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HT Media Ltd — Capital/Financing Update 2022
Aug 31, 2022
61512_rns_2022-08-31_93a64056-da25-44cb-a202-5fc5e6910187.pdf
Capital/Financing Update
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August 31, 2022
BSE Limited The National Stock Exchange of India Limited P.J. Towers Exchange Plaza, C/1, G Block Dalal Street Bandra-Kurla Complex, Bandra (E) MUMBAI – 400 001 Mumbai – 400 051 Scrip Code: 532662 Trading Symbol: HTMEDIA
Dear Sirs,
Sub: Intimation under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform that the credit rating agency ‘CRISIL Limited’ (CRISIL) has:
-
a. revised credit rating and outlook to Long Term Bank facility; and
-
b. revised credit rating and outlook on the Non-Convertible Debentures.
The Summary of above new rating and reaffirmation by CRISIL, are as under:
| Instrument | Previous Rated Amount (Rs. Crore) |
Current Rated Amount (Rs. Crore) |
Rating action |
|---|---|---|---|
| Long Term Bank facility | 100 | 80 | CRISIL AA-/Stable (Revised from 'CRISIL AA/Negative') |
| Non-Convertible Debentures | 100 | 100 | CRISIL AA-/Stable (Revised from 'CRISIL AA/Negative') |
Rating rationale issued by Crisil Ratings Ltd. is attached herewith.
You are requested to take the above information on record.
Thanking you, Yours faithfully, For HT Media Limited
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(Manhar Kapoor) Group General Counsel & Company Secretary
Encl.: As above
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Rating Rationale August 30, 2022 | Mumbai
HT Media Limited
Long-term rating downgraded to 'CRISIL AA-/Stable'; CP Reaffirmed
Rating Action
| Total Bank Loan Facilities Rated | Rs.80 Crore(Reduced from Rs.100 Crore) |
|---|---|
| Long Term Rating | CRISIL AA-/Stable (Downgraded from 'CRISIL AA/Negative') |
| Rs.100 Crore Non Convertible Debentures | CRISIL AA-/Stable (Downgraded from 'CRISIL AA/Negative') |
| Rs.500 Crore Commercial Paper | CRISIL A1+(Reaffirmed) |
1 crore = 10 million Refer to Annexure for Details of Instruments & Bank Facilities
Detailed Rationale
CRISIL Ratings has downgraded its rating on the long-term bank facility and the non-convertible debentures (NCDs) of HT Media Limited (HTML) to ‘CRISIL AA-/Stable’ from ‘CRISIL AA/Negative’. The short-term rating on the commercial paper programme has been reaffirmed at ‘CRISIL A1+’. CRISIL Ratings has also withdrawn its rating on the term loan of Rs 20 crore at the company’s request. This is in line with CRISIL Ratings’ policy on withdrawal of ratings.
The downgrade reflects weaker than expected operating profitability of HTML reflected in subdued operating profits of Rs 27 crore in FY22. Furthermore, company reported operating loss of Rs 29 crore in quarter ended June 2022 compared to operating profit of Rs 22 crore in the previous quarter primarily due to increase in newsprint costs. The operating revenue remained flat at Rs 420 crore in quarter ended June 2022 as against Rs 421 crore in the quarter ended March 2022.
Ad revenue, which contributes about three-fourth to the topline of large print media companies, including HTML, has a high correlation with economic growth. While ad volumes and yields have witnessed recovery since the impact of second wave of Covid-19 in previous fiscal, ad yields continue to be discounted compared to pre pandemic levels. CRISIL will monitor recovery in ad revenues and its impact on the operating performance going forward.
The ratings continue to reflect the strong market position of HTML's flagship English daily, Hindustan Times (HT), in the National Capital Region (NCR) and the established market position of its Hindi daily, Hindustan. The ratings also factor in HTML's healthy financial flexibility because of strong liquidity of ~ Rs 1880 crore as on March 31, 2022, despite sharp impact of the pandemic on the company’s operations. These strengths are partially offset by continued weak operating profitability and susceptibility to volatility in newsprint prices and economic downturns.
Analytical Approach
CRISIL Ratings has combined the business and financial risk profiles of HTML and its subsidiaries. This is because the entities, collectively referred to as the HTML group, are in related businesses and have common promoters.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation.
Key Rating Drivers & Detailed Description
Strengths:
- Established market position of publications: HT is the third-largest English daily in India with an average daily circulation of about 11 lakh copies as per the last available circulation audit for July-December 2019 by the Audit Bureau of Circulation (ABC). Similarly, Hindustan is also the fourth-largest Hindi daily, with a circulation of around 22 lakh copies for the same period.
According to the last available Indian Readership Survey (IRS) for the fourth quarter of 2019, Hindustan is the third most read newspaper among Hindi dailies, while HT is the second most read English daily. HT's strong market position in NCR and Hindustan's leading position in Bihar, Jharkhand and Uttar Pradesh, should continue to support HTML’s overall business risk profile.
- Strong financial flexibility: Capital structure draws support from the sizeable gross cash of ~Rs 1880 crore as on March 31, 2022, which comfortably exceeded total debt of ~Rs 800 crore. Gearing is estimated to be less than 0.40 time as on March 31, 2022 and should remain stable over the medium term. Interest coverage ratio was healthy estimated at 3.7 times in fiscal 2022. It is expected to remain at around 4 times in fiscal 2023 due to impact of newsprint prices on
profitability. Nevertheless, the financial risk profile should sustain, aided by healthy financial flexibility, strong liquidity and the absence of any large capital expenditure (capex) or investment plans.
Weaknesses:
- Continued weak operating profitability: While revenues recovered significantly in fiscal 2022 year on year, EBITDA remained weak at Rs 27 crore compared to losses of Rs 124 crore in FY21. This was due to impact of second wave of pandemic in the first half of fiscal 2022 as well as rising newsprint prices. Additionally, HTML’s profitability was weaker than its peers because of significant dependence on metro markets in both English print and radio which were relatively more impacted amid the pandemic. However, the radio business saw third consecutive quarter of operating profit for the quarter ended June 2022 driven by improvement in both volume and rate.
Furthermore, elevated newsprint prices have led to operating loss of Rs 29 crore in the quarter ended June 2022. While there is an expectation of newsprint prices peaking out and expected to decline in second half of fiscal 2023, operating profitability should recover with a lag due to high cost inventory. Therefore, operating profits for fiscal 2023 are expected to remain subdued. Movement of the newsprint prices, recovery in ad revenues and their impact on the company’s operating profitability going forward will remain a key monitorable.
- Exposure to volatility in newsprint prices and economic downturns: A substantial share of operating income is derived from ad revenue, which has a strong linkage to economic activity and is affected by economic cycles. Recessionary cycles and uncertain market conditions lead to a slowdown in spending, constraining the ad revenue for newspapers, as seen in the previous fiscal.
In addition to linkages with overall economic activity and corporate spending, the operating cost of the company also depends on movement in newsprint prices. As newsprint accounts for 30-35% of the operating cost, operating margin is susceptible to volatile newsprint prices and foreign exchange rates.
Liquidity: Strong
HTML’s superior liquidity is driven by cash and equivalent of ~Rs 1,880 crore as on March 31, 2022 and estimated cash accrual of Rs 100-200 crore per fiscal over the medium term. Liquidity is further supported by unutilised bank limit of around Rs 500 crore as of March 2022. Available liquidity and cash accrual should suffice to cover debt repayment obligation of Rs 150 crore in fiscal 2023 and moderate capex over the medium term on a consolidated basis.
Outlook: Stable
CRISIL Ratings believes HTML will continue to benefit from its established market position, while the financial risk profile should remain supported by strong liquidity
Rating Sensitivity factors
Upward factors
Sustained revenue growth, along with improvement in operating margins sustaining over 10%
Substantial turnaround in the radio and digital businesses leading to improvement in return on capital employed
Downward factors
Lower-than-expected recovery in ad revenue or sustained high level of newsprint prices impacting operating profitability Weakening of market position of publications due to intense competition
Large, debt-funded capex or acquisition or diversification leading to net cash sustaining below Rs 600 crore
About the Company
Hindustan Times Ltd (HTL), a KK Birla group company, which holds 69.51% stake in HTML as on June 30, 2022, demerged its print media business into HTML in July 2003. HT, the leading English daily in Delhi that was inaugurated by Mahatma Gandhi in 1924, is HTML's flagship product. Other publications include Hindustan and Mint. HTML has presence in the FM radio space through Fever 104 FM, Radio Nasha and Radio One; and has internet portals such as shine.com.
Key Financial Indicators
| As on / for theperiod ended March 31 |
Unit | 2022 | 2021 | |
|---|---|---|---|---|
| Revenue | Rs crore | 1,500 | 1,121 | |
| Profit after tax(PAT) | Rs crore | 19 | -65 | |
| PAT margin | % | 1.3% | -5.8 | |
| Adjusted debt/adjusted networth | Times | 0.36 | 0.33 | |
| Adjusted interest coverage | Times | 3.74 | 1.61 |
Financial numbers mentioned in this report are CRISIL Ratings adjusted numbers and may not directly comparable with company financials.
Any other information: Not applicable
Note on complexity levels of the rated instrument:
CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.
Annexure - Details of Instrument(s)
ISIN Name of Date of Coupon Maturity Issue Complexity Rating assigned instrument allotment rate (%) date size level with outlook
| (Rs crore) |
|||||||
|---|---|---|---|---|---|---|---|
| NA | Debentures* | NA | NA | NA | 4.0 | Simple | CRISIL AA-/Stable |
| NA | Commercial Paper |
NA | NA | 7-365 days |
500.0 | Simple | CRISIL A1+ |
| NA | Term Loan | 26-Mar-21 | NA | 26-Mar-24 | 80.0 | Simple | CRISIL AA-/Stable |
| NA | Term Loan | 26-Mar-21 | NA | 26-Mar-24 | 20.0 | Simple | Withdrawn |
| INE501G07013 | Debentures | 31-Dec- 21 |
5.70% | 31-Dec-24 | 96.0 | Simple | CRISIL AA-/Stable |
*Not yet placed by the company
Annexure – List of entities consolidated
| Annexure– List of entities consolidated |
||
|---|---|---|
| Name of entity | Extent of consolidation | Rationale of consolidation |
| Hindustan Media Ventures Ltd | Full | Related business and commonpromoters |
| HT Music and Entertainment CompanyLtd | Full | Related business and commonpromoters |
| HT Mobile Solutions Ltd | Full | Related business and commonpromoters |
| HT Overseas Pte. Ltd | Full | Related business and commonpromoters |
| HT Noida(Company)Ltd | Full | Related business and commonpromoters |
| Next Mediaworks Ltd | Full | Related business and commonpromoters |
| Next Radio Ltd | Full | Related business and commonpromoters |
| Mosaic Media Ventures Private Limited | Full | Related business and commonpromoters |
| Sports Asia PTE Limited(Singapore) | Joint Venture | Joint Venture |
| HT Content Studio LLP | Joint Venture | Joint Venture |
^List of consolidated entities as per last filed results
Annexure - Rating History for last 3 Years
| Current | Current | Current | 2022 (History) | 2022 (History) | 2021 | 2021 | 2020 | 2020 | 2019 | 2019 | Start of 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Instrument | Type | Outstanding Amount |
Rating | Date | Rating | Date | Rating | Date | Rating | Date | Rating | Rating |
| Fund Based Facilities |
LT | 100.0 | CRISIL AA-/Stable |
-- | 31-08-21 | CRISIL AA/Negative |
-- | -- | -- | |||
| Commercial Paper |
ST | 500.0 | CRISIL A1+ |
-- | 31-08-21 | CRISIL A1+ | 31-07-20 | CRISIL A1+ |
10-12-19 | CRISIL A1+ | CRISIL A1+ | |
| -- | -- | 28-04-21 | CRISIL A1+ | -- | 30-04-19 | CRISIL A1+ | -- | |||||
| Non Convertible Debentures |
LT | 100.0 | CRISIL AA-/Stable |
-- | 31-08-21 | CRISIL AA/Negative |
31-07-20 | CRISIL AA/Stable |
10-12-19 | CRISIL AA/Stable |
CRISIL AA+/Negative |
|
| -- | -- | 28-04-21 | CRISIL AA/Stable |
-- | 30-04-19 | CRISIL AA+/Negative |
-- |
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
|---|---|---|---|
| Term Loan | 80 | Axis Bank Limited | CRISIL AA-/Stable |
| Term Loan | 20 | Axis Bank Limited | Withdrawn |
This Annexure has been updated on 30-Aug-22 in line with the lender-wise facility details as on 31-Aug-21 received from the rated entity.
Criteria Details
Links to related criteria
Rating criteria for manufaturing and service sector companies CRISILs Criteria for Consolidation CRISILs Criteria for rating short term debt
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