, ICICIdirect.com Research
The Indian print media sector suffered on account of the global meltdown
and financial crises resulting in lower advertisement revenue growth in
FY09. Major advertisers like realty, banking & financial sector and IT were
among the worst hit during the global crisis leading to ad spends
shrinking. Companies in the print space were pushed further into the
corner with mounting operating costs led by all-time high newsprint
prices. Operating margins across the board declined by an average of
51% in FY09, with the exception of Jagran Prakashan that declined by
mere 13%. The arrest in margin decline was mainly achieved due to
lower inventory storage.
However, with cooling of newsprint prices, clearing out of high cost

inventory in the system and improving macroeconomic conditions we
expect print companies to get back to a higher trajectory post Q3FY10E.
Our claim is supported by the recent trend exhibited in Q2FY10 results.
The advertisement and circulation revenue of companies under the
ICICIdirect.com print universe recorded a YoY growth of 11.0% in
H1FY10 as against mere 3.3% in H1FY09. Also, the EBITDA margin
improved from 23.8% in H1FY09 to 33.0% in H1FY10.
Exhibit 4: YoY growth in print revenue and raw material cost for ICICIdirect.com print universe
Revenue growth has exceeded
50% the growth in raw material cost.
40% Raw material posted a negative
growth in Q2FY10 on the back of
30% a steep decline in raw material
20% prices, as compared to last year.
We expect raw material prices to
10% inch up slightly and remain stable
0% at those levels
-10% Q1FY09 Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10
-20%
-30%
Revenue Growth Expenditure Growth
Source: Company, ICICIdirect.com Research
4 | Page
Rising ad spend
Advertisement is one of the major revenue drivers for the media
industry. Over the past three years, advertisement has grown at a
CAGR of 17.1%. However, due to the recent turmoil in the world
economic scenario, advertisement budgets have shrunk across
industries. Consequently, we expect slow growth in this revenue
stream in the current year.
Nevertheless, the long-term scenario looks positive for the Indian

advertisement industry. India is still under penetrated and behind
developed nations and even China when compared on
advertisement to GDP ratio. This indicates further potential for rise
in ad spend for the Indian media industry. Ad spends as a
percentage of GDP have been on an upward trend for more than a
decade. It grew from 0.31% in FY98 to 0.47% in FY08.
Exhibit 5: Indian ad revenue industry (Rs billion)

FY05 FY06 FY07 FY08 FY09E FY10E FY11E FY12E FY13E % CAGR (FY05-08) % CAGR (FY08-13E)
Television 51.9 60.5 71.1 82.5 88.2 97.1 112.6 131.7 155.5 16.7 13.5
Print 69.4 84.9 100.2 108.4 114.8 123.8 136.5 153.6 174.3 16.0 10.0
Radio 4.9 6.0 7.4 8.4 9.2 10.3 11.9 13.9 16.3 19.7 14.2
Internet Advertising 2.0 2.0 3.9 6.2 8.4 11.0 13.7 17.1 21.4 45.8 28.1
Outdoor 10.0 11.7 14.0 16.1 17.7 19.8 22.4 25.5 29.3 17.2 12.7
Total 138.2 165.1 196.6 221.6 238.3 262.0 297.1 341.8 396.8 17.0 12.4
Exhibit 6: Ad spend as a percentage of GDP globally
India 0.47
India is still under penetrated and

China 0.54 behind developed nations and
even China when compared on
advertisement to GDP ratio.
UK 0.95
US 1.34
0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6
5 | Page
Exhibit 7: Ad spend as percentage of GDP in India
0.50 0.47
0.45
0.40 Ad spends as a percentage of
0.37
GDP have been on an upward
0.35 0.40
0.37 0.38 trend for more than a decade. It
0.30 0.33 0.35
0.31 grew from 0.31% in FY98 to
0.25
0.47% in FY08.
0.20
0.15
0.10
0.05
0.00
1994 1996 1998 2000 2002 2004 2006 2008
Ad spend as percentage to GDP
Advertisement in print
Advertisement revenue is one of the major revenue drivers for print
media companies. It contributes almost as high as 90% of the total
revenue for English dailies and about 70% for Hindi dailies. On an
industry wide basis, advertisement contributes about 65% of the
total print media revenue.
Exhibit 8: Break-up of total print ad revenue of Rs 10800 crore in FY08
Business Daily, 6%
57% - Contributed by Delhi &
Magazines, 7% Mumbai
43%- Other markets
Hindi Daily, 19% English Daily, 45%
Regional Daily, 23%
English Daily Regional Daily Hindi Daily Magazines Business Daily
Source: FICCI report 2009, Company, ICICIdirect.com Research
Growth in advertisement revenue led by expansion in emerging

sectors like organised retail, telecom, insurance and education is
expected to outpace circulation growth. Advertisement revenue is
expected to grow at a five year CAGR (FY08-13E) of 10.0% while
circulation revenue is expected to grow at 7.4% over the same
period.
6 | Page
Exhibit 9: Print advertisement
200 FY08-FY13E CAGR of 10% 25.0

22.3 174.3
180
153.6
160 18.0 136.5 20.0 Growth in advertisement revenue
140 123.8 led by expansion in emerging
108.4 114.8
120 100.2 13.5 15.0 sectors like organised retail,
Rs crore
12.5
100 84.9 telecom, insurance and education
10.3
%
80 69.4 8.2 7.8 10.0 is expected to outpace circulation
60 5.9 growth. Advertisement revenue is
expected to grow at a five year
40 5.0
CAGR (FY08-13E) of 10.0%
20
0 0.0
Print Ad revenue Growth
Exhibit 10: Volume growth in print
350 321
301 311
300
252 261
250
203
Print ad volumes increased 2.2
200 times in 2008 compared to that
150 127 124 in 1999
113
100
100
50
0
FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08
Index Growth: Year 199 = 100
Source: AdEx India, ICICIdirect.com Research
Exhibit 11: Average ads per day in newspapers
500 469 466 460

450 420
386
400
350 Average ads per day in
300 257 newspapers increased 3.6
times in 2008 over 1999
250
200 157
130 141
150 100
100
50
0
FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08
Index Growth: Year 199 = 100

7 | Page
The Indian print media sector suffered on account of the global
meltdown and financial crises resulting in lower advertisement
revenue growth in FY09. Major advertisers like realty, banking &
financial sector and IT were among the worst hit during the global
crisis leading to ad spends shrinking. The advertisement spend is
expected to remain under pressure during the current fiscal and
would lead to moderate growth in ad revenue. Print media ad
revenue is expected to grow at 7.8% in FY10E.
Nevertheless, corporates are inching up their ad spends and the

industry has recovered since its worst show in H2FY09. It is steadily
returning to its earlier high growth trajectory. A major rise in ad
revenue would be visible after FY10E. The industry is expected to
grow at 10.0% CAGR (FY08-FY13E) to Rs 174 billion.
Exhibit 12: Ad revenue growth

Improvement in ad revenue growth is
85% expected from FY10E onwards. All
75% companies in the ICICIdirect.com
65% print universe are expected to post
ad revenue growth in excess of 11%
55% in FY11E and FY12E
45%
35%
25%
15%
5%
-5%
FY07 FY08 FY09 FY10E FY11E FY12E
HT Media Deccan Chronicle Jagran Prakashan
Exhibit 13: Top 10 print advertising sectors (Jan-Jun 2009)

Top 10 Advertisers (H1CY09) % Share
Education 19
Services 11
BFSI 9
Auto 7
Retail 4
Personal Accessories 3
Personal Healthcare 3
Durables 3
Corporate/Brand Image 2
Media 2
Growing regional focus

The Indian print industry is highly fragmented with over 60,000
newspapers published in 22 languages. According to IRS, Hindi
newspapers have highest penetration followed by English, Marathi,
Tamil and Telugu. In the backdrop of consumption shifting to
smaller towns and villages, the industry has seen various vernacular
launches in order to increase circulation and shield against seasonal
downturn in national advertising.
8 | Page
Exhibit 14: Newspaper readership in India
210 191
180 Readership figures clearly show
consumer preference for the regional
Readership in Millions
150 130 press. Hindi is the most read

120 language in the country followed by
English, Tamil, Malayalam and
90 Telugu
60 39
30
0
English Top 10 Hindi Top 10 Vernacular Top 10
Source: IRS R2 2008, ICICIdirect.com Research
Exhibit 15: Top 15 newspaper in India

Ranking Newspaper Language AIR (Lacs)
1 Dainik Jagran Hindi 160.7
2 Dainik Bhaskar Hindi 128.8
3 Hindustan Hindi 93.0
4 Malayala Manorama Malyalam 88.8 Only one English newspaper figures
5 Amar Ujala Hindi 81.8 in top 15 national dailies in India.
6 This strengthens our argument in
Daily Thanthi Tamil 76.1
favour of regional dominance in the
7 The Times Of India English 68.7
print media
8 Lokmat Marathi 67.9
9 Rajasthan Patrika Hindi 66.7
10 Ananda Bazar Patrika Bengali 65.5
11 Eenadu Telegu 65.3
12 Mathrubhumi Malyalam 64.1
13 Dinakaran Tamil 54.2
14 Gujarat Samachar Gujarati 54.2
15 Daily Sakal Marathi 40.2
Source: IRS 2009 R1, ICICIdirect.com Research
Exhibit 16: Some of the recent launches

Newspaper Recent Launches
Hindustan Times Metro Now
Mint
Sensing the immense potential in
Shine.com
regional markets, players are trying
Times of India Gujarati and Hindi edition of Economic Times to mark footprints in untapped
Mail Today markets. Established national
32 page Premium edition on weekends players are leveraging their brand
Jagran Prakashan City plus value to enter the regional space.
I-Next This is evident from some of the
launches in the past two years
Dainik Bhaskar Ludhiana and Patiala editions
Six edition in M.P (Chattisgarh, Bhilai, Jagdalpur, Ratlam)
Launched in Haryana, Shimla and Rajasthan
Launched Hindi financial daily (Business Bhaskar)
Expanded Business Bhaskar with launch of 13 editions
Business Standard Hindi edition of Business Standard
Financial Express Lucknow edition
DNA Ahmedabad and Surat editions
Source: Industry, ICICIdirect.com Research
9 | Page
Hindi and other vernacular publications are more local friendly as
compared to their English peers. Moreover, with rising affluence in
non-metro cites consumption has increased in these regions. To
address the increasing demand in Tier II and III towns, advertisers
have also shifted their focus and increased their budgets for
regional ads. In the recent economic slowdown, national players
were the most impacted while their regional counterparts did not
really face the heat. A major slowdown was seen in national
advertising while regional advertising was more resilient.
Exhibit 17: Strong ad revenue growth of regional companies
50 38 39
40 30
26 In the recent economic
30 19 20 23 slowdown, national players were
15 15
20 8 11 12 the most impacted while their
10 4 6 2 5 4
regional counterparts did not
0
0 really face the heat. A major
-10 -2 -1 slowdown was seen in national
-7 -10 advertising while regional
-20 -13 -13 -18
-30 -20 -19 -19 advertising was more resilient.
-25
-40 -29 -33
-50 -39
-60
Sun TV Jagran Zee News Deccan Zee Tel HT Media TV18 ENIL
Q3FY09 Q4FY09 Q1FY10 Q2FY10
Localisation of content
Catering to the immense appetite for local content in regional
markets, increasing number of dailies have introduced city/region
specific issues. Also, the industry has seen an increasing trend in
variety and frequency of city centric supplements.
The increasing regionalisation of media is primarily driven by:

• Increasing literacy levels in rural markets leading to more
demand for print media
• Higher population growth in Tier II and Tier III cities and
towns
• Higher consumption potential in rural areas
• Low media penetration and relatively untapped
opportunities in smaller towns and rural India
Hindi and vernacular space — a cheaper option

With increasing regional penetration print media companies have
been able to increase their circulation figures. However, gaining a
share in the huge regional advertisement pie has been the primary
driving force behind print companies venturing into newer
territories.
However, media buyers do not rate all media at the same rate. At
the prevailing rates, an English reader is valued at a premium of 9.0x
over Hindi readers and 13.4x over a vernacular reader. This implies
that the Hindi and vernacular space is still much cheaper as
compared to English, leaving ample opportunity for print companies
to expand into these areas. We expect this anomaly to get corrected
as regional media gets its due importance.
10 | Page
Exhibit 18: Premium to English over Hindi and vernacular Traditionally, large metro cities,
which also tend to have high
Per reader revenue (Rs)
Language percentage of English newspaper
Advertising Circulation Total
readership, have commanded
English 2099 728 2827 significant advertising rate
Hindi 233 208 441 premium over non-metro
Vernacular 157 203 360 newspapers. However the trend is
changing and we expect this
Premium of English Over Hindi 9.0x 3.5x 6.4x anomaly to get corrected as
Premium of English over Vernacular 13.4x 3.6x 7.9x regional media gets its due
importance, owing to superior
Source: FICCI Report2009, ICICIdirect.com Research
consumption & higher growth
potential.
Regionalisation – resulting in intense competition
National daily cover prices have traditionally been on the lower side
and they have been unable to recover the cost of production. Print
companies have been dependent on advertising revenue to recover
their cost and improve margins. This is evident from the increase in
colour content in national dailies in a bid to gain more
advertisements. Colour content lends more appeal to advertisement
and provides more value to media buying agencies.
Although regionalisation presents companies with an opportunity to

tap relatively newer markets, a simultaneous focus of major print
companies on these markets has turned them into a red sea. Cover
prices for regional and vernacular newspapers have generally been
on the higher side compared to their English counterparts.
Aggressive competition in the regional print space has let to an
inevitable price war. Many players have dropped average cover
prices to gain market share and improve circulation. Going forward,
we expect the look and feel of regional papers to improve in order
to compete more effectively with English newspapers.
Increasing penetration —next growth driver for circulation

Advertisement revenue is directly linked to economic growth, while
circulation is led by an increase in penetration and literacy rate.
Circulation revenue is primarily a volume game. Companies are
expanding their operations and focusing on Tier II and Tier III cities
to increase circulation in the vernacular or Hindi space. India has the
second largest readership base of 255 million, with 85% reach in
urban markets and a stifled reach of only 33% in rural areas. This
provides enough room for further penetration.
Large players like Times of India, Dainik Bhaskar, HT Media, Jagran

Prakashan and Deccan Chronicle are continuously expanding and
leveraging their brand to enter local space. These companies have
started publishing city centric supplements or have entered the
regional space with vernacular or Hindi editions.
Although we have seen some recent cover price hikes by some

regional players, we believe these are one-off cases. In our view,
they do not indicate at any sustainable trend, going forward. Given
the highly competitive and fragmented nature of the market it would
be difficult for print companies to increase the average cover price.
Circulation revenue is expected to grow from Rs 64.2 crore in FY07E
to Rs 91.7 in FY13E, implying a CAGR of 7.4%.
11 | Page
Exhibit 19: Circulation revenues
FY08-FY13E CAGR of 7.4%
100 91.7 14.0
12.6 85.7
90 12.1
79.5 12.0
80 74.1
69.1
70 64.2 10.0
60.2 Circulation revenue is expected to
53.7
Rs billion
60 47.7 8.0 grow from Rs 64.2 crore in FY07E

50 to Rs 91.7 in FY13E, implying a
%
7.6 7.2 7.8 6.0 CAGR of 7.4%.
40 6.6 7.3 7.0
30 4.0
20
2.0
10
0 0.0
Circulation Revenue Growth
Exhibit 20: Ad-circulation ratio (Standalone for FY09)
100% 6.5%
12.0%
90% 26.9%
80%
70%
60%
50% 93.5%
88.0%
40% 73.1%
30%
20%
10%
0%
Jagran Prakashan HT Media Deccan Chronicle
Ad Revenue Circulation Revenue
Newsprint prices cool off

Newsprint is an indispensable raw material component for the print
media industry accounting for more than 50% of the total operating
expenditure for print companies.
During FY09, the economic slowdown coupled with higher

newsprint prices had played spoilsport for the print media industry.
Both domestic and international newsprint prices were trading at
peak levels. During last year domestic newsprint prices had risen to
Rs 43500/MT from Rs 30000/MT in January 2008 while international
newsprint prices traded at ~$960/MT in November 2008 as
compared to $600/MT(ex landing and freight cost) in November
2007. The price rise was led by increase in crude prices and high
demand of newsprint from China and US due to Olympics and the
US presidential elections.
National players like HT Media and Deccan Chronicle, which are
highly dependent on imported newsprint, suffered a huge dent in
margins during FY09, while companies like Jagran Prakashan that
rely heavily on domestic newsprint were comparatively less
affected.
12 | Page
Exhibit 21: Average newsprint cost of listed companies for FY09
Newsprint Average cost (Rs/MT) Imported as % of total Newsprint
Deccan Chronicle 40,739 90
HT Media 34,334 70
Jagran Prakashan 29,517 20
Exhibit 22: Raw material as percentage of net revenue

Deccan with highest dependence
70% on imported newsprint was the
highest impacted with rising
60%
newsprint prices. Raw material
50% cost as a percentage of revenue
went up from 38.6% in FY08 to
40%
41.5% in FY09 for HT Media, from
30% 26.5% to 52.4% for Deccan
Chronicle and 36.2% to 41.5% for
20%
Jagran Prakashan.
10%
0%
Q1FY08 Q2FY08 Q3FY08 Q4FY08 Q1FY09 Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10
However, newsprint prices have now cooled off and are back to
traditional levels, giving relief to print companies. This is also
reflecting in the raw material cost as a percentage of net revenue for
all three companies. We expect the share of newsprint cost in total
operating cost to fall further as low cost inventory would start
flowing into the system. We expect domestic and landed
international newsprint prices to remain in the range of Rs
~26000/MT and ~$550/MT, respectively, for the rest of FY10E.
Exhibit 23: Newsprint prices
50000 800 Both domestic and international

45000 700 newsprint prices were trading at
40000 600 peak levels. During last year
35000 500 domestic newsprint prices had
Rs/MT
30000 risen to Rs 43500/MT from Rs

$/MT
400
25000 30000/MT in January 2008 while
20000 300 international newsprint prices
15000 200 traded at ~$960/MT in November
10000 100 2008 as compared to $600/MT in
5000 0 November 2007.
Apr-08
Nov-06
Nov-07
Aug-08
Feb-09
Apr-09
Jan-06
Mar-06
May-06
Jul-06
Sep-06
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Jan-08
Jun-08
Oct-08
Dec-08
Jun-09
Aug-09
Oct-09
Domestic (LHS) International (RHS)
Source: CMIE, ICICIdirect.com Research
13 | Page
Diversification to de-risk dynamism core business
Print companies are exploring new opportunities and have ventured
out into related businesses. Many companies have diversified into
newer verticals of media and entertainment like internet, OOH, event
management, radio, cricket (IPL), etc. They are also able to leverage
their existing networks and client relationships.
These businesses are at a nascent stage and together contribute

less than 10% of the topline of all three companies. Although we do
not expect explosive growth in new segments in the near future,
they provide necessary impetus to print companies to compete
more effectively as they enter newer geographies. Print companies
now position themselves as a comprehensive media solution
company rather than a mere newspaper printing company.
Exhibit 24: New initiatives in core and diversification

Print Non-Print
Jagran Prakashan Jagran - Punjab OOH
City Plus Event Management
I-Next Internet Print companies are exploring
SMS new opportunities and have
ventured out into related
HT Media HT Mumbai Radio businesses. Many companies
Hindustan - UP Internet have diversified into newer
Mint Events verticals of media and
Third party printing Mobile Solutions entertainment like internet, OOH,
Shine.com event management, radio, cricket
(IPL), etc
Deccan Chronicle Chennai Media Selling
Bangalore Internet
Retailing
IPL
14 | Page
Risks & concerns
Volatility in raw material prices

Newsprint prices witnessed a highly volatile cycle during FY09. Both
international and domestic newsprint prices peaked at $960/MT and Rs
43500/MT, respectively, in the last fiscal year. On account of this, the raw
material cost for print media companies had significantly shot up,
affecting the profitability. HT Media was among the worst hit as company
consumes a higher proportion of international newsprint.
Raw material cost as a percentage of revenue went up from 38.6% in

FY08 to 41.5% in FY09 for HT Media, from 26.5% to 52.4% for Deccan
Chronicle and 36.2% to 41.5% for Jagran Prakashan. This highlights the
high sensitivity of EBITDA margin of print media companies to newsprint
prices.
Exhibit 25: Operating cost break-up for FY08 Exhibit 26: Operating cost break-up for FY09
18.4 84.2
640.9 684.9
973.1
1,407.9
416.5
332.4
Raw material cost Employee expenses SG&A Other Raw material cost Employee expenses SG&A Other
Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research
Currently, newsprint prices are at the lower end. International prices are
~ $490/MT while domestic prices are ~Rs 25500/MT. We expect prices
to move slightly upwards in the current fiscal. We have estimated
average international prices for companies to be ~ $620/MT (including
landing and freight charges). Any volatile movement on either side would
impact our estimates.
Rising competition can impact circulation revenue

Many national players are entering the regional space to tap new
markets. Recent launches show that companies are also offering
attractive discounts to increase circulation and gain market share. This
may reduce the attractiveness of regional markets and may also lead to
delayed breakeven in new territories.
Failure of new businesses

Print media companies have entered new business segments like out-of-
home (OOH), event management, radio, internet, retail, etc. Most of them
are still in the investment mode. These domains are new and more of an
experiment for these companies. If these new ventures do not pay back
as expected, it could be detrimental to print companies.
15 | Page
Financials
Revenues to grow in double digits

All three print media companies under the ICICIdirect.com universe
coverage are expected to show robust growth in revenues in the
near future. However, the growth would not be evenly and equally
spread for all three companies. Both Jagran Prakashan and Deccan
Chronicle are expected to post double digit growth in FY10E led by
strong demand in the regional advertisement space, while HT Media
would grow at 7.5% (primarily led by growth in Hindi
advertisement) for FY10E. Nevertheless, all three companies are
expected to grow at a double digit CAGR over FY09-12E, backed by
robust growth in advertisement revenue.
We expect Jagran Prakashan to grow at a CAGR of 12.9% over

FY09-12E with increasing spend in the regional ad space. Deccan
Chronicle is expected to post growth of 13.2% over the same
period, led by 11.1% CAGR (FY09-12E) in advertisement revenue
and 32.0% CAGR (FY09-12E) in revenue from IPL. Growth in HT
Media would be relatively slow at 10.0% CAGR (FY09-12E) led by
moderate 8.8% CAGR (FY09-12E) in advertisement revenue and
robust 27.0% CAGR in revenue from radio over FY09-12E.
Exhibit 27: Revenue growth
CAGR % (FY09-12E)
4,600 HT Media - 10.0%
4,100 Deccan Chronicle - 13.2%
Jagran Prakashan - 12.9% 1,185 We expect Jagran Prakashan to
3,600
1,057 grow at a CAGR of 12.9%. Deccan
3,100 930
Rs crore
823 Chronicle is expected to post

2,600 750 1,403 growth of 13.2%. Growth in HT
2,100 1,253
968 1,120 Media would be relatively slow at
1,600 895 10.0% CAGR (FY09-12E)
1,100 1,792
1,347 1,448 1,613
600 1,203
100
FY08 FY09 FY10E FY11E FY12E
EBITDA margin across companies to improve

We expect the margin across players to improve considerably as
the high cost newsprint is cleared out of the system. EBITDA
margins for both HT Media and Jagran Prakashan are expected to
be higher in FY10E than that in both FY08 and FY09. This would be
achieved primarily due to declining newsprint prices and, to an
extent, also due to reduction in SG&A expenses. Deccan Chronicle
is also expected to improve its EBITDA margin considerably over
that in FY09. However, we expect the EBITDA margin to stabilise at
~44% level and not go back to the earlier levels of ~61% in the
near future as the company would expand into new regions and
investment in new businesses would take more time to pay off.
16 | Page
Exhibit 28: EBITDA margin
70.0% 61.4%
60.0%
44.8% We expect the margin across
50.0% 43.9% 44.8% players to improve considerably
as the high cost newsprint is
40.0% 31.0% cleared out of the system.
30.0% 32.8% EBITDA margins for both HT
21.9% 19.0% 29.7% 31.6%
Media and Jagran Prakashan are
20.0%
expected to be higher in FY10E
18.8% 19.7% 20.6%
10.0% 14.1% than that in both FY08 and FY09.
6.5%
0.0%
PAT margin to exhibit a similar trend

The PAT margin is also expected to exhibit a similar trend across
players. With increasing EBITDA margin, the PAT margin is also
expected to expand handsomely for all companies under the
ICICIdirect.com print media universe.
Exhibit 29: PAT margin
40% The PAT margin is also expected

35% 34% to exhibit a similar trend across
28% 27% players. With increasing EBITDA
30% 26% margin, the PAT margin is also
25% expected to expand handsomely
20% for all companies under the
15%
15% 20% ICICIdirect.com print media
8% 18% 19%
universe.
10%
11% 10% 11%
5% 13% 8%
0.1%
0%

[
17 | Page
Valuations
With higher income levels in non metros and consumption shifting to

smaller towns and villages, advertisers have started to focus on non-
metro towns and allocate higher budgets to non-metro advertising.
Consequently, companies with a focus on regional advertisement have
been more resilient to the slowdown. They have been able to post
handsome growth in advertisement revenues, while their national
competitors have witnessed a decline in revenues.
We expect the current trend to continue for a while and players like
Jagran Prakashan, which cater to regional demand, would continue to
command a premium over national players.
We are initiating coverage on HT Media with a REDUCE rating. Deccan

Chronicle with the highest margin among print companies and
additional contribution from IPL franchise is our top pick in the sector
and we are initiating coverage with STRONG BUY rating. We believe,
Jagran Prakashan, being dominant in the regional space would
continue to post robust growth. We reiterate our BUY rating on the
stock.
HT Media (REDUCE); P/E based Target Price: Rs 125

The stock has historically traded at a very high one-year forward P/E
multiple of above 40x. However, with increasing newsprint prices,
hardening competition with launch in new markets, tough operating
conditions and deteriorating margins, the one year forward P/E multiple
for HT Media had fallen to as low as 10x. With dismal ad revenue growth
of -0.5% in H1FY10 for HT Media as compared to 17.2% for Jagran
Prakashan (which is a regional player), we think the higher multiple
compared to Jagran Prakashan is unjustified. Given the slow ad revenue
growth expectation for the near future, we value the stock at a 10%
discount to Jagran Prakashan.
At the CMP of Rs 138, the stock is trading at 26.2x FY10E EPS of Rs 5.3
and 19.9x FY11E EPS of Rs 6.9. We value the stock at 18x (~10%
discount to Jagran Prakashan) FY11E EPS to arrive at a target price of Rs
125. This implies a downside of 9.0% over the current price. We are
initiating coverage on HT Media with a REDUCE rating.
Deccan Chronicle (STRONG BUY); SOTP based Target Price: Rs 186

The stock has historically underperformed its peers and has traded at a
~40-50% discount to Jagran Prakashan. However, with balance sheet
concerns fading, the stock has appreciated and is now trading at ~30%
discount to Jagran Prakashan. Possible stake sale in Deccan Chargers or
divestment of Odyssey Retail could further help unlock value.
We value the company (ex-IPL) at 13x (~35% discount to Jagran

Prakashan) FY11E Ex-IPL EPS of Rs 12.9 to arrive at a value of Rs 168 per
share.
We value IPL at 2.0x franchise fee of Rs 428 crore (25% discount to the
Rajasthan Royals Deal) to arrive at an enterprise value of Rs 941.6 crore
for Deccan Chargers. Adjusting for net debt of Rs 385.5 crore we get the
IPL valuation of Rs 18 per share.
18 | Page
Our SOTP target price of Rs 186/share discounts FY11E consolidated EPS
of Rs 13.2 by 14.1x. This implies an upside of 23.0% over the current
price. We are initiating coverage on Deccan Chronicle with an STRONG
BUY rating.
Jagran Prakashan (BUY); P/E based Target Price: Rs 134

and 17.8x FY11E EPS of Rs 6.7. We value the stock at 20x FY11E EPS to
arrive at a target price of Rs 134. This implies an upside of 12.0% over the
current price. We reiterate our BUY rating on the stock.
Exhibit 30: Historical P/E Multiples

Historical P/E Discount/Premium to Jagran
FY07 FY08 FY09 FY07 FY08 FY09
HT Media 43.0 39.8 1,504.3 43.7% 46.8% 7935.7%
Deccan Chronicle 20.2 13.0 8.1 -32.5% -52.2% -56.7%
Jagran Prakashan 29.9 27.1 18.7 0.0% 0.0% 0.0%
Exhibit 31: One-year forward P/E chart
60
50
40
30
20
10
0
Apr-06
Apr-07
Apr-08
Apr-09
Jul-06
Oct-06
Jan-07
Jul-07
Oct-07
Jan-08
Jul-08
Oct-08
Jan-09
Jul-09
Oct-09
EV/EBITDA based Valuation
HT Media; Target price: Rs 135

On an EV/EBITDA basis, we are assigning a multiple of 10x (~10%
discount to Jagran Prakashan) to the company to arrive at a target price
of Rs 135. This implies downside potential of 2.0% over the current
market price.
Deccan Chronicle; Target price: Rs 175

On an EV/EBITDA basis, we are assigning a multiple of 7.2x (~35%
of Rs 175. This implies an upside potential of 15.0% over the current
market price.
Jagran Prakashan; Target price: Rs 137

On an EV/EBITDA basis, we are assigning a multiple of 11.0x to the
company to arrive at a target price of Rs 137. This implies an upside
potential of 15.0% over the current market price.
19 | Page
Exhibit 32: One year forward EV/EBITDA chart
60
50
40
30
20
10
0
Apr-06
Oct-06
Oct-07
Oct-09
Jul-06
Jan-07
Apr-07
Jul-07
Jan-08
Apr-08
Oct-08
Jul-08
Jan-09
Apr-09
Jul-09
Exhibit 33: Comparative valuations

Year End Mar 31 HT Media Deccan Chronicle Jagran Prakashan
Current Price (Rs) 138 152 119
Rating REDUCE STRONG BUY BUY
Price target 125 186 134
Implied upside (%) -9 23 12
Valuation
FY09 P/E 3,566.3 26.1 39.2
FY10E P/E 26.2 14.3 21.5
FY11E P/E 19.9 14.1 17.8
FY09 EV/EBITDA 39.0 11.9 22.3

FY10E EV/EBITDA 12.7 6.5 12.0
FY11E EV/EBITDA 10.7 5.5 9.4
CAGR (%) Growth rates (FY09-12E)

Revenue 10.0 13.2 12.9
EBITDA 61.3 28.0 35.4
PAT 510.7 39.2 37.4
EPS 510.7 39.2 37.4
Profitability
EBITDA Margin (%), FY10E 18.8 44.8 29.7
EBITDA Margin (%), FY11E 19.7 43.9 31.6
% Change in Margin 5.0 -2.0 6.6
20 | Page
November 18, 2009 | Media
Initiating Coverage Current Price Target Price

Rs 138 Rs 125
Potential upside Time Frame
HT Media (HTMED) -9% 12 months
Near term pain for ad revenue growth… REDUCE

HT Media has transformed itself into an integrated media house with
presence in English, Hindi and financial dailies and radio. Though strong
in its home turfs, it is facing stiff competition in new territories The ad Analysts’ Name
revenue growth has been drab in H1FY10 and may take some more time Naval Seth
to pick up. Owing to these concerns, near term financial performance is naval.seth@icicisecurities.com
expected to be dull. We expect the top line to grow at 10.0% CAGR Karan Mittal
(FY09-12E) and PAT at a 510% CAGR (FY09-12E) primarily due to small karan.mittal@icicisecurities.com
base in FY09, where company reported a PAT of only Rs 0.9 crores.
Cognizant of near term dullness in profitability and recent run up in the
stock, we are initiating coverage on HT Media with REDUCE rating.
Sales & EPS trend
Regional advertisement – the next growth driver 2000 10
Ad contributes about 84% of the top line of HT Media. Out of the total 8
1500
Rs crore
print ad revenue of Rs 1129.9 crore in FY09, regional or Hindi ad 6
1000
Rs
contributed ~Rs 247 crores. Total ad revenue has grown at a 13.8% 4
CAGR (FY07 – 09), while the Hindi ad has grown at ~25.3% CAGR. 500 2
Led by increasing literacy rate and rising demand of print medium in 0 0
Tier II and III cites and town, regional ad is set to grow unabated.
Growing at 20.7% CAGR (FY09-12E), we expect the Hindi ad to
Sales (LHS) EPS (RHS)
spearhead HT Media’s print revenue growth from Rs 1129.9 crore in
FY09 to Rs 1456.1 crore in FY12E, implying a 8.8% CAGR. We expect Stock Metrics
Hindi ad share in total ad revenue to increase to 30% by FY12E. Bloomberg Code HTML.IN
Hindustan — Going strong Reuters Code HTML.BO
Face value (Rs) 2
The company has strong presence in major Hindi markets and plans
Promoters Holding 68.8%
to enter Rajasthan and MP at a later date. Hindustan has 15 editions
Market Cap (Rs cr) 3,230.0
spread over Bihar, Jharkhand, UP, Delhi and Punjab. It enjoys a 52 week H/L 143 / 36
numero uno position in Bihar and Jharkhand, while it is a strong No.2 Sensex 16974
in the Delhi region. With regional ad CAGR of 20.7% (FY09-12E) and Average volumes 44,460
increasing circulation on back of entry into new territories, Hindustan
is set to outpace the growth in English daily. Comparative return metrics
Valuations 1M 3M 6M 12M
At the CMP of Rs 138, the stock is trading at 26.2x FY11E EPS of Rs 6.9. HT Media 10.0 33.5 110.6 130.6
Deccan Chronicle 2.8 54.7 173.2 254.1
Given negative ad growth in H1FY10 and bleak outlook for the near future,
Jagran Prakashan 7.9 20.0 123.4 146.4
we value the stock at 18x (~10% discount to Jagran Prakashan) FY11E EPS.
Our target price of Rs 125 implies a downside of 9.0% over the current Price Trend
price. We initiate coverage on HT Media with a REDUCE rating.
300
Exhibit 34: Key Financials 250
(Year-end March) FY07 FY08 FY09 FY10E FY11E FY12E 200
Net Profit (Rs crore) 97.0 101.3 0.9 123.3 162.5 206.3 150
Shares in issue (in crore) 23.4 23.4 23.4 23.4 23.4 23.4 100
EPS (Rs) 4.1 4.3 0.0 5.3 6.9 8.8 50
% Growth 4.4 (99.1) NA 31.8 26.9 0
PER (x) 33.3 31.9 3,566.3 26.2 19.9 15.7
Apr-07
Oct-07
Oct-08
Oct-09
Jul-07
Jan-08
Apr-08
Jul-08
Jan-09
Apr-09
Jul-09
Price / Book (x) 4.2 3.8 3.8 3.3 2.8 2.4

EV/EBITDA (x) 18.9 19.2 39.0 12.7 10.7 8.5
Close price
RoE (%) 12.7 11.9 0.1 12.7 14.3 15.4
RoCE (%) 13.4 10.5 1.6 13.9 15.7 18.4
Source: ICICIdirect Research
zz
21 | Page
Shareholding pattern (Q2FY10)
Company Background
Shareholder % holding
Promoters 68.8
HT Media Ltd is one of India’s foremost media companies and home to Institutional investors 26.1
three leading newspapers in the country in English, Hindi and business Other investors 2.2
segments –Hindustan Times (English daily), Hindustan (Hindi daily) and General public 2.9
Mint (business daily). Hindustan Times was started in 1924 and has more
than 80-year history as one of India’s leading newspapers.
Promoter & Institutional holding trend (%)
The company also has four FM radio stations Fever 104 in Delhi, Mumbai,
Bengaluru and Kolkata. It has also made a foray into the internet space 69% 68% 69% 69%
80%
through its subsidiary Firefly e-Ventures Ltd and launched a new job
portal www.Shine.com. These are in addition to the existing websites 60%
livemint.com and hindustantimes.com. 40% 26% 26% 29% 29%
20%
In addition, the company has entered into a 51:49 joint venture (JV) with 0%
German media group Hubert Burda to leverage HT Media's expertise in
printing and publishing and capture opportunities in the booming high-
end magazine and catalogue printing space in India and the Asia-Pacific
Promoter Holding Institutional Holding
region. HT Media also publishes two Hindi magazines Nandan and
Kadambini.
Exhibit 35: About HT Media
HT MEDIA
99.27% 75.0% 51:49 JV 100% 100% 100%
HT MEDIA Ventures HT Music & DHT Digital Media Firefly e-Ventures HT Mobile Solutions
HT Burda Media Ltd
Entertainment Holdings Ltd Ltd Ltd
Exhibit 36: Achievements

Year Achievements
1924 The company inaugurated its flagship paper Hindustan Times.
1936 The Hindi daily Hindustan was launched, which remains the dominant newspaper in the core Hindi belt of
northern India.
1960 The Hindi literary magazine Kadambini was launched.
2004 HT Media Ltd was listed as a public company and attracted external funding
2005 Hindustan Times successfully entered the Mumbai market with a refreshingly new product and content mix.
2006 Fever 104 FM is launched, in technical collaboration with the Virgin Group. Hindustan was re-launched re-
establishing the company's prominent presence in the regional news space.
2007 Mint, the business paper in partnership with the Wall Street Journal was launched in Delhi and Mumbai. In the
internet space, Hindustantimes.com was re-launched and Livemint.com was introduced.
2008 Firefly e-Ventures, an HT Media Company launched its first portal for job seekers, Shine.com; and a social
networking website Desimartini.com. HT Media also entered the Mobile space with 54242 in partnership with
velti.com
2009 Entered into 51:49 joint venture with Bruda International for third party printing.
22 | Page
Exhibit 37: HT Media - Present in major English and Hindi markets
Exhibit 38: Readership of editions (in ‘000s)

Areas HT Hindustan Mint
Delhi 2202 1414 146
Bihar 75 4336 -
UP/Uttrakhand 246 2314 -
Jharkhand 58 1253 -
Mumbai 548 - 26
Kolkata 31 4 15
Bangaluru - - 15
Chennai - - 15
Total India readership 3494 9303 220
Source: Company, IRS 2009 R1, ICICIdirect.com Research
Exhibit 39: Revenue break-up for FY09 (Rs crore)
Others*, 30.1
Radio, 29.0
Circulation, 154.0
Advertisement
Revenue, 1,133.5
Advertisement Revenue Circulation Radio Others*
* others include revenue from job work, sale of waste paper

23 | Page
Investment rationale
Regional advertisement — the next growth driver

Advertisement contributes about 84% to the total topline of the
company. Out of the total print advertisement revenue of Rs 1129.9
crore in FY09, regional or Hindi advertisement contributed about
~Rs 247 crore. Total print advertisement has grown at a CAGR of
13.8% over FY07–09, while Hindi advertisement has grown at a
CAGR of 25.3% over the same period.
Also, the share of Hindi ads is constantly increasing. It has increased

from 18% in FY07 to about 22% in FY09 signifying reducing
dependence on the English segment. The company’s focus on
expansion in the Hindi belt would further aid the growth in regional
ad revenue. Hindustan has recently launched a Bareilly edition,
further consolidating its position in the UP and Uttarakhand region.
Led by increasing literacy rate and rising demand of print medium in

Tier II and III cites and town, regional ad is set to grow unabated.
Growing at 20.7% CAGR (FY09-12E), we expect the Hindi ad to
spearhead HT Media’s print revenue growth from Rs 1129.9 crore in
FY09 to Rs 1456.1 crore in FY12E, implying a 8.8% CAGR. We
expect Hindi ad share in total ad revenue to increase to 30% by
FY12E.
Exhibit 40: Hindi-English ad ratio
100%
18% 20% 22% 27% 29% 30%
80%
We expect Hindi ad share in total
60% ad revenue to increase to 30% by
FY12E.
40% 82% 80% 78% 73% 71% 70%
20%
0%
English Hindi
Hindustan — Going strong

Hindustan, the Hindi news daily of the company, is the third largest
read newspaper in the country. It has a strong leadership position in
Bihar and Jharkhand, with a huge gap between it and the nearest
competitor.
24 | Page
Exhibit 41: Hindustan - Present in major Hindi markets
Exhibit 42: Share of Hindi in print ad revenue

Print ad market of Rs 10800 crore (FY08) Hindi ad market - Rs 2000 crore
Magazines
Regional Daily UP & Uttrakhand 31%
7%
23%
Rajasthan 17%
Business Daily
6%
Hindi Daily19%
Punjab 10%
Others 5%
Bihar & Jharkhand 10%

English Daily Delhi 10% M.P. 17%
45%
25 | Page
Exhibit 43: Hindi ad revenue growth
500 35.0%
29% 26% 30.0%

400 we expect the Hindi ad to
22% 25.0% spearhead HT Media’s print
20%
300 16% revenue growth from Rs 1129.9
Rs crore
20.0%
crore in FY09 to Rs 1456.1 crore
200 15.0% in FY12E, implying a 8.8% CAGR.
374
312 434 10.0%
247
100 203
157 5.0%
0 0.0%
Hindi ad revenue Growth %
Hindustan has 15 editions spread over Bihar, Jharkhand, UP, Delhi

and Punjab. It enjoys the numero uno position in Bihar and
Jharkhand, while it is a strong No.2 in the Delhi region. With the
recent launch of the Bareilly edition and setting up of printing facility
there, the company has further consolidated its position in the UP
region. According to the latest IRS survey, total readership of
Hindustan stands at 93.0 lakh. Out of top four Hindi dailies,
Hindustan is the only newspaper that has managed to increase its
readership in all the last four rounds of IRS.
Exhibit 44: Average issue readership

2007 R2 2008 R1 2008 R2 2009 R1 Out of top four Hindi dailies,
Dainik Jagran 165.0 163.8 162.9 160.7 Hindustan is the only newspaper
that has managed to increase its
Dainik Bhaskar 128.2 128.3 130.0 128.8
readership in all the last four
Hindustan 85.5 87.5 92.1 93.0
rounds of IRS.
Amar Ujala 80.8 80.9 80.7 81.8
In lacs
Source: IRS R12009, ICICIdirect.com Research
The company has increased its focus on the Uttar Pradesh region.
Out of the total Hindi print advertisement market of approximately
Rs 2000 crore, UP is expected to have a share of about Rs 700 crore.
The company has invested heavily in building its brand in this region
and is expecting to reduce the gap between itself and the second
most read Hindi newspaper Amar Ujala in UP. Long-term plans of
the management include entry into Rajasthan and Madhya Pradesh
in the future.
The Hindi newspaper market offers huge opportunities for growth.

This is evident from the recent strategy shift wherein the
management has decided to de-merge the operations of Hindustan
into a separate subsidiary. This would enable the company to
increase its focus on the higher growth Hindi newspaper segment.
We do not expect the English newspaper industry to increase

significantly in volume terms. Some companies would fare better
than others led by differentiated marketing strategies. Nevertheless,
it would be more of a zero sum game in terms of volume growth.
Major growth in this segment would be a result of price increase.
However, in the Hindi newspaper segment, a large market is still
26 | Page
untapped. With increasing literacy rates and improving purchasing
power we believe the overall pie of the Hindi newspaper reading
population is set to grow at a fast pace.
HT Media offers better quality of news and has a superior look and
feel compared to its competitors. It is set to benefit from both
increasing industry size of Hindi newspaper and also from the higher
demand of quality content with increasing purchasing capacity in
small towns and villages.
Exhibit 45: Average readership in Bihar Exhibit 46: Average readership in Jharkhand
60 14 12.2 12.5
48.7 11.1 11.6
50 45.5 45.6 12 10.9
43.8 43.4 10.1 9.7 9.8
10 9.1 9.2
40 8.0 8.5 8.7 7.9
7.9
In Lacs
In Lacs
26.0 27.6 25.1
30 24.4 24.1
6
20 4
10 5.3 5.0 4.2 3.7 2.8 2
0 0
2007 R1 2007 R2 2008 R1 2008 R2 2009 R1 2007 R1 2007 R2 2008 R1 2008 R2 2009 R1
Hindustan Dainik Jagran Amar Ujala Hindustan Prabhat Khabar Dainik Jagran
Source: IRS R12009, ICICIdirect.com Research Source: C IRS R12009, ICICIdirect.com Research
Exhibit 47: Average readership in Delhi Exhibit 48: Average readership in UP
20 120
17.0 17.3 16.6 99.7
18 15.7 94.2 91.6 91.9 91.4
15.4 100
16
14 12.6 80
11.0 64.5 60.8 61.4 61.7 62.8
12
In Lacs
In Lacs
9.7 9.2 9.5

10 8.4 8.6 60
7.9 7.3 7.7
8
40
6 22.3 20.4 21.5 21.9 23.1
4 20
2
0 0
2007 R1 2007 R2 2008 R1 2008 R2 2009 R1 2007 R1 2007 R2 2008 R1 2008 R2 2009 R1
Navbharat Times Hindustan Prabhat Khabar Dainik Jagran Amar Ujala Hindustan
Source: IRS R12009, ICICIdirect.com Research Source: IRS R12009, ICICIdirect.com Research
Hindustan Times – second largest English daily

HT Media’s flagship newspaper Hindustan Times is the second
largest English daily in the country after The Times of India. The
company has a widespread presence in major parts of the country.
It has a significant presence in Delhi, Bihar, Kolkata and certain parts
of Uttar Pradesh. The company has also extended its presence in
several areas of Punjab, Haryana and Mumbai in the recent past. It
has also revamped its offerings in the English segment with various
new supplements.
27 | Page
The company now has a presence in both leading markets of Delhi
and Mumbai, which together account for more than 57% of the
country’s print advertisement revenue. These two markets
contribute about 60% of the total English revenue of HT Media.
Exhibit 49: Break-up of total print ad revenue
Business Daily, 6%
57% - Contributed by Delhi &
Magazines, 7% Mumbai
43%- Other markets
Hindi Daily, 19% English Daily, 45%
Regional Daily, 23%
Exhibit 50: Top 5 most read English newspapers (In 000’s)

Paper 2008 R1 2008 R2 2009 R1
The Times of India 6,790 6,710 6866
Hindustan Times 3,276 3,522 3494
Hindu 2,244 2,121 2235
Deccan Chronicle 1,225 1,152 1093
Telegraph 1,009 1,018 1083
Exhibit 51: English ad revenue growth
1,200 16.0% English ad revenue de-grew 7.8%

13% 14.0% in H1FY10 due to shrinking ad
1,000 12.0%
10% budgets of the national level
800 8% 10.0% advertisers led by slowdown in
9% 8.0% the economic activity, we expect
Rs crore
600 6.0% English ad to decline by ~2% in

929 1,022 4.0% FY10E to Rs 860.3 crore. With
400 811 882 860
716 2.0% negative growth expected in
0.0% FY10E, we expect this segment to
200
-2.0% post a CAGR of 5.0% over FY09-
-2%
0 -4.0% 12E to Rs 1022.1 crore.
English ad revenue Growth %
28 | Page
English ad revenue grew at 11.0% CAGR (FY07-09) to Rs ~882.2
crore. Although the company has a strong presence in Delhi and is
consolidating in markets of Punjab and Mumbai, we do not expect
English segment to grow at a rapid pace in the near future. With a de
growth of 7.8% in H1FY10 due to shrinking ad budgets of the
national level advertisers led by slowdown in the economic activity,
We expect English ad to decline by ~2% in FY10E to Rs 860.3 crore.
With negative growth expected in FY10E, we expect this segment to
post a CAGR of 5.0% over FY09-12E to Rs 1022.1 crore.
Delhi – Sustaining market share, albeit intense competition persists

Hindustan Times has strengthened its position and consolidated as
the most read English daily in Delhi. It has surpassed its closest
competitor The Times of India (TOI) in two consecutive rounds of
IRS. Out of Hindustan Times’ total readership of 63.4 lakh, HT Delhi
accounts for ~32% (19.9 lakh) of the total readership.
Although the company has surpassed TOI in the recent past, it is

worth noting that the superior performance is not attributed to the
strong show by HT as much as it is to the below-par performance by
TOI. TOI is still a close second with an average issue readership of
19.4 lakh. We expect the company to continue its strong
performance in the Delhi region, while TOI would continue to be a
tough competitor.
Exhibit 52: Average readership in Delhi
2200
2134
2150 2113
2100
2050 2011 Hindustan Times has
1991 strengthened its position and
2000 1954
In 000 's
1935 consolidated as the most read

1950 1907 English daily in Delhi. It has
1900 1862 surpassed its closest competitor
1850 The Times of India (TOI) in two
1800 consecutive rounds of IRS.
1750
1700
2007 R2 2008R1 2008R2 2009R1
HT TOI
Gaining market share in Mumbai

HT Media launched its flagship newspaper Hindustan Times in
Mumbai in 2005. Back then, TOI had a complete monopoly in the
English segment and enjoyed higher cover price and premium
advertisement rates. However, with subscription based discount
schemes, continuous improvement in product offerings and strong
brand positioning, HT has achieved a strong No.4 position with
average readership of 5.48 lakh and a market share of 20% in
Mumbai. The company has been able to continuously increase its
readership in the city while that of TOI is on a decline.
Moreover, given its presence in both Delhi and Mumbai, Hindustan

Times has been able to garner a better advertisement share than its
closest competitor DNA in Mumbai. We expect the Mumbai
business to strengthen further and achieve operational break-even
29 | Page
by FY12E. The delayed break-even can be attributed to substantial
discounts offered on cover price and advertisement rates, coupled
with the economic slowdown in the last fiscal year.
Exhibit 53: Average issue readership in Mumbai

-3%
1800
1571 1520
1600 1533
1400 17%
1200 13% Hindustan Times is gaining
In 000 's
1000 44% -11% 873 865 traction in Mumbai. AIR for the
705 737 Mumbai edition grew ~44% over
800 622 673
526 548 538 480 479 the last two rounds of IRS. The
600 381 company has re launched its
400 paper in Mumbai in July ’09,
200 which could further improve
0 readership of HT in Mumbai.
HT Media TOI DNA Mid-Day Mumbai Mirror
2008R1 2008R2 2009R1
Mint — Gaining momentum

HT Media launched a business daily Mint in association with The
Wall Street Journal in February 2007. The company entered the
highly competitive business paper market. According to the
management, within a short period of its launch, Mint has grown to
become the No.2 business daily in the key cities of Delhi, Mumbai
and Bengaluru. Strategies adopted by the company in terms of low
introductory pricing, clean design and printing quality and
contextual content environment have yielded desired results. The
company has witnessed high growth in readership of Mint. It has
also recently launched Mint in Bengaluru, Kolkata and Chennai.
Although Mint has made a quantum leap in average readership

since the time it was launched in 2007, it would continue to face
tough competition from The Economic Times and DNA. Both these
dailies are far ahead of it in terms of readership in IRS 2009 R1.
Mint reported a topline of ~Rs 35 crore in FY09. We expect Mint to

break-even by the end of FY11E.
Exhibit 54: Average issue readership (In lacs) Although Mint has made a quantum
leap in average readership since the
2008R1 2008R2 2009 R1
time it was launched in 2007, it would
Economic Times 7.43 7.52 7.83 continue to face tough competition
Mint 0.51 1.39 1.75 from The Economic Times and DNA.
Hindu Business Line 0.91 0.77 0.77 Both these dailies are far ahead of it in
terms of readership in IRS 2009 R1.
30 | Page
Exhibit 55: Business daily - ad revenue (~Rs 600 crore)
Others , 22%
Company posted revenue of Rs 35

crore from Mint in FY09. Mint has
been gaining momentum and is
expected break-even at the end of
Mint , 5% FY11E. Mint commands ~5% of the
total business ad market of ~Rs 600
crore.
ET , 60%
BS, 13%
Circulation to inch up going forward

Circulation revenue has grown from Rs 139.7 crore in FY07 to Rs
153.1 crore in FY09 registering a two year CAGR of 4.7%. This was
achieved primarily on back of launch of both Hindi and English daily
in new territories and launch of business daily Mint.
However, it is worth noting that the number of copies sold per year
has increased from 86.4 crore in FY07 to 101.1 crore in FY09,
registering a two year CAGR of 8.2%. This highlights the aggressive
pricing policy adopted by the company to gain inroads in the new
territories and increase the readership of its publications.
However, going forward we expect the company to increase cover

price in the markets where it has gained market share resulting in
12.5% CAGR (FY09-12E) in circulation revenue to Rs 217.8 crore led
by 6.2% CAGR (FY09-12E) in number of copies sold per year to
121.0 crore copies. Major circulation increase would be seen in
Hindustan and Mint, while Hindustan Times is expected to register a
nominal growth.
Exhibit 56: Circulation to inch up going forward
250 25%
22.9%
We expect the company to
200 20%
increase cover price in the
markets where it has consolidated
150 15% market share, resulting in 12.5%
218 CAGR (FY09-12E) in circulation
100 188 205 10% revenue to Rs 217.6 crore led by
9.2% 121
140 149 6.6% 153 6.2% CAGR (FY09-12E).
50 96 101 106 114 5%
86 6.0%
2.1% 2.8%
0 0%
Circulation revenue (Rs crore) No. of copies sold (RHS) Revnue growth (%)
31 | Page
Radio
HT Media forayed into the radio business in 2006 in collaboration
with UK-based Virgin Radio under the brand name Fever 104. The
radio business was earlier operated through its 75% subsidiary, HT
Music and Entertainment. It was recently demerged and is now
operated under the parent company (HT Media).
The company operates 4 radio
Unlike the other major players, HT Media acquired licenses for only stations under brand name Fever
the four major cities of Delhi, Mumbai, Bengaluru and Kolkata, which 104 and enjoys no.2 position in 3
of the areas where it operates.
together account for more than 50% of the radio ad market.
We expect this segment to report
Consequently, the company has performed much better than its
total ad revenue of ~Rs 39.7
national counterparts. Fever 104 is expected to break even by the crore for FY10E.
end of FY10E, while other players like Sun TV, which operates about
44 radio stations all over India, is far from breaking even.
HT Media paid a license fee of Rs 75 crore, which would be equally

written off over a period of 10 years. It enjoys No.2 position in Delhi,
while it has 7% market share in Mumbai and Bengaluru. It has a 9%
share in Kolkata.
Exhibit 57: Market share in Mumbai Exhibit 58: Market share in Delhi
Radio City, Others, 13% Radio Mirchi,

Others, 9% 18% 26%
Radio One, 7% Big FM, 7%
Fever FM, 7%
Radio One, 8%
Big FM, 16%
AIR FM2-Gold,
11% Red FM, 9% AIR FM2-Gold,
16%
Radio Mirchi, Red FM, 17% Fever FM, 11%
Radio City,
15% 10%
Source: RAM, ICICIdirect.com Research Source: RAM, ICICIdirect.com Research
Exhibit 59: Market share in Bengaluru Exhibit 60: Market share in Kolkata
Others, 11%
Big FM, 27% Radio Mirchi,
Fever FM, 7% Others, 13%
20%
Meow FM, 7%
Radio City, 8%
Red FM, 9%
Radio One, 8%
Big FM, 19%
S FM, 10% Radio Mirchi, Amaar FM, 9%
19%
AIR FM1-
Fever FM, 9% Friends FM,
Rainbow, 10%
14%
Source: RAM, ICICIdirect.com Research Source: RAM, ICICIdirect.com Research
32 | Page
During the last fiscal, the radio business reported 54% YoY growth
in airtime sales. We expect the company to report ~36.9% YoY
growth in the current fiscal. Radio advertisement revenue for
H1FY10 stood at Rs 18.6 crore. We expect the radio to report total
ad revenue of ~Rs 39.7 crore for FY10E. On the EBIT level, it
reported a loss of ~Rs 4.9 crore in H1FY10.
Online ventures – Still in investment mode

The company views the online segment as a high growth potential
segment and has invested heavily into various online ventures. It
has re-launched its portals www.hindustantimes.com and
www.livemint.com in FY08 with significant improvement in features
and functionality. These news portals continue to make strides in the
online news segment with 25 million page views per month for
hindustantimes.com and 8 million page views per month for
livemint.com.
Shine.Com, a complete career portal, has earned the distinction of

registering 2.2 million candidates within its first year of operations. It
has gained higher acceptability due to its patented matching
technology combined with world class design, salary benchmarking,
privacy, anonymity protection and other career related content and
tools that make this website unique in India.
The company also owns the social networking site DesiMartini.com,

which is operated through its newly formed wholly-owned
subsidiary Firefly e-Ventures Ltd.
These segments are still in the nascent stage and would remain in
investment mode in the near future.
Exhibit 61: Unique Visitors on English news online portals
Source: Statsaholic.com, ICICIdirect.com Research
33 | Page
Exhibit 62: Unique Visitors on English business news online portal
The news portals continue to

make strides in the online news
segment with 25 million page
views per month for
hindustantimes.com and 8 million
page views per month for
livemint.com.
Source: Statsaholic.com, ICICIdirect.com Research
JV – Yet to commence operations

The company has entered in 51:49 joint venture with Germany-
based media group Hubert Burda to set up third party publishing
operations. This JV has been formed to cater to the booming high-
end magazine and catalogue printing space in India and the Asia-
Pacific region. The operations under this JV would commence from
Q3FY10E onwards. We have not included revenue from this JV in
our valuations.
34 | Page
Risks & concerns
In addition to the industry wide risk discussed above, HT Media also faces
the following concerns:
High competition in English news segment

The company has been able to maintain its position as the most read
English newspaper in the NCR in the last two IRS rounds and is also
gaining market share in the newly launched Mumbai market. However,
TOI is a close second in Delhi and has a huge lead in the Mumbai market.
HT Media may have to reduce its cover price and advertisement rates in
case TOI resorts to aggressive marketing to regain its lost market share.
This would be detrimental to the operating performance of the company.
Expansion in UP region
The company has a stronghold in the Jharkhand and Bihar region and
holds the No.2 position in Delhi. However, it is facing tough competition
from both Dainik Jagran and Amar Ujala in UP. Although the company is
aggressive and has gained commendable market share in UP, gaining
further inroads may prove difficult. This would delay the break-even in the
UP market.
35 | Page
Financials
Major revenue growth beyond FY10E

Topline for the company grew by 15.7% in FY08 and 11.9% in FY09
to Rs 1346.6 crore, implying a healthy CAGR of 13.8% during FY07-
FY09. The company exhibited laggard growth in H2FY09 owing to
low ad revenue, affected by the slowdown in the economy and the
global financial crises and discount led circulation strategy in new
territories.
The company has still not recovered fully from the economic
slowdown, with revenue growing only 3.7% in H1FY10 as compared
to 18.5% in H1FY09 and 5.5% in H2FY09. Nonetheless, with the
improving economic scenario, companies with a regional focus
have posted good revenue growth. We expect even national players
to get back to their earlier trajectory post FY10E. In FY10E, we
expect the company to register modest revenue growth of
7.5%YoY. Major increment in revenue would be visible during
FY11E, driven by increasing penetration and higher ad revenue
growth, which we expect will grow at ~11.3% YoY. We expect the
company to report revenue CAGR (FY09-FY12E) of 10.0% to Rs
1792.0 crore in FY12E, led by 20.7% CAGR in Hindi ad revenue and
12.5% CAGR in circulation revenue over the same period.

FY09-12E CAGR of 10.0%
2000 15.7% 1792 18%
1800 1613 16%
1600 1448 We expect the company to report
1347 14%
1203 revenue CAGR (FY09-FY12E) of
1400 12% 10.0% to Rs 1792.0 crore in
1200
Rs Crore
11.4% 10% FY12E, led by 20.7% CAGR in

1000 11.9% 11.1%
8% Hindi ad revenue and 12.5%
800 CAGR in circulation revenue over
600 7.5% 6%
the same period.
400 4%
200 2%
0 0%
FY08 FY09 FY10 FY11 FY12
Advertisement Revenue Circulation Radio Others* Growth %
*Others include Job work, sale of waste paper, revenue from JV and other operating income
Exhibit 64: Revenue break-up (Rs crore)

FY07 FY08 FY09 FY10E FY11E FY12E CAGR% (09-12E)
Advertisements 874.9 1,012.9 1,133.5 1,173.1 1,305.3 1,459.1 8.8
Airtime Sales 1.9 18.8 29.0 39.7 48.9 59.4 27.0
Sale of publications 136.2 149.9 154.0 189.0 206.5 219.0 12.5
Others* 26.6 21.6 30.1 46.2 52.7 54.9 22.1
Total 1,039.7 1,203.3 1,346.6 1,448.0 1,613.5 1,792.5 10.0
* Job work, Sale of waste paper, Revenue from JV and other operating income
36 | Page
Margins back to higher levels
The economic crises led declining revenue growth coupled with rise
in newsprint prices dented the margins of print media companies
during FY09. Both domestic and international newsprint prices have
peaked in FY09 due to rise in crude prices and increased demand
from US and China during Q2FY09. The major impact was, however,
felt in H2FY09 as companies generally stock about three months of
raw material.
About 70% of HT Media’s raw material consumption is met by

imported newsprint. Average newsprint price for the company
during FY09 stood at Rs 34,334/MT as compared to Rs 27,598/MT in
FY08. Newsprint peaked in Q2FY09 and started cooling off at the
end of Q3FY09, resulting in dented margins in the last three quarters
of FY09.
The high cost inventory has been cleared out of the system. On a
standalone basis, the company reported EBITDA margin of 19.7% in
H1FY10 as compared to 16.1% in H1FY09 and 13.3% in H2FY09. We
have estimated the average newsprint cost at Rs 30,931 for FY10E.
We expect the company to report EBITDA margin of 18.8% at the
end of FY10E.
Exhibit 65: Newsprint assumptions

Copies sold / day (mn) 2.4 2.6 2.9 2.9 3.1 3.3
% increase 11.4 11.5 0.3 7.5 6.0
About 70% of HT Media’s raw
Pages/copy 32 33 31 32 33 33 material consumption is met by
Total newsprint (MT) 130,927 153,447 147,109 141,767 149,675 157,085 imported newsprint. Average
% increase 10.3 17.2 -4.1 -3.6 5.6 5.0 newsprint price for the company
Blended rate (Rs/MT) 31,045 27,598 34,334 30,931 30,564 31,396 during FY09 stood at Rs
% increase 14.3 -11.1 24.4 -9.9 -1.2 2.7 34,334/MT as compared to Rs
Newsprint cost (Rs Cr) 407 424 505 439 457 493 27,598/MT in FY08.
Ink, store & spare (Rs Cr) 26 32 35 38 42 45
Total Raw Material (Rs Cr) 432 456 540 476 500 539
% increase 26.6 5.5 18.5 -11.8 4.9 7.7
Exhibit 66: EBITDA and PAT margin
24% 20.6%
19.7%
21% 18.8%
18% We have estimated the average
14.1% newsprint cost at Rs 30,931 for
15% FY10E. We expect the company
12% to report EBITDA margin of 18.8%
9% 6.5% at the end of FY10E.
11.3%
9.9%
6% 8.1% 8.4%
3% 0.1%
0%
EBITDA Margins PAT Margins
37 | Page
PAT margin for FY09 stood at 0.1%, as compared to 8.1% in FY08.
Lower revenue growth coupled with higher interest cost and lower
other income dented the PAT margin. On the back of higher revenue
growth, better operating performance and lower interest cost, we
expect the company to report PAT margin of 8.4% for FY10E. We
expect lower interest expense on account of loan repayment to help
PAT margin expand to 11.3% in FY12E.
Return ratios
RoCE during FY09 reached the lowest levels of ~0.1%, induced by
high cost inventory led dismal operating performance. With
improvement in macroeconomic conditions and increasing visibility,
we expect RoE and RoCE of 13.9% and 12.7%, respectively, for
FY10E. Going forward, return ratios are expected to improve further.
Exhibit 67: RoE and RoCE
21% 18.4% RoCE during FY09 reached the

18% lowest levels of ~0.1%, induced
15.7%
13.9% by high cost inventory led dismal
15% operating performance. With
10.5% 15.4% improvement in macroeconomic
12% 14.3%
12.7% conditions and increasing
9% visibility, we expect RoE and
11.9%
RoCE of 13.9% and 12.7%,
6%
0.1% respectively, for FY10E.
3%
0% 1.6%
RoE RoCE
38 | Page
Valuations
The stock has historically traded at very high one year forward P/E
multiples of above 40x. However, with increasing newsprint prices,
hardening competition with launches in new markets, tough operating
conditions and deteriorating margin, the one year forward P/E multiple for
HT Media had fallen to as low as 10x. With dismal ad revenue growth of -
0.5% in H1FY10 for HT Media as compared to 17.2% for Jagran
Prakashan (which is a regional player), we think such high multiples are
unjustified. Given the slow ad revenue growth expectation for the near
future, we value the stock at a 10% discount to Jagran Prakashan.
The EPS in FY09 had fallen to Rs 0.04 due to exceptionally high newsprint
prices and low revenue growth owing to slowdown in the advertisement
industry. However, going forward, we expect the margin to improve since
the high cost inventory has been cleared out of the system. We also
expect growth of 8.9% (CAGR of FY09-12E) in consolidated
advertisement revenue resulting in overall revenue growth of 10.0% over
the same period. The EPS is expected to grow to Rs 8.8 by FY12E.
P/E based valuation of Rs 125/ share
and 19.9x FY11E EPS of Rs 6.9. We value the stock at 18x (~10%
discount to Jagran Prakashan) FY11E EPS to arrive at a target price of Rs
125. This implies a downside of 9.4% over the current price. We are
initiating coverage on HT Media with a REDUCE rating.
Exhibit 68: One year forward P/E chart
400
350
300
250
200
Rs
150
100
50
0
Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug-
06 06 06 07 07 07 08 08 08 09 09
Price PER 50 PER 40 PER 30 PER 20 PER 10
EV/EBITDA based valuation of Rs 135/ share
On an EV/EBITDA basis, we are assigning a multiple of 10x (~10%

discount to Jagran Prakashan) to the stock to arrive at a target price of Rs
135. This implies downside potential of ~2.0% over the current market
price.
39 | Page
Exhibit 69: EV/EBITDA valuation
EV/EBITDA
FY11 EBITDA Rs crore 318.2
EV/EBITDA multiple x 10.0
Target EV Rs crore 3,181.6
Target Market Cap Rs crore 3,152.5
Number of Equity Shares Crore 23.4
Target Price per Share Rs 135
Upside Potential -2.4%

8,000
7,000
6,000
5,000
EV (Rs Cr)
4,000
3,000
2,000
1,000
0
Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug-
06 06 06 07 07 07 08 08 08 09 09
EV 25x 20x 15x 10x 5x
40 | Page
Profit and loss statement
(Rs Crore)
(Year-end March) FY07 FY08 FY09 FY10E FY11E FY12E
Net Sales 1,039.7 1,203.3 1,346.6 1,448.0 1,613.5 1,792.5
% Growth 15.7 11.9 7.5 11.4 11.1
Raw Material cost 435.2 464.0 558.9 493.6 518.4 555.9

% of Sales 41.9 38.6 41.5 34.1 32.1 31.0
Employee Expense 159.6 198.3 241.9 264.5 307.8 328.1
% of Sales 15.4 16.5 18.0 18.3 19.1 18.3
Administrative and Other Expenses 277.1 370.8 458.0 417.5 467.5 537.6
% of Sales 26.7 30.8 34.0 28.8 29.0 30.0
(Increase)/Decrease in inventories (0.3) 0.3 (0.1) 0.6 1.6 1.8
% of Net Revenue (0.0) 0.0 (0.0) 0.0 0.1 0.1
Total Expenditure 871.6 1,033.4 1,258.7 1,176.2 1,295.3 1,423.4
% Growth 18.6 21.8 (6.6) 10.1 9.9
Op Profit 168.0 169.9 87.87 271.9 318.2 369.0

% Growth 1.1 (48.3) 209.4 17.0 16.0
Other Income 36.7 43.9 33.0 23.5 29.0 32.0
Depreciation 43.6 57.0 68.8 77.8 86.9 96.1
EBIT 124.4 112.9 19.1 194.0 231.3 273.0
% Growth (9.3) (83.1) 917.7 19.2 18.0
Interest 14.3 17.8 32.3 34.1 27.7 14.6

Exceptional Items 0.0 - 18.9 4.5 - -
Profit before Tax 146.8 139.0 0.9 178.9 232.5 290.4
Taxation 54.6 37.7 12.5 55.6 70.0 84.1
Less: Losses adjusted against goodwill 0.3 - (0.2) - - -

Add: Share of Minority Interest in Losses 4.6 (0.0) 12.7 - - -
Net Profit 97.0 101.3 0.9 123.3 162.5 206.3
% Change YoY 4.4 (99.1) NA 31.8 26.9
41 | Page
Balance sheet
(Rs Crore)
Liabilities
Equity Share Capital 46.8 46.9 47.0 47.0 47.0 47.0
Reserves & Surplus 717.4 806.0 801.5 924.8 1,087.4 1,293.7
Secured Loans 165.0 220.8 369.9 419.9 339.9 139.9
Unsecured Loans 0.8 2.3 0.8 0.8 0.8 0.8
Current Liabilities & Provisions 211.3 280.4 539.9 383.5 439.7 501.7
Others 31.81 12.21 13.71 -1.61 -16.93 -32.25
Total Liabilities 1,173.0 1,368.5 1,772.8 1,774.3 1,897.7 1,950.7
Assets
Gross Block 500.1 561.4 672.5 824.9 897.0 960.1
Less Accumulated Depreciation 108.1 145.2 195.3 252.5 315.9 384.4
Net Block 392.0 416.2 477.1 572.4 581.1 575.6
Capital WIP 18.8 58.9 194.6 100.0 80.0 50.0
Total Fixed Assets 410.9 475.2 671.7 672.4 661.1 625.6
Net Intangible Assets 109.8 107.8 100.0 98.0 87.4 76.8
Investments 229.3 265.6 303.5 303.5 303.5 303.5

Recoverable Welfare Trust 21.7 - - - - -
Loans & Advances 34.6 106.4 216.7 181.0 225.9 250.9

Cash 115.0 77.4 70.5 88.0 89.9 139.1
Trade Receivables 148.5 198.3 219.9 256.2 318.5 319.9
Inventories 103.2 115.5 175.6 159.3 193.6 215.1
Other Non Current Assets - 22.3 14.8 16.0 17.8 19.8
Total Current Assets 401.3 519.9 697.6 700.4 845.7 944.8
Misc expenses written off 0.1 0.1 0.0 0.0 0.0 0.0
Total Assets 1,173.0 1,368.5 1,772.8 1,774.3 1,897.7 1,950.7
42 | Page
Cash flow statement
(Rs Crore)
Profit after Tax 97.0 101.3 0.9 123.3 162.5 206.3
Depreciation 43.6 57.0 68.8 77.8 86.9 96.1
Deferred Tax Liability 2.3 (19.6) 8.5 - - -
Cash Flow before WC Changes 142.9 160.4 78.3 201.1 249.4 302.4
Net Increase in Current Liabilities 27.6 69.1 259.5 (156.4) 56.2 62.0
Net Increase in Current Assets (28.1) (156.2) (184.5) 14.6 (143.4) (49.9)
Cash Flow after WC Changes 142.4 73.4 153.2 59.3 162.2 314.5
Purchase of Fixed Assets (86.7) (119.2) (257.6) (76.5) (65.0) (50.0)

(Increase) / Decrease in Investment (188.5) (36.4) (37.9) - - -
Cash Flow from Investing Activities (275.2) (155.6) (295.4) (76.5) (65.0) (50.0)
Increase / (Decrease) in Loan Funds (3.8) 57.3 147.6 50.0 (80.0) (200.0)
Increase / (Decrease) in Equity Capital (20.0) 0.0 0.2 - - -
Minority Interest (4.6) 0.0 (7.0) (15.3) (15.3) (15.3)
Payment of Proposed Dividend and Tax (8.2) (11.0) (8.2) - - -
Increase / (Decrease) in Reserve and Surplus 29.8 9.3 (86.1) - - -
Transfer from P&L and Merger Adj. (26.0) (11.0) 89.0 - - -
Cash Flow from Financing Activities (32.8) 44.7 135.3 34.7 (95.3) (215.3)
Op bal Cash & Cash equivalents 280.6 115.0 77.4 70.5 88.0 89.9
Cash acquired during Amalgamation
Closing Cash/ Cash Equivalent 115.0 77.4 70.5 88.0 89.9 139.1
43 | Page
Ratios

Per Share Data (Rs)
EPS 4.1 4.3 0.0 5.3 6.9 8.8
Cash EPS 6.0 6.8 3.0 8.6 10.6 12.9
Book Value 32.6 36.4 36.2 41.5 48.4 57.2
Operating Profit Per Share 7.2 7.3 3.8 11.6 13.6 15.8
Operating Ratios
Operating Margin (%) 16.2 14.1 6.5 18.8 19.7 20.6
Net Profit Margin (%) 9.0 8.1 0.1 8.4 9.9 11.3
Return Ratios
RoE (%) 12.7 11.9 0.1 12.7 14.3 15.4
RoCE (%) 13.4 10.5 1.6 13.9 15.7 18.4
Dividend yield (%) 5.1 6.8 5.1 5.1 5.1 5.1
Valuation Ratios
EV/EBITDA 18.9 19.2 39.0 12.7 10.7 8.5
PE 33.3 31.9 3,566.3 26.2 19.9 15.7
EV/Sales 3.1 2.7 2.5 2.4 2.1 1.8
Sales to Equity 1.4 1.4 1.6 1.5 1.4 1.3
Market Cap to sales 3.1 2.7 2.4 2.2 2.0 1.8
Price to Book Value 4.2 3.8 3.8 3.3 2.8 2.4
Turnover Ratios
Fixed Assets Turnover Ratio 2.5 2.5 2.0 2.2 2.4 2.9
Debtors Turnover Ratio 7.7 6.9 6.4 5.6 5.6 5.6
Creditors Turnover Ratio 5.8 5.4 3.5 3.3 4.3 4.3
Cash to Absolute Liabilities 1.9 1.9 1.3 1.8 1.9 1.9
Debt/Equity 0.2 0.3 0.4 0.4 0.3 0.1

Current Ratio 1.9 1.9 1.3 1.8 1.9 1.9
Quick Ratio 1.4 1.6 1.2 1.6 1.7 1.6
DuPont analysis
(%)
FY07 FY08 FY09E FY10E FY11E FY12E
PAT / PBT 66.1 72.9 102.0 68.9 69.9 71.0
PBT / EBIT 118.0 123.1 4.7 92.2 100.5 106.4
EBIT / Sales 12.0 9.4 1.4 13.4 14.3 15.2
Sales / Assets 108.1 110.6 109.2 104.1 110.7 123.7
Assets / Equity 125.9 127.6 145.3 143.1 128.5 108.1
RoE 12.7 11.9 0.1 12.7 14.3 15.4
44 | Page
Annexure 1:
De- Merger of Hindi business
The Board of Directors of HT Media Limited (HTML) approved the

sale/transfer of its “Hindi Business Undertaking” to Hindustan Media
Ventures Limited, a subsidiary company, of which 99.3% is owned by
HTML. The transaction shall be effective from December 1, 2009.
As part of this transaction, the ‘Hindi business’ of HTML comprising of

‘Hindustan’, the Hindi daily; Hindi magazines, ‘Nandan’ & ‘Kadambini’, and
the internet portals of these publications, including all assets, liabilities
and employees pertaining to this business, will be transferred to
Hindustan Media Ventures Limited on a ‘slump sale’ and ‘going concern’
basis. The transfer will be on ‘Book Value’ of the business as on
November 30, 2009.
The lump-sum cash consideration towards the proposed sale would be

Rs. 149 crore including net working capital of Rs. 24 crore. The net
working capital shall however be adjusted and transferred as per the
actual books of accounts audited by the Statutory Auditors, as on 30th
November, 2009.
The management would start reporting numbers separately for both the
entity from second half of FY11E. We have not valued the Hindi business
separately.
45 | Page
Initiating Coverage Current Price Target Price

Rs 152 Rs 186
Deccan Chronicle Holdings (DECCHR) 23% 12 months
King of the south… STRONG BUY

Deccan Chronicle has a presence in all the key markets of Southern India.
With the recent launch in Bengaluru, it has further consolidated its
position in the region. Its investment in IPL and the retail venture Analysts’ Name
Odyssey hold immense potential and are expected to unlock huge value if Naval Seth
divested in future. We expect the topline and bottomline to grow at a naval.seth@icicisecurities.com
CAGR (FY09-12E) of 13.2% and 39.2%, respectively. The company has Karan Mittal
addressed the balance sheet concerns, resulting in a re-rating of the karan.mittal@icicisecurities.com
stock. We initiate coverage on the stock with a STRONG BUY rating.
Deccan Chronicle - King of the South

Sales & EPS trend
Deccan Chronicle is the fourth largest English daily with a total
average issue readership of 10.9 lakh and has presence in all the 1500 20
major markets of Southern India. Average daily circulation stands at
13.3 lakh copies and is expected it to inch up to ~15 lakh copies/day 15
1000
Rs crore
by FY10E. We expect the circulation revenue to grow at 11.3% CAGR 10
Rs
over FY09-12E to Rs 76.9 crore, on back of 8.4% growth in circulation 500
5
and 2.6% growth in cover price. 0 0
Major revival in ad revenue, post FY10E FY08 FY09 FY10E FY11E FY12E
In testing times where almost all national players have struggled, Sales (LHS) EPS (RHS)
Deccan Chronicle was able to stand out and post a growth of 11.4% in Stock Metrics
standalone ad revenue in H1FY10. Ad revenue is expected to grow
10.3% in FY10E. Ad expenditure is on an uptrend from sectors like Bloomberg Code DECH.IN
automobiles, education, pharmaceuticals and telecom. We expect a Reuters Code DCHL.BO
major revival in ad growth post FY10E. Standalone ad revenue is Face value (Rs) 2
expected to grow at 11.8% and 12.0% for FY11E and FY12E, implying Promoters Holding 63.7%
an 11.3% CAGR over FY09–12E to Rs 1047.5 crore. Market Cap (Rs cr) 3,705
52 week H/L 163 / 25
Valuations Sensex 16,974
At the CMP of Rs 152, the stock is trading at 11.7x FY10E EPS of Rs 13.0 Average volumes 249,703
and 11.5x FY11E EPS of Rs 13.2. We value the company (ex-IPL) at 13x Comparative return metrics
(~35% discount to Jagran Prakashan) FY11E Ex-IPL EPS of Rs 13.0 to arrive
at a value of Rs 168 per share. We value IPL at 2.0x franchise fee (25% 1M 3M 6M 12M
discount to the Rajasthan Royal Deal) of Rs 428 crore to arrive at IPL HT Media 10.0 33.5 110.6 130.6
valuation of Rs 18 per share. Our SOTP target price of Rs 186/share Deccan Chronicle 2.8 54.7 173.2 254.1
discount FY11E consolidated EPS of Rs 13.2 by 14.1x. We initiate coverage Jagran Prakashan 7.9 20.0 123.4 146.4
on Deccan Chronicle with STRONG BUY rating. Price Trend
300
Exhibit 71: Key Financials (Rs Crore) 250
(Year-end March) FY08 FY09 FY10E FY11E FY12E 200
Net Profit (Rs crore) 303.5 141.9 316.7 322.4 383.1 150
100
Shares in issue (in crore) 24.4 24.4 24.4 24.4 24.4
50
EPS (Rs) 12.4 5.8 13.0 13.2 15.7
0
% Growth 84.0 (53.2) 123.1 1.8 18.8
Apr-07
Apr-08
Apr-09
Jul-07
Oct-07
Jan-08
Jul-08
Oct-08
Jan-09
Jul-09
Oct-09
PER (x) 12.2 26.1 11.7 11.5 9.7

Price / Book (x) 3.1 2.9 2.5 2.1 1.8
EV/EBITDA (x) 6.1 11.9 6.5 5.5 4.3
RoE (%) 25.2 11.2 21.0 18.4 18.6
RoCE (%) 27.6 12.2 20.5 21.0 21.6
Source: ICICIdirect.com Research
46 | Page
Company Background
Promoters 63.4
The Deccan Chronicle Holdings Ltd (DCHL) was incorporated in 2002. The Institutional investors 24.6
company’s flagship paper Deccan Chronicle is the most read English Other investors 6.2
newspaper in Andhra Pradesh (AP). It is simultaneously published in AP General public 5.9
and Tamil Nadu in India. They also publish Andhra Bhoomi in Telugu,
which are daily, weekly, and monthly magazines. In terms of readership, it
is India's fourth largest English language newspaper. The newspaper has Promoter & Institutional holding trend (%)
nine editions, seven published from various parts of AP while out of the
rest of the two edition covers, one each are from Chennai and Bengaluru.
80% 63% 63% 63% 63%
DCHL had launched a new financial daily, the Financial Chronicle with
editions in Hyderabad and Chennai during April 2008. The Bengaluru 60%
edition was launched on May 26 2008. 40% 25% 25% 26% 28%
20%
Deccan Chronicle entered the retail space with the acquisition of Odyssey
0%
in 2005. Since then the company has increased its presence from 13
stores in six cites to 46 stores in 15 cities. Q2FY10 Q1FY10 Q4FY09 Q3FY09
Promoter Holding Institutional Holding
In 2006-07, the company promoted a 100% subsidiary under the name of
Sieger Solutions Ltd with an investment of Rs 25.1 crore for the business
of buying and selling advertisement space and to explore alternate media
space.
Deccan bought an IPL team in FY08-09 through its wholly owned

subsidiary Deccan Charges sporting venture Ltd with total investment of
Rs 428 crore.
Exhibit 72: About Deccan Chronicle
Deccan Chronicle Holdings
90% 100% 100% 100%
Asian Age Holdings Sieger Solutions Ltd Odyssey India Ltd Deccan Chargers
Sporting Ventures Ltd
76%
Netlink Technologies Ltd
47 | Page
Exhibit 73: Revenue break-up FY09
IPL, 56.20 Others, 3.06
Odyssey, 55.93
Circulation , 55.83 Advertisement ,

Advertisement contributed 82%
796.99
of the consolidated revenue of
Deccan Chronicle.
48 | Page
Investment Rationale
Deccan Chronicle - King of the South

After the recent launch of the Bengaluru edition, the company has a
presence in all the major markets of Southern India. Deccan enjoys a
leadership position in Andhra Pradesh, while it is second in Chennai
after The Hindu, in terms of readership. The Bengaluru edition has
also started to gain traction. According to IRS Round 2, 2009,
Deccan Chronicle was the fourth most read English daily with a total
average issue readership of 10.9 lakh.
According to the latest round of the IRS survey, the company

witnessed a decline in readership largely due to increase in
competition in Chennai, after the launch of TOI in FY09.
Nevertheless, the decline was marginal and the company expects to
regain lost ground as discount led strategies adopted by
competition come to an end.
Exhibit 74: Top 5 most read English newspapers (In lacs)

Newspaper 2008 R1 2008 R2 2009 R1 After launch of Bangalore edition,
The Times of India 67.9 67.1 68.7 Deccan Chronicle is consolidating
Hindustan Times 32.8 35.2 34.9 its position in south India. It is
Hindu 22.4 21.2 22.4 among the top 5 most read
Deccan Chronicle 12.3 11.5 10.9 English newspapers in the
Telegraph 10.1 10.2 10.8 country with an AIR of 10.93 lacs.
Increase in circulation to back circulation revenue

Circulation for the Deccan chronicle has witnessed a steep rise on
the back of new launches and expansion into newer territories.
Circulation grew 25.4% CAGR (FY07-09), on the back of launch of
financial chronicle and launch of Bangalore edition. The company
had a total circulation of 48.7 crore copies at the end of FY09.
Average daily circulation stands at 13.3 lakh copies and the

company expects it to inch up to ~15 lakh copies per day by the
end of the current fiscal on the back of new editions and increase in
circulation in Bengaluru. With this circulation revenue for FY10E
would grow 15.1% YoY to Rs 64.3 crore.
We expect the circulation revenue to grow from Rs 55.8 crore in

FY09 to Rs 76.9 crore in FY12E at a CAGR of 11.3%. This is on the
back of 8.4% growth in circulation from 48.7 crore copies in FY09 to
62.0 crore copies in FY12E and 2.6% growth in cover price.
49 | Page
Exhibit 75: Circulation revenue
100 30.0%
FY09-12E Revenue CAGR of 11.3%
90
80 25.0%
21.8% 25.8% Total circulation is expected to
70 20.0% increase to 62.0 crore by the end
60 of FY12E growing 8.4% CAGR
50 15.0% (FY09-12E), while circulation
40 15.1% 10.3% 77 revenue would grow at 11.3%
30 7.1% 59 62 10.0% CAGR (FY09-12E) on the back of
56 49 56
20 41 64 71 increase in circulation coupled
31 44 37 8.5% 5.0%
10 with increase in cover price.
0 0.0%
Circulation revenue (Rs crore) No. of copies sold (Crore) Revenue growth
Market leader in Andhra Pradesh

The company enjoys a leadership position in Andhra Pradesh with
an average issue readership of 8.1 lakhs. It is way ahead of its
closest competitor The Hindu, which has an average issue
readership of 3.8 lakhs. The Andhra Pradesh market currently
contributes ~74% to the total average issue readership of Deccan
Chronicle. Out of nine editions of Deccan Chronicle, seven are
circulated in Andhra Pradesh alone.
A.P is the home market of the
Exhibit 76: Average issue readership in AP (In lacs) company. Out of its total 9
Andhra Pradesh 2008 R1 2008 R2 2009 R1 editions 7 editions are circulated
Deccan 8.9 8.2 8.1 in A.P. Readership in A.P
The Hindu 4.1 3.7 3.8 accounts for ~ 74% of total AIR
The Times of India 1.9 1.9 1.9 of 10.93 lacs.
Chennai — increasing competition

Deccan is ranked No. 2 in the Chennai market with a daily circulation
of 3.0 lakh copies per day. Average issue readership in Chennai
stands at 2.8 lakh copies per day. However, according to the last two
rounds of the IRS survey the readership for the company has been
on a downtrend. This is due to increasing competition from TOI.
Nevertheless, the management is confident of gaining its lost share
in Chennai and does not see the Times of India as a major threat in
this market.
Exhibit 77: AIR in Tamil Nadu (In lacs)

Tamil Nadu 2008 R1 2008 R2 2009 R1
The Hindu 11.6 11.5 11.7
Deccan 3.3 3.3 2.8
The New India Express 1.6 1.6 1.5
50 | Page
Bengaluru — gaining traction
To strengthen its position in the southern region, the company
launched the Deccan Chronicle in Bengaluru, a year ago. It has
received a reasonably good response and has ramped up its
circulation to 2.4 lakh copies per day, while TOI (market leader) has
circulation of 4.0 lakh copies per day. Both TOI and Deccan
witnessed a decline in AIR in the last three rounds of the IRS survey,
which is due to the launch of the DNA in Bengaluru.
The management sees the Bengaluru market as the next major

driver of circulation revenue. It is not planning to expand out of the
southern region of the country in the near future.
The company has got a
Exhibit 78: AIR in Bengaluru (In lacs) reasonably good response from
Bangalore 2008 R1 2008 R2 2009 R1 the Bangalore edition and it has
Times of India 4.5 4.0 3.8 increased its circulation to 2.4
Deccan Herald 2.2 2.4 1.9 lakh copies per day.
Major revival in ad revenue, post FY10E

Owing to the economic slowdown in FY09 the advertisement
industry witnessed de-growth in revenue. The standalone
advertisement revenue of the company grew by a mere 2.9% in
FY09, while the advertisement revenue of the consolidated entity
posted de-growth of 1.6%. This was due to a 47.3% decline in
advertisement revenue of the subsidiaries. The advertisement
revenue had grown at 55.5% during FY07-08.
To counter the declining ad volume, Deccan Chronicle took an ad

rate hike twice in the last fiscal. It increased the ad rates by 30% in
April 2008 and by another 50% in October 2008. This was able to
offset the impact of declining ad volumes to a large extent. Deccan
Chronicle has taken another ad rate hike of 20% in October 2009.
Ad revenue growth in H1FY10 has shown a mixed trend. While the

economy is recovering from the slowdown, the story is not the
same for all media companies. Only companies with a regional
focus were able to post a growth in ad revenue, while almost all
companies with a national presence in the advertisement business
have seen a decline in ad revenue in H1FY10. Only regional players were
able to post a growth in ad
Exhibit 79: Ad revenue growth (YoY)
revenue, while almost all
national players posted a
50 38 39 decline in ad revenue.
40 30 Though not a regional or
26
30 19 2023 vernacular player since it
YoY ad revenue growth
15 15
20 8 11 12 is very south centric,
10 4 6 2 5 4 Deccan Chronicle was
0
0 able to stand out.
-10 -2 -1
-7 -10
-20 -13 -13 -18
-30 -20 -19-19
-25
-40 -29 -33
-50 -39
-60
Sun TV Jagran Zee News Deccan Zee Tel HT Media TV18 ENIL
51 | Page
Though not a regional or vernacular player since it is very south
centric, Deccan Chronicle was able to stand out. Standalone
advertisement revenue for the company grew by 11.4% YoY in
H1FY10.
We expect standalone ad revenue to grow at 9.0% YoY in H2FY10,

implying a full year growth of 10.3% for FY10E. Consolidated ad
revenue is expected to post a growth of 10.0% for FY10E. The
advertisement expenditure is on an uptrend from sectors like
automobiles, education, pharmaceuticals and telecom. We expect a
major revival in ad growth post FY10E. Ad revenue for Deccan is
expected to grow at 11.5% and 11.9% for FY11E and FY12E,
implying an 11.1% CAGR over FY09–12E to Rs 1094 crore.
Exhibit 80: Consolidated advertisement revenue growth

FY09-12E CAGR of 11.1%
1,100 75.4% 80%
70%
900
55.5% 60% Consolidated ad revenue for
700 50% Deccan is expected to grow at
Rs crore
1094 40% 11.5% and 11.9% for FY11E and

500 978 FY12E, implying an 11.1% CAGR
810 797 877 30%
over FY09–12E to Rs 1094 crore.
300 521 20%
10%
100 10.1% 11.5% 11.9% 0%
-100 -1.6% -10%
Advertisement revenue Growth
IPL — the golden goose

Deccan Chronicle owns the IPL team of Hyderabad through its
wholly-owned subsidiary Deccan Chargers Sporting Ventures
(DCSVL). The company had paid Rs 428 crore to buy the Hyderabad
team. During the first year of IPL, Deccan Charges (DC) was unable
to perform satisfactorily and stood last in the competition. However,
in a complete turnaround, under the captaincy of Adam Gilchrist, DC
emerged as the winner in IPL Season 2.
During Season 1 of IPL, DC generated revenues of Rs 56.6 crore with

PAT of Rs 2.1 crore. The company received only Rs 24.0 crore in
FY09 from franchise rights, as the television rights for the Indian
subcontinent were sold for US$1.03 billion for 10 years.
However, with a subsequent renegotiation of the deal before season

2, wherein the telecast rights for the next nine years were given
away for US$1.63 billion, the company is expected to have earned a
net income from franchise rights of Rs 59.9 crore. With a surge in
income from franchise rights we expect the net revenue in FY10E to
be around Rs 106.7 crore.
52 | Page
Exhibit 81: IPL P&L
Particulars FY09 FY10E FY11E FY12E
Total Revenue 56.6 106.7 116.7 129.7 IPL, the new revenue stream of
the company reported net
revenue of Rs 56.6 crore in
Total expenditure 36.3 84.5 88.6 93.6
season-1 and is expected to post
revenue of Rs 106.7 crore in
Operating Profit 20.3 22.2 28.2 36.1 FY10E with PAT of Rs 3.4 crore.
Ammortization 17.1 17.1 17.1 17.1 We expect the revenues to grow
at a CAGR of 32.0% over FY09-
PBT 3.2 5.1 11.0 19.0 12E to Rs 129.3 crore.
Tax 1.1 1.7 3.6 6.3
PAT 2.0 3.4 7.4 12.7

The company is expected to garner higher advertising revenues

after wining the trophy in season 2. We expect the revenues to grow
at a CAGR of 32.0% over FY09-12E to Rs 129.3 crore.
Nevertheless, the actual revenues could vary by a huge margin as

the IPL business is highly dynamic in nature and sponsorship and ad
revenues purely depend on the performance of the team.
Economics of IPL
The franchisee owner is entitled to centralised sponsorship revenue,

team advertisement revenue, ticket sales, stadium advertising and
franchisee rights.
A total of 20% of the franchise rights proceeds would go to the IPL

while 8% would be distributed among players as prize money. The
rest would remain with the respective team owner. The total money
is to be distributed in this proportion until 2012, after which the IPL
is supposed to go public.
The franchises will get 80% of the league’s television revenues in

the first two years, declining to 50% from 2011. They also receive
60% of the central sponsorship for the first 10 years and 50%
thereafter. Over time they have to generate their own money from
sponsorship, licensing, etc.
Exhibit 82: Franchise rights

Particulars Rs Crore
Total Value for 9 years paid by IMG (SONY) 8300
Total Teams 8
Time Frame 9
Deccan Chronicle annual share (Gross Revenue) 115.28
Less
IPL Share 20% 23.06
Production Cost 20% 23.06
Prize Money 8% 9.22
Net Revenue (from Franchise Rights) 59.94

53 | Page
IPL has emerged as a major source of entertainment for Indian
viewers. With the increasing popularity of and demand for the game,
we believe IPL has the potential to be the major growth driver for
the company. If the team performs well, going forward, and
maintains its winning streak, the company could plan to hive off its
minor stake in the team. However, currently the management does
not have any plan to sell a stake but is open to possibilities.
Exhibit 83: Franchise owners and respective bids

Franchise Owner Price (INR Billion)
Mumbai Indians Reliance Industries 4.48
Royal Challengers, Banglore UB Group 4.46
Hyderabad Deccan Chargers Deccan Chronicle 4.28
Chennai Super Kings India Cements and N Srinivasan 3.64
Delhi Daredevils GMR Holdings 3.36
Kings XI Punjab Preity Zinta, Ness Wadia, Karan Paul and Motit Burman 3.04
Kolkata Knight Riders Shahrukh Khan, Juhi Chawla and Jai Mehta 3.03
Rajasthan Royals Emerging Media 2.68
Source: FiCCI report 2009, Company, ICICIdirect.com Research
Rajasthan Royals (winner of IPL season 1) sold 12% stake to Shilpa Shetty
and her partner Raj Kundra for Rs 84 crore. This implies a valuation of Rs
700 crore for Rajasthan Royal franchise, about 2.6 times the owners paid
for acquiring the team (Rs 268 crore).
Odyssey- in expansion mode

Deccan Chronicle entered the retail space with the acquisition of
Odyssey in 2005. Since then the company has increased its
presence from 13 stores in six cites to 46 stores in 15 cities.
Odyssey is a retailer of books, music, cards, stationery, gifts, toys,

multimedia and magazines. Recently, it has forayed into the
premium eyewear segment. About 45% of the revenue of Odyssey
stores comes from book sales while the rest come from sale of
stationery and gift items.
The company has classified its stores into three categories, Regular,
Express and Eyewear according to the built up area under operation.
The company has a much larger presence in southern India with 28
of the 46 stores in that region.
Exhibit 84: Odyssey store formats
Format Stores BUA Minimum area under operations
Regular 17 225884 More than 6000 Sq feet
Express 27 28941 100-6000 sq feet
Eyewear 2 5584 -
Total 46 260409
The retail business reported net revenues of Rs 55.93 crore in FY09,

growing 44.2% YoY. The growth was backed by an increase in area
under operation, which grew from 142198 sq feet in FY08 to 260409
sq feet in FY09. The management expects to add another 100,000 sq
feet in the current fiscal (FY10E). However, we have factored in
execution delays and expect addition of about 80,000 sq feet in the
current fiscal.
54 | Page
However, this business is still in an expansion mode and the
margins are still on the lower side. The company reported a PAT of
Rs 2 crore from this segment for FY09. We expect net revenues to
grow at 20.0% CAGR (FY09-FY12E) to Rs 96.6 crore and PAT to
grow at 44.9% CAGR (FY09-FY12E) to Rs 6.1 crore.
Exhibit 85: Odyssey — Operating metrics
Express Stores (nos) 9 27 34 40 46
Area (sq Ft) 5400 28941 36941 42941 48941
Average area per store 600 1,072 1,072 1,072 1,073
Regular Stores (nos) 15 17 22 27 32 Odyssey is expected to add

Area (Sq ft) 136,800 225884 295884 360884 420884 ~80000 sq feet area under
Average area per store 9120 13287 13,287 13,287 13,290 operation in FY10E, which would
take total no. of stores to 59 from
Eyewear - 2 3 4 5 46 in FY09. We expect net
revenues to grow at 19.9% CAGR
Area (Sq ft) - 5584 8084 10584 13584
(FY09-FY12E) to Rs 96.6 crore and
Average area per store - 2,792 2,792 2792 2793 PAT to grow at 44.9% CAGR
Total Area (Sq ft) 142,198 260409 340909 414409 483409 (FY09-FY12E) to Rs 6.1 crore.
Sales/Sq ft 2,728.1 2,147.9 1,997.9 1,997.9 1,997.9
Sales-net of discounts (Rs crore) 38.8 55.9 68.1 82.8 96.6

PBT 0.2 1.5 3.4 5.0 6.8
PAT -0.1 2.0 3.1 4.5 6.1
Sieger solution — Halt on expansion

Sieger Solution is another of the company’s wholly-owned
subsidiaries, which operates the internet and website business. The
management has slowed down the expansion of the internet and
web business as it does not see much value addition in the
foreseeable future.
Papyrusclubs.com is the only website on which company seems to

be aggressive. It registered a jump in membership from 609 in
FY2008 to 1,280 in FY2009 with total student strength of over 1.5mn.
Recently, it launched BigBreaks.com (a job portal which uses an
offline-online strategy), WeddingWow.com (matrimony services) and
Dcdealofday.com (e-commerce portal).
Sieger solutions reported total revenues of Rs 44.9 crore in FY09,

reporting a YoY de-growth of 37.6% and PAT of Rs 10.3 crore. The
decline was primarily due to decline in advertisement revenue in last
fiscal year. The company is reducing its focus on Sieger solutions,
on back of increasing cost to monetise the internet portals.
55 | Page
Risks & Concerns
Volatility in IPL revenue

We expect the company to report IPL revenues of about Rs 106.7 crore in
FY10E. This would form about 9.5% of the total revenue of the company.
About Rs 59.9 crore coming from franchisee rights would be the same for
future years. Income from sponsorship, ticketing revenues and
advertisement revenues would be largely dependent on the team’s
performance and on widespread popularity of the game.
Hence, the revenue from this stream may be volatile in future. We have
been conservative on this aspect and may see positive surprises in future.
Expansion in Bengaluru
The company’s recent launch in Bengaluru has yielded satisfactory
results with circulation ramping up to 2.4 lakh copies per day within one
year of launch. However, it faces stiff competition from the market leader
The Times of India. It may have to resort to discount strategies to reduce
the gap between itself and the leader, which would impact the revenue
growth from this region.
56 | Page
Financials
Deccan Chargers to support double digit revenue growth

Deccan reported consolidated revenues of Rs 968 crore during
FY09, growing 8.1% YoY, largely on the back of Rs 56.6 crore
additional revenue contributed by DC. Without this the company
would have posted YoY growth of just 1.6%. The core business was
under intense pressure during the last fiscal year due to lower ad
revenues.
The company reported standalone revenue of ~Rs 467.5 crore for

H1FY10, growing 11.3% over the same period last year. We expect
the company to post standalone revenue of Rs 901.3 crore for
FY10E, implying a growth of 10.6%. We expect the standalone
revenue to post a 3 year CAGR (FY09-12E) of 11.3% to Rs 1124.5
crore.
On the consolidated basis, the company is expected to perform

even better with robust revenue growth from IPL. We expect the
consolidated revenues to post a 3 year CAGR (FY09-12E) of 13.2%
to Rs 1403 crore, led by 32.0% and 20.0% CAGR in IPL revenue and
proceeds from Odyssey respectively over the same period.
Exhibit 86: Deccan Chronicle - Consolidated revenue
1,600 FY09-12E CAGR of 13.2% 1403 60%

1,400 52.1% 1253 We expect the consolidated
50%
1120 revenues to post a 3 year CAGR
1,200
968 40% (FY09-12E) of 13.1% to Rs 1403
1,000 895
crore led by 32.0% and 20.0%
Rs Crore
800 30% CAGR in IPL revenue and

600 proceeds from Odyssey
20% respectively over the same
400 period.
15.7% 10%
200
8.1% 11.9% 12.0%
0 0%
Advertisement Circulation Odyssey IPL Others* Growth %
* Others include revenue from Sieger solutions and other operating income
Exhibit 87: Revenue break-up (Rs Crore)

FY07 FY08 FY09 FY10E FY11E FY12E CAGR % (FY09-12E)
Segmental Revenue
Advertisement revenue 520.7 809.8 797.0 877.1 978.2 1,094.3 11.1
Circulation revenue 41.4 44.4 55.8 64.3 70.9 76.9 11.3
Odyssey (net of discounts) 25.4 38.8 55.9 68.1 82.8 96.6 20.0
Revenue from software development - 1.8 3.0 4.0 5.0 6.0 26.5
Revenue from IPL - - 56.2 106.3 116.3 129.3 32.0
Others 0.9 0.6 0.1 0.1 0.1 0.1 -
Total Revenue 587.6 894.8 967.9 1,119.8 1,253.3 1,403.2 13.2

57 | Page
Margin improvement — led by lower raw material cost
FY09 was a tough year for all print media companies with newsprint
prices going through the roof and ad revenues declining due to the
economic slowdown.
Reeling under the effect of high newsprint prices and low revenues,
Deccan Chronicle reported its worst ever consolidated EBITDA
margin in the last few years. The EBITDA margin declined to 31.4%
in FY09 from 61.4% in FY08. The raw material cost increased from
26.5% of revenue in FY08 to 52.4% in FY09. The average newsprint
cost increased from Rs 27196/MT in FY08 to Rs 40738/MT in FY09.
However, newsprint prices have cooled off at the end of FY09 and
are now trading as low as $550/MT as compared to $960/MT in
FY09. Standalone EBITDA margin for H1FY10 stood at 52.3% as
compared to 40.9% for H1FY09.
With reducing newsprint prices, clearing out of high cost inventory

and increasing ad revenue growth, we expect the consolidated and
standalone EBITDA margin to expand to 44.8% and 51.3%,
respectively, for FY10E. We expect the EBITDA margin to stabilise at
these levels and not go back to earlier levels in the near future as the
company would expand into new regions and investment in new
businesses would take more time to pay off.
Exhibit 88: Newsprint assumptions

Copies sold / day (mn) 0.85 1.00 1.3 1.5 1.6 1.7
The raw material cost increased
% increase 18.3 32.9 14.5 6.0 5.0
from 26.5% of revenue in FY08 to
Pages/copy 32 33 31 31 32 32 52.4% in FY09. The average
Total newsprint (MT) 56,216 62,354 79,135 88,482 96,308 99,057 newsprint cost increased from Rs
% increase 10.3 10.9 26.9 11.8 8.8 2.9 27196/MT in FY08 to Rs
Blended rate (Rs/MT) 32,145 27,196 40,739 31,992 33,630 34,067 40738/MT in FY09. However,
% increase 14.3 -15.4 49.8 -21.5 5.1 1.3 newsprint prices have cooled off
Newsprint cost (Rs Cr) 181 170 322 283 324 337 at the end of FY09 and are now
trading as low as ~$550/MT as
Ink, store & spare (Rs Cr) 36 37 121 49 56 59
compared to $960/MT in FY09.
Total Raw Material (Rs Cr) 216 206 443 332 380 397
% increase 26.6 5.5 114.6 -25.1 14.6 4.3
Deccan Chronicle has maximum exposure to international newsprint

prices as compared to all other listed print companies. We expect
the blended cost for the company to be ~Rs 31992 for FY10E.
Exhibit 89: Average newsprint prices

Newsprint Average cost (Rs/MT) Imported as % of total Newsprint
Deccan Chronicle 40,739 90
HT Media 34,334 70
Jagran Prakashan 29,517 20
Deccan chronicle has highest EBITDA margins among its peers (HT
Media and Jagran Prakashan). It has invested in state-of-art
publishing facilities which are highly automated. This has resulted in
a significant decline in number of employees and subsequently in
58 | Page
manpower costs over the last few years, despite expansion in new
markets. Lower employee cost, SG&A cost and other operating
expenditure support high margins. Deccan Chronicle has the lowest
fixed costs in our India publishing universe, which contributes
additional 800-1000 bps to operating margins vis-à-vis its
competitors, such as Jagran Prakashan and HT Media.
Exhibit 90: Highest EBITDA margins among its peers

5% Deccan chronicle has highest
100%
90% 6% 27% EBITDA margins among its peers
26%
80% (HT Media and Jagran
33% 11% Prakashan). Deccan Chronicle has
70% 12%
20% the lowest fixed costs in our India
60%
publishing universe, which
50% 28% contributes additional 800-1000
40% 45% bps to operating margins vis-à-vis
30% 55% its competitors.
20% 34%
10% 24%
0%
Deccan Chronicle Jagran Prakashan HT Media
EBITDA Raw material cost Employee cost SG&A expense Others
PAT margin for FY09 stood at 14.7% down from 33.9% in FY08
primarily due to higher operational cost. With higher revenue
growth and superior operational performance we expect the PAT
margin to improve to 28.3% for FY10E.
Exhibit 91: EBITDA and PAT margin
70%
60% With the newsprint prices cooling
61.4% off, clearing out of high cost
50% 44.8% 43.9%
44.8% inventory and increasing ad
40% 31.0% revenue growth, we expect the
consolidated and standalone
30% 27.3%
33.9% EBITDA margin to expand to
28.3%
20% 44.7% and 51.3%, respectively,
25.7%
for FY10E.
10% 14.7%
0%
EBITDA Margins PAT Margins
Return ratios
RoE and RoCE fell to 11.2% and 12.2%, respectively, in FY09 from
25.2% and 27.6%, respectively, in FY08. With increasing profitability
we expect RoE and RoCE to improve in the current fiscal (FY10E) to
21.0% and 20.5%, respectively.
59 | Page
Exhibit 92: RoE and RoCE
30%
27.6%
25% 21.0% 21.0% RoE and RoCE fell to 11.2% and
25.2% 21.6% 12.2%, respectively, in FY09 from
20%
20.5% 25.2% and 27.6%, respectively, in
15% 12.2% 18.4% FY08. With increasing profitability
18.6%
we expect RoE and RoCE to
10% improve in the current fiscal
11.2%
5% (FY10E) to 21.0% and 20.5%,
respectively.
0%
RoE RoCE
Improving balance sheet

The company has taken corrective measures to address balance
sheet concerns, which were highlighted during FY07-08. Net
working capital to sales has declined from 92% in FY07 to 16% in
FY09. The company has been able to achieve this even though
newsprint prices had increased in an unprecedented manner
resulting in a four fold increase in inventory.
Its debt on the standalone balance sheet has also decreased by Rs

305 crore. The company, however, had to raise debt at the
consolidated level for the IPL franchisee.
Exhibit 93: Improving balance sheet (consolidated)

No. of Days FY07 FY08 FY09
Loans and Advances 113 247 115
Inventory 31 25 46 The company has taken
Debtors 172 136 85 corrective measures to address
Creditors 32 94 141 balance sheet concerns, which
were highlighted during FY07-08.
Net Working capital/ Sales (%) 92 17 16
Net working capital to sales has
declined from 92% in FY07 to
16% in FY09.
Rs Crore FY07 FY08 FY09
Debt (Consolidated) 726.6 673.0 757.6
Debt (standalone) 605.1 672.9 368.0
60 | Page
Valuations
The stock has historically underperformed its peers and traded at a ~40-
50% discount to Jagran Prakashan. However, with balance sheet
concerns fading, the stock has appreciated and is now trading at ~30%
discount to Jagran Prakashan. A possible stake sale in Deccan Chargers
or divestment of Odyssey Retail could further help unlock value.
We estimate revenue CAGR of 13.2% over FY09-12E and PAT CAGR of

39.2%. The stock is trading at 11.7x FY10E EPS of Rs 13.0 and 11.5x
FY11E EPS of Rs 13.2.
We expect the margin to improve since the high cost inventory has been
cleared out of the system. We also expect a handsome growth of 11.1%
(CAGR of FY09-12E) in consolidated advertisement revenue resulting in
overall revenue growth of 13.2% over the same period. The EPS is
expected to grow to Rs 15.7 by FY12E.
SOTP valuation of Rs 186/ share
and 12.5x FY11E EPS of Rs 13.2.
We value the company (ex-IPL) at 13x (~35% discount to Jagran

Prakashan) FY11E Ex-IPL EPS of Rs 12.9 to arrive at a value of Rs 168 per
share.
We value IPL at 2.0x franchise fee of Rs 428 crore (25% discount to the
Rajasthan Royal Deal) to arrive at an enterprise value of Rs 941.6 crore for
Deccan Chargers. Adjusting for net debt of Rs 385.5 crore we get the IPL
valuation of Rs 18 per share.
Our SOTP target price of Rs 186/share discount FY11E consolidated EPS

of Rs 13.2 by 14.1x. This implies an upside of 23.0% over the current
price. We are initiating coverage on Deccan Chronicle with an STRONG
BUY rating.
Exhibit 94: SOTP valuation
SOTP Valuation
Ex IPL EPS FY11 Rs 12.91
P/E multiple assigned to Jagran Prakashan x 20
Discount % 35%
Deccan Chronicle P/E multiple x 13
Value per share (Ex IPL) Rs 168
Franchise Fees Rs Crore 428

EV multiple x 2.0
Enterprise Value Rs Crore 834.6
Less Net Debt Rs Crore 385.5
IPL Market cap Rs Crore 449.1
No. of shares Crore 24.4
Per Share Value for IPL Rs 18
Per share value of Deccan Chronicle Rs 186

61 | Page
350
300
250
200
Rs
150
100
50
0
Apr-06
Apr-07
Apr-08
Apr-09
Jul-06
Oct-06
Jan-07
Jul-07
Oct-07
Jan-08
Jul-08
Oct-08
Jan-09
Jul-09
Oct-09
On an EV/EBITDA basis, we are assigning a multiple of 7.2x (~35%

of Rs 175. This implies an upside potential of 15% over the current market
price.
EV/EBITDA
Less FY11E Net Debt Rs crore (337.1)
Upside Potential 15%
Exhibit 97: One-year forward EV/EBITDA chart
9,000
8,000
7,000
6,000
EV (Rs Cr)
5,000
4,000
3,000
2,000
1,000
0
Apr-06
Apr-07
Apr-08
Apr-09
Jul-06
Oct-06
Jan-07
Jul-07
Oct-07
Jan-08
Jul-08
Oct-08
Jan-09
Jul-09
Oct-09
EV EV/E 14 EV/E 11 EV/E 8 EV/E 5 EV/E 2
62 | Page
(Rs Crore)
Net Sales 588.5 895.3 968.0 1,119.9 1,253.4 1,403.3
% Growth 52.1 8.1 15.7 11.9 12.0
Printing & Other operative expenses 246.4 237.4 507.6 434.5 488.7 510.1
% of Sales 41.9 26.5 52.4 38.8 39.0 36.4
% of Sales 5.4 4.8 7.0 7.6 8.0 8.2
Sales & Administrative expenses 40.1 65.1 92.4 98.3 114.7 148.5
% of Sales 6.8 7.3 9.5 8.8 9.2 10.6
Misc. expenses written off 3.9 0.5 - - - -
% of Sales 0.7 0.1 - - - -
Total Expenditure 321.8 345.6 668.1 618.4 703.5 774.3
% Growth 7.4 93.3 (7.4) 13.8 10.1
Op Profit 266.7 549.7 299.9 501.5 549.9 629.0

% Growth 106.1 (45.4) 67.2 9.6 14.4
Other Income 33.5 39.0 50.5 36.6 42.0 57.0
Depreciation 16.8 31.8 53.0 59.7 65.9 75.8
EBIT 249.9 517.9 246.9 441.8 484.0 553.2
% Growth 107.3 -52.3 78.9 9.5 14.3
Interest 36.1 88.6 80.9 54.9 44.6 38.1

% Growth 89.4 (53.8) 95.6 13.7 18.9
Taxation 82.0 164.8 74.5 106.7 158.8 188.8
Minority Interest 0.0 0.0 0.0 0.0 0.1 0.2
Net Profit 165.3 303.5 141.9 316.7 322.4 383.1

% Change YoY 83.7 (53.2) 123.1 1.8 18.8
63 | Page
Balance sheet
(Rs Crore)
Liabilities
Reserves & Surplus 782.8 1,052.8 1,118.9 1,359.7 1,606.2 1,913.4
Franchise Fee to BCCI - - 329.7 329.7 329.7 329.7
Secured Loans 567.2 659.5 414.5 304.5 204.5 154.5
Unsecured Loans 82.4 - - - - -
FCCB's Outstanding 77.0 13.5 13.5 13.5 13.5 13.5
Others 45.6 59.7 73.2 73.2 73.2 73.2
Total Liabilities 1,655.0 2,342.7 2,443.4 2,654.1 2,849.9 3,162.6
Assets
Gross Block 715.2 784.6 1,441.5 1,460.1 1,540.1 1,610.1
Net Block 671.6 706.8 1,311.2 1,270.0 1,284.1 1,278.3
Capital WIP 12.5 58.7 97.5 97.5 67.5 57.5
Total Fixed Assets 684.1 765.5 1,408.7 1,367.5 1,351.6 1,335.8
Investments 23.1 23.1 23.1 23.1 23.1 23.1
Loans & Advances 113.2 246.9 115.2 127.4 142.2 159.0

Cash 334.9 985.6 514.7 713.9 861.6 1,118.1
Inventories 59.3 62.1 179.6 198.6 221.8 247.8
Total Current Assets 927.3 1,542.7 1,011.6 1,263.5 1,475.1 1,803.7
Other Non Current Assets 20.5 11.4 - - - -
Total Asset 1,655.0 2,342.7 2,443.4 2,654.1 2,849.9 3,162.7
64 | Page
Cash flow statement
(Rs Crore)
Profit after Tax 165.0 303.5 141.9 316.7 322.4 383.1
Depreciation 16.8 31.8 53.0 59.7 65.9 75.8
Deferred Tax Liability 20.3 13.4 13.4 - - -
Net Increase in Current Liabilities 0.1 354.7 (63.5) 79.9 49.3 55.5
Net Increase in Current Assets (328.4) 35.3 60.1 (52.6) (64.0) (72.1)
Cash Flow after WC Changes (129.9) 748.6 216.4 403.7 373.6 442.4
Purchase of Fixed Assets (310.1) (113.2) (696.2) (18.6) (50.0) (60.0)

(Increase) / Decrease in Investment 66.2 - - - - -
Cash Flow from Investing Activities (243.9) (113.2) (696.2) (18.6) (50.0) (60.0)
Increase / (Decrease) in Loan Funds 137.9 (53.7) 84.7 (110.0) (100.0) (50.0)
Increase / (Decrease) in Equity Capital 6.6 102.6 - - - -
Increase / (Decrease) in Securities Premium 368.1 52.9 (11.4) (11.4) (11.4) (11.4)
(Increase) / Decrease in Goodwill 17.3 - - - - -
Payment of Proposed Dividend and Tax (26.8) (86.5) (64.4) (64.5) (64.5) (64.5)
Cash Flow from Financing Activities 503.0 15.3 8.9 (185.9) (175.9) (125.9)
Cash acquired during Amalgamation
Closing Cash/ Cash Equivalent 334.9 985.6 514.7 713.9 861.6 1,118.1
65 | Page
Ratios

Per Share Data (Rs)
EPS 6.8 12.4 5.8 13.0 13.2 15.7
Cash EPS 7.4 13.7 8.0 15.4 15.9 18.8
Book Value 34.0 49.3 52.0 61.9 72.0 84.6
Operating Ratios
Return Ratios
RoE (%) 19.9 25.2 11.2 21.0 18.4 18.6
RoCE (%) 16.0 27.6 12.2 20.5 21.0 21.6
Dividend yield (%) 0.6 2.0 1.5 1.5 1.5 1.5
Valuation Ratios
EV/EBITDA 15.0 6.1 11.9 6.5 5.5 4.3
PE 22.5 12.2 26.1 11.7 11.5 9.7
EV/Sales 6.8 3.7 3.7 2.9 2.4 1.9
Sales to Equity 0.7 0.7 0.8 0.7 0.7 0.7
Turnover Ratios
Solvency Ratios
Debt/Equity 0.9 0.6 0.6 0.4 0.3 0.2
Current Ratio 17.8 3.8 2.9 3.0 3.1 3.4
Quick Ratio 11.4 1.4 1.4 1.3 1.3 1.3
DuPont analysis
(%)
PAT / PBT 66.7 64.8 65.6 74.8 67.0 67.0
PBT / EBIT 98.9 90.4 87.7 95.8 99.5 103.4
EBIT / Sales 42.5 57.8 25.5 39.5 38.6 39.4
Sales / Assets 36.7 46.2 46.1 50.2 52.7 53.3
Assets / Equity 193.0 160.9 165.5 147.7 135.3 127.7
RoE 19.9 25.2 11.2 21.0 18.4 18.6
66 | Page
Company Update Current Price Target Price

Rs 119 Rs 134
Jagran Prakashan (JAGPRA) 12% 12 months
Pure regional play… BUY

Dainik Jagran (Hindi daily), the flagship paper of Jagran Prakashan, is the
most read daily in the country. The company currently circulates 32
editions in 11 states and has a leadership position in most areas. Jagran Analysts’ Name
Prakashan is the market leader in UP, while it enjoys a strong No.2 Naval Seth
position in Punjab and Bihar. With consumption shifting to smaller towns naval.seth@icicidirect.com
and villages and robust demand in these regions, we expect the pure Karan Mittal
regional player Jagran Prakashan to post highest topline and bottomline karan.mittal@icicidirect.com
CAGR (FY09-12E) of 12.9% and 37.4%, respectively, in the industry. We
reiterate our rating on the stock as BUY.
Dainik Jagran — No.1 Hindi daily and most read newspaper Sales & EPS trend
Dainik Jagran is the most read Hindi daily in the country. It is the
market leader in UP, which constitutes 35% of the Hindi ad market, 1500 10
while it enjoys a strong No.2 position in other major markets. The 8
Rs crore
company is consolidating its position as the market leader. We expect 1000 6
Rs
the circulation revenue to increase at 5% CAGR over FY09-12E. Unlike 500 4
its listed peers, Jagran is already presents in all key markets and 2
increasing circulation would not adversely impact margins. 0 0
Strong ad revenue growth
Sales (LHS) EPS (RHS)
Despite the slowdown in the economy during the last fiscal where
Stock Metrics
almost all media companies posted a decline in revenue, Jagran
Prakashan posted double digit ad revenue growth of 10.5% (YoY). Bloomberg Code JAGP.IN
Jagran posted healthy ad growth of 17.2% in H1FY10 as well on the Reuters Code JAGP.BO
back of robust demand in smaller town and villages where the Face value (Rs) 2
company is present. We expect it to post 15.1% ad revenue growth in Promoters Holding 55%
FY10E. Jagran is expected to post the highest in the class CAGR of Market Cap (Rs cr) 3,590
14.6% (FY09-FY12E) ad revenue to Rs 830.2 crore. 52 week H/L 124 / 40
Sensex 16,974
Valuations
Average volumes 113,340
Being a pure regional player, the company has posted highest growth in the
recent past. Jagran Prakashan is the market leader in the segment. It has Comparative return metrics
always commanded a premium over its peers. At the CMP of Rs 119, the 1M 3M 6M 12M
stock is trading at 21.5x FY10E EPS of Rs 5.5 and 17.8x FY11E EPS of Rs Jagran Prakashan 8.9 29.1 102.3 128.2
6.7. We value the stock at 20x FY11E EPS to arrive at a target price of Rs Deccan Chronical 11.0 55.2 127.8 242.9
134. This implies an upside of 12% over the current price. We reiterate our HT Media 0.6 12.3 76.4 79.8
rating on the stock as BUY Price Trend
Exhibit 98: Key Financials (Rs crore)

140
(Year-end March) FY07 FY08 FY09 FY10E FY11E FY12E 120
Net Profit (Rs crore) 76.2 98.2 91.6 166.9 201.3 237.5 100
Shares in issue (in crore) 30.1 30.1 30.1 30.1 30.1 30.1 80
EPS (Rs) 2.5 3.3 3.0 5.5 6.7 7.9 60
% Growth 28.9 (6.8) 82.1 20.6 18.0 40
20
PER (x) 47.1 36.5 39.2 21.5 17.8 15.1
0
Price / Book (x) 7.0 6.7 6.4 5.5 4.5 3.7
Oct-08
Apr-09
Dec-08
Feb-09
Aug-09
Oct-09
Jun-09
EV/EBITDA (x) 28.1 21.0 22.3 12.0 9.4 7.8

RoE (%) 14.9 18.2 16.4 25.4 25.5 24.7
RoCE (%) 16.0 21.1 16.9 30.0 31.7 32.0
Source: ICICIdirect Research
67 | Page
Company Background
Promoters 55.3
Jagran Prakashan (JPL) is a leading media house, which publishes Dainik Institutional investors 17.3
Jagran, India’s largest read daily. It was also voted the most credible and Other investors 16.8
trusted newspaper in India, (Source: Globescan survey). The first edition General public 10.5
was launched from Jhansi, Uttar Pradesh in 1942. Dainik Jagran is now
published from 11 states having 32 editions. The company also launched
I-next, the first ever bilingual newspaper in the country in December, Promoter & Institutional holding trend (%)
2006 and also has an English Infotainment paper called City Plus. JPL also
publishes Sakhi, a monthly magazine targeted at women and Jagran 55% 52% 52% 52%
60%
Varshiki, an annual general knowledge digest, and various national and
state statistical compilations. The company’s portal www.jagran.com is 40%
the most visited Hindi portal. From October 2007, the portal is a co 17% 16% 17% 17%
branded site with yahoo.com. 20%
0%
The group also provides out-of-home (OOH) media solutions like
placement, hoardings and billboard advertising sites and other marketing
promotion activities like event management. The group has also recently P H ldi I i i l H ldi
started providing SMS-based value-added services (ringtone downloads,
e-shopping, etc).
Jagran Prakashan
Print OOH
1500 Rental properties
Metros and existing markets
Dainik Jagran Tabloids Billboards, LEDs, glow tubes
Bihar
Haryana I-Next
HP 9 Editions Event Management
J&K Readership of Events for TVS Scooty, Microsoft
Jharkhand 2.75 lakh daily
MP
New Delhi NCR
Punjab Internet
UP City Plus
18 Editions Jagran.com (Co-branded site with
Uttarakhand yahoo)
WB Readership of
Chandigarh 1.72 lakh weekly
SMS
News updates through short code
Magazines 57272
Sakhi, Jagran Varshiki
68 | Page
Exhibit 99: Top 5 most read newspapers of the country (as per IRS R1 2009)
180 160.7 Dainik Jagran has an average issue

160 readership of 160.7 lakh, highest among
140 128.8 all dailies published in the country
120
93.0 88.8
In lacs
100 81.8
80
60
40
20
0
Dainik Jagran Dainik Bhaskar Hindustan Malyalam Amar Ujala
Manorama
Newspaper
Exhibit 100: Average issue readership in UP (as per IRS R2 2009)
120
99.7
100 94.2 91.6 91.9 91.4
80 DJ is the most read newspaper in Uttar

64.5 60.8 61.4 61.7 62.8
In Lacs
Pradesh, which contributes highest in

60
terms of country’s total ad revenue.
40
22.3 20.4 21.5 21.9 23.1
20
0
2007 R1 2007 R2 2008 R1 2008 R2 2009 R1
Dainik Jagran Amar Ujala Hindustan
1,400 30%
FY09-12E CAGR - 12.9% 1185
1,200 25.4%
1057 25%
1,000 930
802 20%
750 We expect 12.9% revenue CAGR over
Rs Crore
800
15% FY09-12E, led by 14.6% CAGR in
600 advertisement revenue
12.9% 13.7% 10%
400 12.0%
9.8%
200 5%
0 0%
Advertisement Circulation Others* Growth %
*Others include other publications sales, revenue from events, OOH and other operating income
69 | Page
Valuations
Jagran Prakashan is the market leader in Hindi newspapers and among

most dailies in the country. With rising affluence in smaller cities the
consumption is shifting to these regions. Recently, media companies
have also shifted their focus towards Tier II and Tier III cities, where
Jagran has a strong foothold. Given the strong ad revenue growth of the
company, we expect Jagran to post highest revenue growth among its
peers. Owing to its strong regional presence, the stock has historically
traded at a premium to its peers (Deccan Chronicle and HT Media).
Jagran was the least impacted by high newsprint prices during FY09,
largely due to higher exposure to domestic newsprint, which contributes
~80% of the total newsprint used.
Nonetheless, newsprint prices took a u-turn in December 2009 and are

currently down to ~Rs 25000/MT for domestic newsprint as compared to
a high of Rs 43500/MT last year. It is expected to remain in the range of
Rs 26000/MT in FY10E.
We estimate revenue CAGR of 12.9% over FY09-12E and PAT CAGR of

37.4%. The stock is trading at 21.5x FY10E EPS of Rs 5.5 and 17.8x FY11E
EPS of Rs 6.7.
P/E based valuation of Rs 134/ share
and 17.8x FY11E EPS of Rs 6.7. We value the stock at 20x FY11E EPS to
arrive at a target price of Rs 134. This implies an upside of 12% over the
current price. We reiterate our rating on the stock as BUY.
300
250
200
150
100
50
0
Apr-06
Apr-07
Apr-08
Apr-09
Aug-06
Aug-07
Aug-08
Aug-09
Dec-06
Dec-07
Dec-08
On an EV/EBITDA basis, we are assigning a multiple of 11.0x to the

company to arrive at a target price of Rs 137. This implies an upside
potential of 15% over the current market price.
70 | Page
EV/EBITDA
Less: Net debt Rs crore -445.5
Upside Potential 15%
6,000
5,000
4,000
EV (Rs Cr)
3,000
2,000
1,000
0
Apr-06
Apr-07
Aug-06
Apr-08
Dec-06
Aug-07
Apr-09
Dec-07
Aug-08
Dec-08
Aug-09
EV EV/E 17 EV/E 14 EV/E 11 EV/E 8 EV/E 5
71 | Page
(Rs Crore)
Net Sales 598.2 750.0 823.4 929.6 1,057.4 1,184.8
% Growth 25.4 9.8 12.9 13.7 12.0
Raw Material cost 253.1 271.7 341.4 290.0 322.4 373.2

% of Sales 42.3 36.2 41.5 31.2 30.5 31.5
% of Sales 11.8 12.2 12.9 12.7 11.8 11.0
Administrative and Other Expenses 154.8 222.6 218.8 245.2 276.1 291.9
% of Sales 25.9 29.7 26.6 26.4 26.1 24.6
Total Expenditure 478.3 585.8 666.7 653.6 722.9 795.6
% Growth 22.5 13.8 (2.0) 10.6 10.1
Op Profit 119.9 164.1 156.71 276.0 334.6 389.1

% Growth 36.9 (4.5) 76.1 21.2 16.3
Other Income 24.8 21.5 22.7 33.3 30.2 32.8
Depreciation 23.7 33.6 38.3 51.4 61.3 66.1
EBIT 96.1 130.5 118.4 224.6 273.2 323.0
% Growth 35.7 (9.3) 89.8 21.6 18.2
Interest 8.5 6.0 5.9 6.0 5.2 4.0

Exceptional Items (2.7) 0.1 - - - -
Taxation 38.9 47.7 43.6 85.0 96.9 114.3
Net Profit 76.2 98.3 91.6 166.9 201.3 237.5

% Change YoY 28.9 (6.8) 82.1 20.6 18.0
72 | Page
Balance sheet
(Rs Crore)
Liabilities
Reserves & Surplus 450.9 478.5 499.7 597.9 730.5 899.4
Secured Loans 106.7 79.1 141.5 91.5 71.5 51.5
Others 38.39 53.09 52.07 52.07 52.07 52.07
Total Liabilities 721.5 795.3 915.9 965.3 1,121.5 1,271.4
Assets
Gross Block 321.2 391.5 479.5 570.5 636.5 695.5
Net Block 214.0 256.8 328.2 246.8 251.6 244.7
Capital WIP 50.6 47.9 70.7 15.0 10.0 10.0
Total Fixed Assets 264.5 304.6 399.0 261.8 261.6 254.7
Investments 144.6 183.3 156.8 156.8 156.8 156.8
Loans & Advances 45.3 60.5 65.5 79.4 89.9 100.4

Cash 101.4 36.7 82.8 225.8 360.2 464.1
Inventories 32.8 34.7 31.8 22.2 24.1 27.2
Other Non Current Assets 18.7 16.9 21.4 21.4 21.4 21.4
Total Current Assets 312.2 307.3 360.1 546.8 703.1 859.9
Other Non Current Assets 0.2 0.1 - - - -
Total Assets 721.5 795.3 915.9 965.3 1,121.5 1,271.4
73 | Page
Cash flow statement
(Rs Crore)
Profit after Tax 76.2 98.2 91.6 166.9 201.3 237.5
Depreciation 23.8 33.7 38.2 51.4 61.3 66.1
Deferred Tax Liability 1.6 14.8 (1.0) - - -
Net Increase in Current Liabilities 29.3 59.2 37.9 1.3 43.5 1.1
Net Increase in Current Assets (45.4) (59.8) (6.7) (43.7) (22.0) (52.9)
Cash Flow after WC Changes 85.6 146.0 160.0 175.8 284.2 251.8
Purchase of Fixed Assets (128.5) (73.7) (132.7) 85.8 (61.2) (59.2)

(Increase) / Decrease in Investment 31.4 (39.3) 26.5 - - -
Cash Flow from Investing Activities (97.1) (113.0) (106.2) 85.8 (61.2) (59.2)
Increase / (Decrease) in Loan Funds (9.6) (27.7) 62.4 (50.0) (20.0) (20.0)
Payment of Proposed Dividend and Tax (52.0) (70.5) (70.5) (68.7) (68.7) (68.7)
Cash Flow from Financing Activities (61.6) (98.1) (8.1) (118.7) (88.7) (88.7)
Closing Cash/ Cash Equivalent 101.3 36.2 82.5 225.8 360.2 464.1
74 | Page
Ratios

Per Share Data (Rs)
EPS 2.5 3.3 3.0 5.5 6.7 7.9
Cash EPS 16.6 21.9 21.6 36.2 43.6 50.4
Book Value 17.0 17.9 18.6 21.9 26.3 31.9
Operating Ratios
Return Ratios
RoE (%) 14.9 18.2 16.4 25.4 25.5 24.7
RoCE (%) 16.0 21.1 16.9 30.0 31.7 32.0
Dividend yield (%) 1.3 1.7 1.7 1.7 1.7 1.7
Valuation Ratios
EV/EBITDA 28.1 21.0 22.3 12.0 9.4 7.8
PE 47.1 36.5 39.2 21.5 17.8 15.1
EV/Sales 5.8 4.6 4.2 3.5 3.0 2.5
Sales to Equity 1.2 1.4 1.5 1.4 1.3 1.2
Turnover Ratios
Debt/Equity 0.2 0.1 0.3 0.1 0.1 0.1

Current Ratio 4.8 2.5 2.2 3.3 3.4 3.4
Quick Ratio 3.2 2.2 1.7 2.0 1.7 1.7
DuPont analysis
(%)
PAT / PBT 66.2 67.3 67.8 66.2 67.5 67.5
PBT / EBIT 116.5 111.9 114.2 112.1 109.1 108.9
EBIT / Sales 16.5 17.4 14.4 24.2 25.8 27.3
Sales / Assets 91.2 111.8 109.3 116.0 115.7 111.4
Assets / Equity 128.4 124.5 134.6 121.8 115.6 110.8
RoE 14.91 18.22 16.36 25.35 25.45 24.75
75 | Page
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations.
ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current
market price and then categorises them as Strong Buy, Buy, Add, Reduce and Sell. The
performance horizon is two years unless specified and the notional target price is defined as
the analysts' valuation for a stock.
Strong Buy: 20% or more;
Buy: Between 10% and 20%;
Add: Up to 10%;
Reduce: Up to -10%
Sell: -10% or more;
Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com
ICICIdirect.com Research Desk,

ICICI Securities Limited,
7th Floor, Akruti Centre Point,
MIDC Main Road, Marol Naka,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com
ANALYST CERTIFICATION
We /I, Naval Seth MBA Karan Mittal MBA research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report
accurately reflect our personal views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to
the specific recommendation(s) or view(s) in this report. Analysts aren't registered as research analysts by FINRA and might not be an associated person of the ICICI Securities Inc.
Disclosures:
ICICI Securities Limited (ICICI Securities) and its affiliates are a full-service, integrated investment banking, investment management and brokerage and financing group. We along with
affiliates are leading underwriter of securities and participate in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationship
with a significant percentage of companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other
business selection processes. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their dependent family members from maintaining a financial interest in the
securities or derivatives of any companies that the analysts cover.
The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly
confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or
reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on reasonable basis, ICICI Securities, its subsidiaries
and associated companies, their directors and employees (“ICICI Securities and affiliates”) are under no obligation to update or keep the information current. Also, there may be regulatory,
compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such
suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities is acting in an advisory capacity to this company, or in
certain other circumstances.
This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness
guaranteed. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe
for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not
treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or
strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their
own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent
judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return of investment may vary because of changes in interest rates, foreign
exchange rates or any other reason. ICICI Securities and affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Past performance is not
necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual
results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.
ICICI Securities and its affiliates might have managed or co-managed a public offering for the subject company in the preceding twelve months. ICICI Securities and affiliates might have
received compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of public offerings,
corporate finance, investment banking or other advisory services in a merger or specific transaction. ICICI Securities and affiliates expect to receive compensation from the companies
mentioned in the report within a period of three months following the date of publication of the research report for services in respect of public offerings, corporate finance, investment
banking or other advisory services in a merger or specific transaction. It is confirmed that Naval Seth MBA Karan Mittal MBA research analysts and the authors of this report have not
received any compensation from the companies mentioned in the report in the preceding twelve months. Our research professionals are paid in part based on the profitability of ICICI
Securities, which include earnings from Investment Banking and other business.
ICICI Securities or its subsidiaries collectively do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the
publication of the research report.
It is confirmed that Naval Seth MBA Karan Mittal MBA research analysts and the authors of this report or any of their family members does not serve as an officer, director or advisory
board member of the companies mentioned in the report.
ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. ICICI Securities and affiliates may act
upon or make use of information contained in the report prior to the publication thereof.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where
such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within
such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may
come are required to inform themselves of and to observe such restriction.
This report has not been prepared by ICICI Securities, Inc. However, ICICI Securities, Inc. has reviewed the report and, in so far as it includes current or historical information, it is believed to
be reliable, although its accuracy and completeness cannot be guaranteed.
76 | Page

Print Industry Coverage

Transféré par

Informations du document

Description originale:

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Print Industry Coverage

Transféré par

Droits d'auteur :

Formats disponibles

November 18, 2009 | Print

November 18, 2009 | Sector Reprot

Initiating Coverage Analysts’ Name

Print Media Sector naval.seth@icicisecurities.com

1) Print Media Industry-Macro Environment 3

2) Risk and concerns 15

The print media industry is characterised by high fragmentation and

Although it is the second largest print market in the world with a

Exhibit 1: Indian demographic metrics Low readership in rural India

Literacy % 83% 62% 68%

Readership (% of literates) 42% 21% 29%

Exhibit 2: Indian print media industry – Revenue break-up

250 The print industry has grown to

Ad Revenue Circulation Revenue

Source: FICCI report2009, ICICIdirect.com Research

Source: FICCI report 2009, ICICIdirect.com Research

However, with cooling of newsprint prices, clearing out of high cost

-10% Q1FY09 Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10

Revenue Growth Expenditure Growth

Source: Company, ICICIdirect.com Research

Nevertheless, the long-term scenario looks positive for the Indian

Exhibit 5: Indian ad revenue industry (Rs billion)

Source: FICCI report 2009, ICICIdirect.com Research

Exhibit 6: Ad spend as a percentage of GDP globally

India is still under penetrated and

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6

Source: FICCI report 2009, ICICIdirect.com Research

Ad spend as percentage to GDP

Source: FICCI report 2009, ICICIdirect.com Research

Exhibit 8: Break-up of total print ad revenue of Rs 10800 crore in FY08

Hindi Daily, 19% English Daily, 45%

Regional Daily, 23%

English Daily Regional Daily Hindi Daily Magazines Business Daily

Source: FICCI report 2009, Company, ICICIdirect.com Research

Growth in advertisement revenue led by expansion in emerging

200 FY08-FY13E CAGR of 10% 25.0

Print Ad revenue Growth

Source: FICCI report2009, ICICIdirect.com Research

Exhibit 10: Volume growth in print

Index Growth: Year 199 = 100

Source: AdEx India, ICICIdirect.com Research

Exhibit 11: Average ads per day in newspapers

500 469 466 460

Index Growth: Year 199 = 100

Nevertheless, corporates are inching up their ad spends and the

Exhibit 12: Ad revenue growth

HT Media Deccan Chronicle Jagran Prakashan

Source: Company, ICICIdirect.com Research

Exhibit 13: Top 10 print advertising sectors (Jan-Jun 2009)

 Growing regional focus

150 130 press. Hindi is the most read

Source: IRS R2 2008, ICICIdirect.com Research

Exhibit 15: Top 15 newspaper in India

Exhibit 16: Some of the recent launches

Exhibit 17: Strong ad revenue growth of regional companies

Source: Company, ICICIdirect.com Research

The increasing regionalisation of media is primarily driven by:

Hindi and vernacular space — a cheaper option

Although regionalisation presents companies with an opportunity to

 Increasing penetration —next growth driver for circulation

Large players like Times of India, Dainik Bhaskar, HT Media, Jagran

Although we have seen some recent cover price hikes by some

60 47.7 8.0 grow from Rs 64.2 crore in FY07E

Growing regional focus

Increasing penetration —next growth driver for circulation

Newsprint prices cool off

Revenues to grow in double digits

EBITDA margin across companies to improve

PAT margin to exhibit a similar trend

Regional advertisement — the next growth driver