| HT Media Limited | ||||
| Ratings reaffirmed at 'CRISIL AA / Stable / CRISIL A1+ ' | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AA/Stable/CRISIL A1+’ ratings on the debt programmes of HT Media Ltd (HTML).
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. These strengths are partially offset by susceptibility to volatility in newsprint prices and economic downturns.
Although HTML’s operating performance has been significantly impacted in fiscal 2021 by the ongoing Covid-19 pandemic, there has been a sequential improvement in its operating performance over the three quarters through December 2020. Advertisement (ad) revenue, which contributes about three-fourth to the topline of print media companies, including HTML, has a high correlation with economic growth. As the economy is expected to rebound in fiscal 2022, Ad revenue should also recover.
CRISIL Ratings believes the impact of the second wave of Covid-19 on print media companies to be less severe when compared to that in the last fiscal. This is because, circulation of newspapers are seen rebounding, which would gradually push advertisements too. Therefore while print media companies’ revenue may remain modest in the first quarter of fiscal 2022, it is expected to recover second quarter onwards, with a full recovery in fiscal 2023. Any sustained decline in subscription of newspapers thereby impacting operating performance would remain key monitorable.
HTML has also undertaken various cost-rationalisation measures such as reduction in pagination, employee and other fixed costs, which have contained its operating loss to a large extent in fiscal 2021. But, newsprint cost, which accounts for 30-35% of the total expenses for HTML, is estimated to have increased by 20-30% over the past 4-6 months in the industry. While the earnings before interest, taxes, depreciation, and amortisation (EBITDA) ratio is expected to improve in-line with the recovery in revenue in fiscal 2022, any significant and sustained increase in newsprint prices impacting profitability and the credit risk profile of HTML will remain a key rating sensitivity factor.
HTML’s credit risk profile is resilient due to its market leadership, healthy liquidity of over Rs 1,700 crore as on September 30, 2020, prudent capital structure, and high financial flexibility despite the decline in revenue in fiscal 2021. |
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 HTML group, are in related businesses and have common promoters.
Please refer Annexure - List of entities consolidated, for details of the entities considered and their analytical treatment for consolidation |
Key Rating Drivers & Detailed Description Strengths
According to the Indian Readership Survey (IRS) Q4 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 UP, should continue to support HTML’s overall business risk profile.
Nevertheless, financial risk profile should sustain, aided by healthy financial flexibility, strong liquidity and the absence of any large capital expenditure (capex)/investment plans.
Weaknesses
For the first nine months of fiscal 2021, HTML, on a consolidated level, reported EBITDA loss (excluding non-operating income) of ~Rs 145 crore against operating profit of ~Rs 101 crore reported in the corresponding period of the previous fiscal. Operating performance, though improving sequentially, is expected to remain modest in the first quarter of fiscal 2022, but is expected to recover from second quarter onwards, with a full recovery in fiscal 2023. However, revival in macroeconomic environment and its impact on company’s operating performance amidst the second wave of Covid-19 will remain a key monitorable.
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 and the company imports majority of its newsprint requirement, operating margin is susceptible to volatile newsprint prices and foreign exchange rates. HTML’s EBITDA was impacted in fiscals 2019 due to high cost of newsprint and in fiscal 2020 due to reduced ad revenue from various sectors. Further, with the recent rise in newsprint prices, profitability could get further impacted in fiscal 2022, if prices continue to rise and hence would remain monitored. |
Liquidity: Strong HTML’s superior liquidity is driven by cash and equivalents of over Rs 1,700 crore as on September 30, 2020 and estimated cash accrual of Rs 250-300 crore per fiscal over the medium term. Liquidity is further supported by unutilised bank limit of around Rs 500 crore as of March 2021. Available liquidity and cash accrual should suffice to cover debt obligation and moderate capex plan over the medium term. |
Outlook Stable CRISIL Ratings believes HTML will continue to benefit from its established market position, while the financial risk profile should remain comfortable, supported by strong liquidity. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Hindustan Times Ltd (HTL), a KK Birla group company, which holds 69.5% stake in HTML as on March 31, 2020; 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
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 complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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)
*Not yet placed by the company |
Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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