| HT Media Limited | ||||
| Long-term rating downgraded to 'CRISIL AA-/Stable'; CP Reaffirmed | ||||
| Rating Action | ||||
| ||||
| ||||
| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 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 CRISIL Ratings has also withdrawn its rating on the term loan of Rs 20 crore at the company’s request.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:
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.
Weaknesses:
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.
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
Downward factors
|
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
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: |
Annexure - Details of Instrument(s)
*Not yet placed by the company |
Annexure – List of entities consolidated
^List of consolidated entities as per last filed results |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
|
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
|