SANDESH LTD (BSE : 526725) RS 650 (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 392 Cr (Book Value Rs 604 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 680, the share is available at a Price to
Book value of close to 1.1 (Industry Price to Book value 4.5 times). Market Cap
to Sales Ratio is 1.4 (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%.
With blockbuster results of June
quarter, one thing is clear that the company is now on a high growth path and
that will continue going forward, the company can easily post an EPS of Rs 110
for FY 16, which makes this stock one of the cheapest among media company at
only 6 times PE at CMP of 650. Investors can invest in this another “Force
Motors” in the making stock for long term wealth creation.
