Fundamental Valuation for HMVL makes little sense, as it belongs to a dying industry. HMVL, with its flagship Hindi newspaper is still better placed than the English dailies, but the performance has been on the way down pre-covid and has got further exacerbated during and post-Covid. The main revenue earner for the newspapers is the Ad Rev, and this is moving away to digital space. Circulation is static and they have little to no pricing power.
There are a few positives that might play out in FY24 for HMVL; 1) Reduction in newsprint prices may reduce the cash burn (losses), 2) Improved ad spends by corporates in some sectors that target the rural landscape, 3) Uptick in GoI and State Govt. ad spends in view of the upcoming general and state elections, 4) Improvement in their new digital venture subscriptions, OTT Play.
However, HMVL is still an asset play with a large cache of Investments and Cash in its pockets; against a Market Cap of ~550 cr, HMVL’s Investments, Cash and Cash Eq. are worth 1400 cr as per AR FY23.
What is missing is the catalyst to spark market participant’s interest and unfortunately the sub-par transparency and communication skills of the management doesn’t help either. If and when it plays out, it might see some upward movement towards its Intrinsic Value. Note that the stock price has increased by 42% in the last year, but this could just be the result of the general exuberance in small and micro cap stocks in the market.
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