The Q2 numbers are out. Yoy, operational revenues have grown from Rs. 163.3 cr to Rs. 175.6 r. Previous quarter, operational revenues were at Rs. 168 cr. So growth is picking up marginally.
Net loss is at Rs. 30.7 cr compared to net loss of 21 cr last quarter and net profit of 32 cr last year.
Optically, the net loss looks really bad but it has to be looked at in the proper context. They are presumably burning 31 cr this quarter (As reported under Segment reporting) in funding startups under HT Labs. Finally, the promoters have found a way to utilise the huge pile of cash that the company owns. Some of the startups under HT labs are OTT play, Slurrp, Mint Genie, Upublish and HT Schools. These are the well known ones and as per Avinash Mudaliar the head of HT labs, there are more on the pipeline. We may agree or disagree on whether this is the right usage of cash reserves but I think it’s a step in the right direction.
Former Pepsi India head Praveen Someshwar is heading the company so I trust him to lead the company towards being digital and future ready.
The legacy print business has shown marginal improvement. Segment loss has come down to 8 cr compared to 14 cr in previous quarter. The loss is mainly attributed to the rise in newsprint costs.
Current market cap stands at around 380 Cr and latest book value stands at close to 1500 cr. Most of the book value is made up of mutual fund investments in debt instruments. It is baffling to say the least why such a cash rich company is being priced for bankruptcy. It just shows negative sentiment regarding the stock is overwhelming. Many investors looked at the cash reserves in the previous cycle and burned their fingers as the stock price consistently declined from 250 to 50.
Most institutional investors have fled the company. The question is whether the worst has been priced in or is there more pain to go?
Disclaimer: After studying the company, I feel that the stock has been hammered down too much. So its one of the largest holding in my pf at an average of 65. Let’s see what the future holds for HMVL. Interesting times are ahead for sure.
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