HMVL is 2nd largest hindi news paper. HMVL(Hindustan Media Venture ltd.) is attractive investment opportunity...Market Cap Rs. 930 Cr. Cash n equivalent in the book around Rs. 400 Cr. Cash flow from operation was around 100 Cr. While EBIDTA was around 150 cr. That mean one is getting News paper business roughly 5times EV/CFO..... Over and above Company is expected to deliver healthy growth rate in next 4-5 years as contribution from UP will be visible from next year that will improve margin and increase contribution ( UP division is near break even point in FY 14)...Company is entering into Rajsthan market which will drive future growth as well. Market is worried about cash pile up in balance sheet but company is generating around 10-11% return from surplus cash which I believe decent return on investment. Cash in balance sheet not only provide downside protection but also help company to capitalize the opportunity in crisis. Even if removing cash stock is quoting at FY 14e EV/EBIDTA multiple of 3.5x while other paper companies (including DB, Jagran, HT media) are quoting at average EV/EBIDTA multiple of 8-10x.... My DCF based target price is 210 which is almost 70% upside from current level... Valuation is compelling at given price. I believe stock has potential to double in next 15-18 months...If company declare some dividend or announce some acquisition (which they are considering as highlighted in latest conference call) stock can move fast and can double (fill valuation gap) in short span of time... Over and above because of cash component downside is cushioned up to certain extent.....
Posted on: Mon, 17 Mar 2014 12:47:43 +0000
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