The Sandesh ltd is this at inflection point

Tuesday, September 8, 2015
SANDESH LTD (BSE : 526725) RS 850 (FV RS 10)

Sandesh Group is over 90 years old, the journey of Sandesh as a newspaper started in 1923, and today Sandesh is Gujarat’s largest and most influential media house, having a strong foothold across media landscape, such as :

Newspaper : Sandesh, which is published from Gujarat & Maharashtra is the largest media Gujarati company with 7 editions across Gujarat & Mumbai.

Television : Sandesh News (Award winning channel) is the region’s fastest growing 24x7 Gujarati News Channel, which reaches out to the most affluent and powerful gujarati audience.

Digital : Harnessing the potential as a future of communication, Sandesh is among first to launch a Gujarati news Smart Phones App in India to provide information and news in real times as it happens, and continues to have an expanding digital presence of over 5 million followers across all platforms.

Magazine & Weekly Publications : Through “Agro Sandesh” which provides relevant and enriching content to the farming, Dairy and co-operative sector, thus contributing the sector positively. “Stree” is popular women focused magazine which reaches out to women across all classes and addresses the issues related to them directly.

OOH (Out of Home) Media Solutions : “Spotlight” Brand Management focuses on every aspect of Brand Launching, upto Brand Building and enhancing the brand message by going beyond just grabbing eyeballs, but creating a lasting buzz around the brand. Company has its sites at all the major commercial areas in Ahmedabad. The company has procured various prestigious tenders like BRTS, Bus Shelters, AUDA & Ahmedabad Municipal Corporation.

Besides all of the above, the company also successfully operates its Real Estate (by the name of Applewoods Estates Pvt Ltd, by monetizing its land bank in Ahmedabad) and Finance business.

To cover the entire geography of Gujarat state, the company has its printing facilities at Baroda, Surat, Rajkot, Bhavnagar, Bhuj to cater Semi urban & rural areas. The regional offices are located at Mumbai, Delhi, Kolkata, Bangaluru, Chennai & Pune. Company enjoys a strong regional franchise, where it enjoys strong readership loyalty.

Future Outlook : According to FICCI-KPMG Report 2014, the print sector continued to buck the global slowdown trend and the sector grew at CAGR of 8.5% last year to touch Rs 243 Billion. The print industry is expected to grow at a CAGR of over 9% for 2013-18, as against estimated 8.7% expected in 2013. Vernacular market saw 10.8% growth in advertisement revenues, with English print reporting a sluggish growth of 5.2%. The increase in population, literacy rate and reach has led to increased circulation and readership of the newspapers in India. The company is steadily increasing its geographical presence, which helps improve its circulation and readership of its publications.

Sectors which spent heavily on print were FMCG (12.3%), Automobiles (11.7%), Education (9.7%), and Real Estate (8.7%). FMCG, Telecom and Automobile will continue to increase their ad-spent to push the sales due to slowdown, and majority will likely to come to Print media, due to its affordability, vast reach and direct impact.

According to FICCI-KPMG Report 2014, among various media, Print and Television continued to be the primary media platforms, claiming nearly 82% of total revenue and could continue to be the most dominant media for the next 5 years.

Valuation : This closely held DEBT FREE, Cash Rich company, with a tiny equity of Rs 7.61 Cr & Reserve of 420 Cr (Book Value Rs 650 per Share), where promoters hold 74.81% (Zero Pledge), HNIs hold 12.12% and rest (~13%) is held by Public, is trading at a PE of only 7.5 times TTM EPS of Rs 85 per Share (Average Industry PE stands at 18 times). At CMP of 850 the share is available at a Price to Book value of close to 1.2 (Industry Price to Book value 4.5 times). Market Cap to Sales Ratio is 2 ( Industry Average is 4.5 times).

June 15 Quarter company posted YOY sales growth of 10%, while Net Profit Jumped over 50% from 13.3 cr to 20.35 Cr, posting an EPS of 26.88 for June Quarter alone. The great news is that the company has posted a Super margins, OPM of 36.15% and NPM of 22%, which is the highest in the industry. ROE & ROCE stands at 12.01% and 35.95%.
The sept qtr result is also very good with revenue at 81 cr operating profit margin of 39% and net profit of 19 cr reality showing improvement there outdoor adverṭising model can also increase the media revenue with apple wood town ship cleared all hurdles and Ahmedabad witness some huge reality deals ( between Sandesh and Shivalik )

Even today the stock is quoting below 6 EVEBITA and and price to clash flow of less than 13 and pe of around 10 on fy 16 ex eps whereas the other media stocks are quoting at 10 EVEBITA
Request members view regarding the future scalability and investment rationale for long term

Disl I have invested

 

Good pick with good fundamentals but is print media going to sustain? There is heavy competition from Times of India and other strong newspapers. Even in Gujarati language these newspapers from big brands are there. Stock is up 71% for year and 31% in 3 months. But requires to kept watch and so thanks for sharing this. We have to find such gems early when mcap is still only 550 crore.

 

good find . still @Srouta Mukherjee 's question is valid. so be cautious and dont overexpose to this stock.

 

Times of India group has gujarati newspaper called Navgujarat Samay, which is currently available in Ahmedabad only but can increase new editions and will give tough competition to peers.

 

Thank you very much for your feed back
The first spot is occupied by divya bhaskar and as per recent survey Sandesh is ranked second yes print media English may feel the pinch of e media whereas the vernacular regional media company can grow at at 12% cagr. Assuming the print media is valued fairly at the present M.cap kam only wondering the growth they can show in outdoor advertising rights the recent digital media ( they are first to launch gujrathi mobile news app with good viewer ) the Sandesh news channel.
If you see the sept qtr the real estate segment has shown growth in profits and any members from Ahmedabad can help us verify the status of applewood estate town ship in s P ring road. The value of investment which is now wholly owned by Sandesh group is approx 320 cr even recently Sandesh and Shivalik had a major deal see the news paper cutting ( Ahmedabad mirror)
QUOTE
MEGA DEAL BOOSTS REALTY SENTIMENTS

By Kuldeep Tiwari | Jan 23, 2015, 02.00 AM IST

​

It is a deal that the realty market of Ahmedabad needed to shake off the sentiment of stagnancy it has been mired in for a long time now. Once paperwork is completed, the expected rate of Rs 1 lakh a sq yard for a plot next to Iskcon Circle on SG Highway promises to make it the most expensive deal in the city so far. According to sources close to the development, "City-based realty firms Shivalik Projects and Shilp Infrastructure have bought the 8,000 sq yard plot, right at the corner of Iskon circle. The news has boosted the sentiment of the prevailing stagnant realty market."

Post Vibrant Gujarat summit, this is the first landmark deal that may cross the Rs 100-crore mark. According to realty experts, prior to this deal NS Safal bought Kedar Bungalows, spread over 18,000 sq yard, at Rs 90,000 sq yard a year ago. This makes the Big Bazaar land deal the biggest on SG Highway. The property earlier had HN Safal and Goyal and Company as partners. After buying their stakes, Sandesh Group sold the property to Shivalik Group two days back. Sandesh Group MD Parthiv Patel, who looks after the real estate division, said "Yes we have sold our land to Shivalk Projects and Shilp Group.

However, we won't be able to comment on the deal's amount as it is still under negotiation." Sources in the realty market said that the companies - Shivalik Projects and Shilp Infrastructure - have given the token amount to Sandesh Group towards finalising the deal and rest of the amount will be given in parts as per the terms and conditions finalised on paper. When contacted, Shivalik Projects Managing Director Chitrak Shah said, "We have bought the plot from Sandesh Group and are planning to come up with a state-of-theart commercial project."

On the buzz of the deal being the most expensive on SG Highway, Shah said, "We are working on the project cost and other factors which will decide the final price of the plot. So, it is difficult to share the per sq yard price of the land deal. But we agree that it is a landmark deal so far as 'per sq yard' rate is concerned." The piece of land next to the BRTS corridor and right on SG Highway. Shivalk Group will be getting floor space index (FSI) of four to construct the building which is an advantage to the developer. Therefore, the deal is noteworthy for Ahmedabad's real estate market.

National Association of Realtors vice president Pravin Bavadiya said, "Being one of the biggest deals on SG Highway, in terms of price and strategic location, it will boost the sentiments of the realtors in the market." Considering the strategic location and market value of the property, Bavadiya added, the deal should be around Rs 100 crore. At the time when Ahmedabad real estate market is struggling with the stagnancy, the deal will give sense of relief to many developers, anticipating revival of the real estate market in near future."
UNQUOTE

I also noticed the promoter holding 74 % and another nearly 15% by HNI so out of 76 lac shares virtually some 65 lac shares is not floating only remaining 10 to 12 lac floating stock so the sudden spike always happen with low float.

Please do not take it as a any buy recommendation my aim to see whether it will fit a long term investment and I also request once again any Ahmedabad based members to give feed back on apple wood town ship present status.

 

If you are convinced go for it. There will always be two sides to a coin

 

with this yr showing a rev growth in media around 10% and real estate and finance can produce nearly 45 cr as other operating revenue expect the top line around 390 and net profit around 85cr and ebita above 100 cr virtually debt free remember the town ship apple wood is now wholly owned by sandesh the overall value of that is nearly 3000 cr above all the quality of mangement is good the cash flow of nearly 60 cr cheap stock on all front huge upside potential HNI accumaltion going on in every dip a sure shot multibagger

 

AnonymousDecember 19, 2015 at 1:26 PM
man I came across two companies one is ASSOCIATED ALCHOLOL & BREWERIES LTD this company has grown at 35% cagr on profit and revenue over 5 yrs they are bottles for all premium brand of whisky justice raro glen Drummond black dog and supplier of triple dispelled extra fine spirit for major vodka brands Imil sales in MP promoter holding 58% no pledge no dilution no warrants and debt is 38 cr fy 16 e rev around 350 cr and opm of 12% looks possible can u please have a look and post ur view
Second one is THA SANDESH ltd Gujarati publication which has shown a consistent Opm of above 30% and growth looks attractive in outdoor advertising and there investment in APPLE wood estate town ship in ahemadabad is started giving profits the investment alone is 350 cr in real estate it appears to be the cheapest at 6 EVEBITA in media sector your opinion will be highly helpful for long term investment purpose as of today I have not invested thank u in advance

Dolly KhannaDecember 19, 2015 at 10:14 PM
Sorry not tracking above stocks. But from above statistic it looks good.
see even dolly suggested that it is good

 

Why you want to buy JUNK STOCKS from liquor industry which is BANNED in so many States of Country. Dont you have any other stocks that you want to buy such stocks which are evil in society and also facing BAN from Govt. I suggest you forget such stocks and buy quality stocks from Pharma (basket to avoid FDA risk) (JB Chem, Shilpa, Ajanta), NBFC (CAPF, DHFL), Housing (Repco) HSIL, CERA etc. Forget stocks that are bad for society and also facing ban like Ciggarette and alcohol. OK?

 

Yes. Liquor stocks are facing lot of uncertainties at to which states will ban them in future. Its better to stay away from the sector.
Cigarette sector also facing low margin pressure. Along with various taxes. Not very profitable

 

Srouta the results are out
Revenue fy 16 371 cr as against 340 cr fy 15 yoy growth 8% and
Profit 81 cr fy 16 as against 54 cr fy 15 yoy growth 40%
Three year cagr > 8% and 15% in revenue and profit
Roe > 15% and Roce> 30% and
525 cr net worth 72 cr net asset
Non current investment 209 cr in subsidiary and 72 cr in mf total 280 cr
Cash in hand 124 cr and current investment 42 cr total 168 cr
Operating profit 121 cr operating cash flow improved to 130 cr ( reduction in inventory and growth in pat)
M.cap 580 cr nci+ cash+ CI = 448 cr 80% of the m.cap
At present cmp quoting less than a pe of 8 and 1.1 book value and 5 EVEBITA and < 5 pcf
Eps of 106 and equity of 75 lac promoter holding 74% no pledge and just 20 cr debt
Media segment profit 86 cr and finance segment is 30 cr and the real estate segment will start giving income from fy17 ( apple woods estate Ahmedabad is in completion stage) so with this in mind
Now what could be the fair value looks very interesting and good for rerating senior members please give feed back.

 

Results are good. I think stock get re-rated soon. Looks like safe stock with consistent wealth creator. In Media space I have TV Today which is also v. good stock.

 

This was written by my friend Prakash in valuepickr I am reproducing this with his permission just read it and give your views pl.
Gaurav I read this book of John greenbalt were he emphasised on earnings yield with that I went to the screener I found this stock to match that philosophy
See even at today price of 800 the enterprise value is 485 cr which comes to 4 EVEBITA and the earning yield is 25% and assuming the m.cap to be at 750 cr the enterprise value is 645 cr operating profit of 125 cr the EVEBITA 5 and the PE Will be 10.
At the present EBIT/ enterprise value the EARNING YIELD IS 25% and at 750 cr m.cap and EV OF 645 the EARNING YIELD IS 20%
Even on taking the media alone the revenue is 341 cr and operating profit is 95 Cr and the net profit is 58 cr on media alone even if media segment to be valued at 10 EVEBITA this comes to 950 cr
Or even on market cap to sales of 2 it is 700 cr without finance segment
Now the current investment and non current investment comes to nearly 110 which I have not considered
On finance segment there is 300 cr which is fetching around 29 cr operating profit and 21 cr net profit. This at least we can give a 50 cr m.cap
Lastly 209 cr investment in debentures in the real estate
The sales growth has consistently above 8% profit growth above 15% this time is above 30% even if take the total balance sheet value as asset which is 637 cr and net profit 81 the return on the total assets is above 12.5% the Roce is consistent above 30% the return on equity this Fy is 15%.
The growth factor is 6 P SCORE IS 9 and Alt Z score is 6 and modified c score 1 the current book value is 700.
No debt 90 yr history the mangement is conservative in rewarding dividend but have never given negative result in last many years.
Finally if they decide to merge the Sandesh procon Pvt. Ltd with the parent company the same way they merged Sandesh digital that value unlocking has huge potential.
Now for an enterprise value of just 485 cr backed by asset and cash and equity of more than 880 cr there can be very limited down side from here and even assuming a fare EVEBITA of 5/6 the market cap should be above 750/850 cr
I think you have found a good deal. If I missed some thing I request senior to high light please.
Disl. Invested

 

Hi to all friends. This is my first post on this blog. So bear with me if it contains the error. Expecting the response from my seniors for correction so can improve myself.
I found the Sandesh Stock very encouraging. But on going through the BS, found that they had almost advanced their entire earning till date to the associate company. It is in form of Equity, Preference and Loans. These entities are in Real Estate sector and the situation in real estate is known to all. Management is silent on these investments in all of their Annual Reports till date. I hope they will clarify present value these investments in the coming AR of FY1516.

 

Now if you read what tilak has posted you query will be answered actually they have parked the surplus cash in a real estate entity as 15% fully convertible debentures and if you see the other operating income the interest received is shown and this fy if you see the amount used in buying the land trade has given exceptional income of 8 Cr in current investment money is parked in mutual funds if you noticed even big cash rich company like tcs has parked the money in mf and government treasury bills which gives only 7 % whereas this has earning them more than 15% and the real estate go through the website sandesh procon or search for applewoods estates Ahmedabad it is around more than 600 Cr project you will clearly know the potential of sandesh procon Pvt ltd now there is chance of mergers than what will be market capital imagine. But if you see tilak post he had talk only about the under value even to media segment so 750 Cr without even considering the real estate is possible 520 Cr in net worh and take only 70 Cr in asset and 190 Cr cash the difference between current assets and current liability(124 Cr cash and. 65 Cr excess cash generated) that itself is 800 Cr the npm is 21% so even a 10 evebit for media alone it is more than 800 cr hope I tried to clarify but this is MHO

 

Thanks adrian007 for clarification. Got the interest @18.5% in other operating income. Rs.1821.81 Lac. Will consider this for investment after further study. Cheers

 

looks undervalued. it can be a good pick at 800 cmp .
its real estate business hav no revenues??

 

June qtr 100 cr revenue 37 cr ebita and 24 cr net profit 32 eps qoq growth is 25% in profit the operating cash flow this year is 145 cr cash on books is 120 cr debt is 15 cr fy 17 400 cr ebita 150 cr and net profit of 100 cr eps of 133 and book value of 750/775 available at an enterprise value of 550 cr and EVEBITA of less than 5