ITV

Tag: FMCG

  • Colgate-Palmolive Q-2015 marketing spends at Rs 201 crore

    Colgate-Palmolive Q-2015 marketing spends at Rs 201 crore

    BENGALURU: Q2-2015 has witnessed probably what has been Colgate-Palmolive (India) highest advertisement and sales promotion spend (marketing or ASP) in a quarter at Rs 201 crore (20.1 per cent of Total Income or TI) based on the data over the last 10 quarters starting Q1-2013 until Q2-2015. Q2-2015 ASP was 11.3 per cent more than the Rs 180.55 crore (18.7 per cent of TI) in the immediate trailing quarter (Q1-2015) and 68.2 percent more than the Rs 119.47 crore in the corresponding year ago quarter Q2-2014.

    Note: 100,00,000 = 100 Lakhs = 10 million = 1 crore

    Colgate-Palmolive’s brands include Colgate for oral care, Palmolive, Charmis and Halo for personal care, and Axion for household care.

    Please refer to figure A below. Over the 10 quarter period under consideration, Q2-2015 ASP is also the highest in terms of percentage of TIO, with the previous highest being 18.7 percent of TI in Q1-2015.

    Across seven financial years starting FY-2008 until FY-2014, the company’s TI, ASP  and ASP as percentage of TI show an upward linear trend, with the company’s marketing spends being the highest both in terms of absolute rupees and percentage of TI in FY-2014 at Rs 688.66 crore (19.2 per cent of TIO).

    In H1-2015 (six month period ended September 30, 2014), Colgate-Palmolive’s ASP at Rs 381.55 crore (19.5 percent of TI) was 72.8 percent more than the Rs 220.86 crore (12.3 percent of TI) in H1-2014 and was more than double (2.21 times) the ASP of Rs 172.64 crore (11 percent of TI) in H1-2013.

    Similarly, across the 10 quarters under consideration in this report, TI, ASP and ASP as percentage of TI show an upward linear trend. Colgate-Palmolive’s TI in Q2-2015 at Rs 1000.52 crore was 3.9 percent more than the Rs 956.90 crore in Q1-2015 and 9.5 percent higher y-o-y than the Rs 913.75 crore.

    Colgate-Palmolive’s TI in Q2-2015 at Rs 1000.52 was 3.9 percent more than the Rs 963.55 crore in Q1-2015 and 9.5 percent more than the Rs 913.75 crore in Q-2014. For H1-2015, Colgate-Palmolive’s TI improved 9.5 percent to Rs 1957.42 crore from Rs 1790.56 crore in H1-2014. The company had reported TI of Rs 3578.81 crore for FY-2014.

    Colgate-Palmolive’s Advertisement spends to increase in Q3-2015?

    Colgate-Palmolive’s ASP comprises of two components – (a) Advertising, and (b) Sales promotion. Data for 3 financial years – FY-2012, FY-2013 and FY-2014 show the breakup of ASP into these two components. Please refer to Fig A1 below. If one were to assume the lowest percentage in figure A1- 63.8 of ASP, as component of ad spend, the company’s advertisement spend in Q2-2015 works out to about Rs 128 crore. The simple average of the ad spends for the three years works out to 66.8 percent or about Rs 134 crore.

    Going by the company’s trends in FY-2013 and FY-2014, ASP has been higher in Q3 than in Q2, hence the chances of the company spending at least the same, if not higher amounts towards marketing in Q3-2015 are quite high.

    PAT

    Colgate-Palmolive’s PAT in Q2-2015 was 4 percent lower at Rs 129.58 crore (13 percent of TI) than Rs 134.91 crore (14.1 percent of TI) in Q1-2015, but was 18.3 percent more than the Rs 109.52 crore (12.2 percent of TI) in the corresponding quarter of last year. YTD, in fiscal 2015, Colgate-Palmolive’s PAT at Rs 264.49 crore (13.5 percent of TI) was 10.3 down as compared to the Rs 294.74 crore (16.5 percent of TI) in H1-2014.

    On an annual basis, the company’s PAT shows an upward linear trend in terms of absolute rupees, but a downward linear trend in terms of percentage of TI. During the 10 quarters under consideration, the company’s PAT shows almost flat to downward linear trend in terms of absolute rupees and a downward trend in terms of percentage of TI.

  • Green TV to go the AFP way, soon

    Green TV to go the AFP way, soon

    MUMBAI:  India’s first agriculture oriented private TV channel launched on 21 October has already managed to penetrate 11 per cent of the total TV homes in the country.

    However, the channel headed by Nomad Films managing director Junaid Memon, has not been able to get any advertiser on board but it soon plans to change that. “Within the next few days you will see some advertiser funded programmes on Green TV,” says Memon. However, unlike other channels, they won’t be entertainment or news shows but awareness-based programmes that will educate farmers.

    It is looking at one year tie ups with brands wherein shows will be created on ground first and then aired on the channel. Though he did not wish to reveal the names, he says that talks are on with FMCG brands. Memon says that the channel is not going by conventional advertising since is very limiting. “What we can offer is allowing brands to meet their buyer. We are beyond just a TV channel, we can offer two-way communication,” he says.

    “We are picking people from agriculture institutes and then teaching them how to talk to the farmers and how to create shows for TV,” he adds. Currently, the channel has about 160 people which he soon looks to increase to 250.

    The primetime bands are morning 9 am to 12 pm and evening 4 pm to 7 pm with about six hours of original content being produced now. It will be soon taken up to eight hours. Morning shows consist of business, commodity market and daily updates on crop, afternoon is targeted to women with health and education programmes and evening is dedicated to information based technical shows. Memon advises that ‘agriculture’ is just a word but the channel’s scope involves a variety of things including horticulture, pisciculture, etc. All programmes are being shot in HD but currently telecast only in SD.

    The research team consists of 13 people, which he will be increasing to 23 by January. The group CEO is Ravi Bhatnagar, programming head is Nitin Sukheja, sales head is Sudeep Bhattacharya, and distribution head is Devinder Verma.

    It is soon going to bring on board an ad sales company. The marketing for the channel will begin in January with creatives being done by Guava Creative Solutions.
    So far, its distribution team has seeded about 2000 of the targeted 8000 boxes to LCOs.

    It is also closing in on deals with two DTH operators.

     

  • GroupM revises Ad Spend growth to 12.5% from earlier 11.6%

    GroupM revises Ad Spend growth to 12.5% from earlier 11.6%

    MUMBAI: GroupM revised their annual estimated advertising expenditure (AdEx) for 2014 from 11.6 per cent to 12.5 per cent released earlier this year. The AdEx revision is part of the global report called the ‘This Year, Next Year’ 2014.

     

    Speaking about the various sectors contributing to the revised growth, GroupM South Asia CEO CVL Srinivas said, “After a cautious start to the year, the overall sentiment in the country is positive following the general elections and a new stable government. One of the sectors that is adding to the growth story in India is retail. Specifically e-Commerce players that are investing heavily in above the line advertising along with digital media. Industries like FMCG, Auto, telecom and BFSI are expected to increase spends given competitive pressures and clear policies.”

     

    While, digital media continues to show the maximum growth with 35 per cent, television spending is set to grow to 14.8 per cent as against the previously predicted 12 per cent. In print, as government spending and retail will continue to increase spending, regional publications and local advertisers are projected to lead the growth for dailies.

     

    ‘This Year, Next Year’, is part of GroupM’s media and marketing forecasting series drawn from data supplied by holding company WPP’s worldwide resources in advertising, public relations, market research, and specialist communications.

     

    GroupM globally also released their revised estimate India, Brazil and Russia remain among the faster-growing ad markets.

  • Britannia to invest up to Rs 200 crore to be market leader

    Britannia to invest up to Rs 200 crore to be market leader

    KOLKATA: Fast moving consumer goods (FMCG) company Britannia Industries is planning a capital expenditure between Rs 150 crore and Rs 200 crore over the next two years, informed its chairman Nusli Wadia at the company’s AGM.

     

    Wadia said the capital expenditure would be made on two counts namely, up-gradation and innovation for creating new capacities.

     

    He also said that the company was willing to have a good market share in the south Asian association of regional cooperation (SAARC) countries. “Earlier we had plans for Bangladesh. But it did not work out for some reason. But we can always revisit our plan for Bangladesh,” he said. 

     

    Besides Bangladesh, going forward Sri lanka is also on the radar.

     

    According to Wadia, the company aims to be the number one player in the biscuits segment over the next three years. Currently, Parle occupies the number one spot.

     

    He said this year the company had gained market share by 1.2 per cent and outgrown the market. “In three years, we want to be the market leader,” he added stating that the company’s margins were affected by rising prices of milk, he added.

  • Tangerine Digital launches Analytics Driven Content Solution for FMCG Industry

    Tangerine Digital launches Analytics Driven Content Solution for FMCG Industry

    NEW DELHI : Tangerine Digital, India’s leading digital content solutions provider, a part of TO THE NEW ecosystem, has announced the launch of its Analytics Driven Content Services to aid FMCG companies enhance their customer engagement across digital platforms. The offering is backed by analytics that will drive FMCG brand’s content strategy. Tangerine Digital has expanded its existing range of services across the content marketing spectrum from content creation, content management, content aggregation and crowd sourcing services to analytics for content strategy.

     

    A study from Twitter reveals that consumers nowadays want customized content to be shared on social media and seek more than just product information online. Also, a similar study from Hubspot has stated that consumers are more confident when they watch a product video prior to making a purchase online and are less likely to return that product.

     

    With this launch, Tangerine Digital will now enable brands in the FMCG industry in India with product descriptions, photo shoots, user generated content, expert reviews and ratings, celebrity feeds, FMCG blogs and articles, blogger outreach program.

     

    Mr. Kesavan Kanchi Kandadai, CEO, Tangerine Digital  stated, “It has become extremely important to cater the digitally aware consumer as online sales are playing a significant role. Our product launch for the FMCG sector is a step to boost the ever evolving digital ecosystem that will help the end consumer to make informed choices. Now, brands can also decode the online choices by customized analytics solution and can cater respected choices of the consumer. We are sure that this space will see a significant penetration with our product offering.”

     

    Tangerine Digital has an array of renowned clients across sectors and is now aggressively focusing on growing the business in the FMCG segment. According to a new report by Waggener Edstrom Communications released in January 2014, an astonishing 97% of the Indians surveyed follow their favorite brands on social media.

     

    To further enhance this content offering, Tangerine Digital has:

     

    • Signed up with more than 300 publications, whose digital content is readily available to be syndicated
    • A network of more than 1000 FMCG bloggers that can help enhance brand presence
    • More than 25 in-house FMCG content creators to create content in multi-formats for web mobile and social media
    • Served to more than 5 top brands in the FMCG industry
    • Crowdsourcing capabilities through creation of unique Whatsapp and WeChat experiences

     

  • Jyothy Labs FY-2014 ad spends up 65 per cent, PAT up 141 per cent

    Jyothy Labs FY-2014 ad spends up 65 per cent, PAT up 141 per cent

    BENGALURU:  Indian FMCG company Jyothy Laboratories Limited (Jyothy Labs) announced 140.97 per cent higher PAT in FY-2014 at Rs 106.11 crore (8.42 per cent of total income or Op Inc) as compared to the Rs 44.04 crore in FY-2013 (4.32 per cent of Op Inc).

    The company spent Rs 135.36 crore (10.74 per cent of Op Inc) towards advertising and sales promotion (Ad & SP), 64.46 per cent more than the Rs 81.81 crore (8.03 per cent of Op Inc) in FY-2013.

    Jyothy Labs portfolio includes household brands led by its flagship fabric whitening brand Ujala, Henko, Mr. White, Chek, Exo, Pril, Margo, Fa, Neem and Maxo.

    Note : 100,00,000=100 lakh = 1 crore = 10 million.

    Over a nine quarter period starting Q4-2014 until Q4-2014, Jyothy Labs Op Inc has shown an upward linear trend. Q4-2014 Op Inc at Rs 333.41 crore was 12.1 per cent higher quarter on quarter (qoq) as compared to the Rs 297.43 crore and 22.14 per cent more than the Rs 272.97 crore in Q4-2013.

    The company’s Ad & SP spend over the nine quarter period and also over a three year period staring FY-2012 until FY-2014 show an upward linear trend, both in terms of absolute value and in terms of percentage of Op Inc.  Ad & SP spend in Q4-2014 at Rs 39.60 crore (11.88 per cent of Op Inc) was 44.12 per cent more than the Rs 27.48 crore (9.24 per cent of Op Inc) and 95.82 per cent (almost double) the Rs 202.22 crore (7.41 per cent of Op Inc) in the year ago quarter Q4-2013.

    Please refer to Fig 1A and Fig 1B below for Op Inc and Ad & SP trends.

    The company’s PAT too has shown an upward trend over the nine quarters under consideration as is evident from Fig 2A below.

    However, over a three year financial period starting FY-2012 until FY-2014, PAT has shown a downward linear trend in terms of percentage of Op Inc. In absolute value terms, PAT has shown an upward trend. Please refer to figure 2B below.

    Jyothy Labs chairman and managing director M P Ramchandran said, “We have sustained our growth momentum despite inflationary pressures, rising input costs and moderation in demand. Our sustained focus on visibility of our brands through marketing exercise and advertising spends has helped us to deliver above industry growth. Our portfolio will get a further boost with the launch of innovative products in FY-2015.”

    “Going forward we expect growth rate to sustain on the sales and margin front. We continue to enhance our market share in the urban market without losing our focus on the rural market,” he added.

  • HUL ad spends down 10 per cent in Q4-2014, up 12 per cent in FY-2014

    HUL ad spends down 10 per cent in Q4-2014, up 12 per cent in FY-2014

    BENGALURU: Indian FMCG giant Hindustan Unilever Limited (HUL) Advertisement and Promotions spends (Ad & Promo spends) was down 9.59 per cent in Q4-2014 at Rs 840.34 crore as compared to the Rs 929.46 crore in the immediate trailing quarter (Q3-2014), but was 2.34 per cent more than the Rs 821.13 crore in the year ago quarter (Q4-2013). The company spent the lowest amount towards Ad & Promo in Q4-2014 during FY-2014.

    Note : All figures are standalone.

    Overall, across eight quarters starting with Q1-2013 until Q4-2014, HUL’s Ad & Promo spend shows an upward trend, both in rupee value as well as percentage of Operating Income (Op Inc) terms. Please refer to Fig 1 below.

    Also,  the company’s Ad & Promo spends is trending upwards, both in absolute value and as percentage of Op Inc terms between FY-2012 to FY-2014 as is evident from Fig 1A below:

    Across the eight quarters under consideration, HUL’s Op Inc shows an upward trend, though Op Inc in Q4-2014 was (-1.79) per cent lower at Rs 7094.1 crore  as compared to the Rs 7223.35 crore in Q3-2013, though y-o-y Op Inc was higher by 9.72 per cent than the Rs 6465.81 crore in Q4-2013.

    The company’s PAT has shown a declining trend, both in absolute as well as percentage of Op Inc terms during the eight quarters under consideration. PAT for Q4-2014 was (-17.90) per cent lower at Rs 872.13 crore as compared to the Rs 1062.31 crore in Q3-2014 and was 10.79 per cent more than the Rs 787.20 crore in the year ago quarter Q4-2013.

    However, on annualised basis, across three financial years from FY-2012 to FY-2014, PAT has increased and is showing an upward trend, albeit slower in FY-2014, during which it grew by 1.87 per cent to Rs 3867.49 crore from Rs 3796.67crore in FY-2013. Correspondingly, PAT grew in FY-2013 more rapidly at 41.07 per cent from Rs 2691.40 crore in FY-2012. Please refer to Fig 2 and Fig 2A below.

    HUL says that the slowdown in the market in growth (volume and value) across categories continues, and though input costs have been firm, there has been a sharp rise in cost of PFAD, while at the same time competitive intensity has remained high. The company says that its Q4-2014 domestic business has increased by 9 per cent with a 4 per cent underlying volume growth that is far ahead of the market. It says that its soaps and detergents business grew by 9 per cent, personal products and beverages grew by 8 per cent each and packaged foods by 13 per cent during the quarter.

    Here is what the company has to say about various categories.

    Soaps and Detergents: Healthy performance

    Skin Cleansing delivered double digit growth, aided by a step up in price growth as judicious pricing actions were taken to manage input cost inflation. Growth was broad based across brands with the liquids portfolio seeing accelerated growth.

    In laundry, growth was led by the premium segment with Surf maintaining its double digit growth momentum and Rin delivering good growth on the bars portfolio. Wheel growth stepped up on the back of its re-launch in the last quarter. Comfort Fabric Conditioners continue to lead market development with sustained high growth. Vim led the performance in Household Care.

    Personal Products: Growth in a challenging environment

    Skin Care grew well in a soft market. The re-launch of Fair & Lovely, with the new ‘Best Ever Formula’ and supported by a focused activation plan, is yielding positive results. Ponds had a good quarter at the premium end while Lakme and Dove sustained their robust performance. The Facial Cleansing portfolio registered broad based growth driven by innovations launched in previous quarters.

    Hair Care sustained volume led double digit growth with Dove delivering another strong performance and Clinic Plus doing well. TRESemmé, which saw the addition of a new Split Remedy variant, continued to make very good progress.

    In Oral Care, significant investments were made to sustain our competitiveness in the category. While Close Up grew in the quarter, Pepsodent was impacted by the high promotional intensity in the market. Actions are underway to step up performance.

    Colour Cosmetics maintained its strong innovation led growth momentum across both Lakme and Elle 18. Lakme continues to strengthen its position in premium make up driven by a range of exciting and contemporary offerings.

    Beverages: Growth led by Tea

    Tea sustained double digit growth on the back of stepped up volumes. Taj Mahal, Red Label and 3 Roses grew in double digits, driven by a strengthened mix and focused in-market activities. The thrust on leading market development for tea bags saw flavoured and green tea bags more than double sales in the quarter. In Coffee, Bru Gold continued to perform well.

    Packaged Foods: Strong performance by Kissan, Kwality Walls and Magnum

    Kissan registered another robust quarter with growth accelerating on both Ketchups and Jams, driven by impactful activation while Knorr growth continued to be led by Instant Soups which more than doubled volumes. Ice creams saw strong growth arising from the selling in of Magnum which was extended to four other cities, and sharper in-market execution on Kwality Walls, ahead of the season.

  • Godrej Consumer Products lowers Q4-2014 ad spends by 36 per cent

    Godrej Consumer Products lowers Q4-2014 ad spends by 36 per cent

    BENGALURU: FMCG player Godrej Consumer Products Limited (GPCL) spent (-35.93) per cent less towards Advertising and Publicity (Ad & Pub spends) in Q4-2014 at Rs 145.78 crore as compared to the Rs 227.53 crore in the immediate trailing Q3-2013 and (-14.75) per cent lower than the Rs 171 crore in the year ago quarter (Q4-2013).

    However, the company spent 24.61 per cent more towards Ad & Pub in FY-2014 at Rs 832.97 crore as compared to the Rs 668.48 crore in the last fiscal (FY-2013). Overall, as per Fig 1 below, in terms of rupees spent, the company’s overall Ad & Pub spends trend (linear) upwards over the last eight quarters starting with Q1-2013 till Q4-2014. However, in terms of Ad and Pub spends in terms of percentage of Operating Revenue (Op Rev), the linear trend is downwards, the company is spending less as a percentage of its Op Rev towards Ad & Pub.

    The company’s Op Rev in Q4-2014 has fallen by (-2.56) per cent to Rs 1931.52 crore from Rs 1982.27 crore in Q3-2014, but is 12.34 per cent higher than the Rs 1719.39 crore in Q4-2013. GCPL’s FY-2014 Op Rev is 18.49 per cent higher at Rs 7602.41 crore as compared to the Rs 6416.30 crore in FY-2013.

    Overall, GCPL’s PAT for FY-2014 at Rs 759.73 crore is (-4.57) per cent lower than the Rs 796.10 crore in FY-2013. Q-o-Q, PAT at Rs 236.28 crore in Q4-2014 is 20.69 per cent higher than the Rs 195.77 crore in Q3-2014, but (-29.29) per cent lower than the Rs 334.14 crore y-o-y.

    As per Fig 2 below, GCPL’s Op Rev, PAT and PAT as percentage of Op Rev, all show an upward trend.

    In its India category review, the company has the following to say:

    Household Insecticides

    Sales growth returns back to normalcy at 17 per cent plus, well ahead of the category. GCPL continues to drive market share gains aided by success of Good Knight Fast card and HIT Anti Roach Gel. GCPL believes that the new launch Good Knight Xpress LV will bring further gains to GCPL franchise.

    Soaps

    Sales value grew at 1 per cent, well ahead of the category growth which is facing significant pressure in terms of consumer off take. Category de-grew both in value and volume terms in mid to high single digits respectively. GCPL has recently launched a new variant for Godrej No. 1 ‘Lavender and Milk Cream’and says that it has also started a 360 degree media campaign for Cinthol ‘Cool’ soap ahead of summers.

    Hair Colours

    Strong momentum in hair colours was maintained, delivering sales growth at 16 per cent plus despite anniversarisation of Expert Cr?me launch. Growth rates were significantly ahead of category growth rates. The company has also launched new packaging for Expert Advanced Gel based hair colours and a twin use pack for Expert Cr?me. GCPL has on going initiatives such as salon engagement programs, festival linked promotions, etc. to drive higher  consumption and penetration for the category continued to deliver healthy results.

    Aer

    GCPL says that Aer continues to do well aided by its consumer engagement initiatives. The product was launched in gel format for both click and twist format.

     GCPL chairman Adi Godrej’s quote

    “We have delivered robust performance in our India and in our international businesses this quarter, in a challenging market environment. Our focus on sustaining and extending leadership in our core categories has enabled us to grow significantly ahead of the market. Our innovations have delivered well ahead of expectations. Overall, our operating performance has been strong, with profits growing ahead of sales.”

    “Our India business delivered relatively healthy sales growth, amidst a slowdown in the household and personal care market. We have continued to gain market shares across categories, driven by new innovations and compelling marketing programs.”

    “Our international businesses also had a good quarter with significant improvements in profitability. Our teams have demonstrated great agility and resilience to deliver this market-leading performance.”

    “The overall macro outlook remains turbulent. While the pace of economic recovery remains uncertain, we are hopeful that consumer sentiment will become more positive and we will see better growth in the sector in the quarters ahead. We will continue investing judiciously for the longer term to improve our competitive position and emerge stronger than ever before. I am confident that with our clear strategic focus, our superior execution and our top notch team, we will continue to deliver industry leading results in the future.”

  • SMG Convonix wins 24 clients in the last quarter of FY 13-14

    SMG Convonix wins 24 clients in the last quarter of FY 13-14

    MUMBAI: Starcom MediaVest Group’ integrated digital marketing arm SMG Convonix has won 24 new clients in the last quarter across sectors like education, FMCG, travel, banking and finance, e-commerce and technology.

     

    SMG Convonix CEO Vishal Sampat said, “Most of our recent wins were after multi-agency pitches and are testimony to the strength of our offering and thought and rigor that the teams put into campaigns. We continue to work with the same core principle of trying to solve business problems by leveraging synergies across digital solutions, analytics and technology. Going forward, our focus will be on growing the media offering and delivering cutting-edge impactful campaigns enabled by the right technology.”

     

    Tata Global Beverages has awarded the Global SEO mandate for their brands to SMG Convonix, which includes Tetley and Eight o’ clock. The new roster of clients also includes IMS Learning Resources, Tuffware and e-commerce biggies such as Pepperfry and Reseller Club. SMG Convonix has, in a focused manner, expanded its base and experience in Consumer Electronics by bagging The Mobile Store and The Electronic Store. In addition to the Indian wins, a significant number of clients from other markets like the US have also augmented the roster.

  • Digital media eats into traditional media spend

    Digital media eats into traditional media spend

    MUMBAI: India’s low ad-spend-to-GDP ratio makes it one of the most promising ad markets globally, says IIFL’s Institutional Equities. In  a Media sector report titled “India: Ad-vert > Ad-word – Digital yet to come of age,” IIFL states that digital media is eating ad space with the other traditional forms of media like the print and television media and has been the fastest growing advertising media. This trend is likely to continue as the Internet user base expands at a brisk pace.

     

    India’s digital ad market grew at 43% CAGR over the past decade to ~Rs25bn, far in excess of the overall ad-spend growth of 13% during this period. Digital now accounts for 7% of the total ad spend, compared with 1% in CY03. A multi-fold rise in the Internet user base over CY03-13 (from 5m to 169m) and increasing acceptance of the digital platform among advertisers drove this growth. The supernormal growth in Internet penetration is likely to continue, driven by the Internet on mobile, the report states.

     

    However, India still is behind developed markets in terms of mobile technology and internet connectivity, hence there is no immediate threat to Print and Television advertising from the digital media ad spends, the report adds.

     

    Emergence of digital would materially harm the print industry in the medium to long term. English print is at a higher risk compared with regional print. Moreover, given the limited reach of the Internet, certain India-specific factors would help print to face competition from digital media. Ad spend on Indian print is expected to continue to increase in the medium term.

     

    “However, a larger audience base and diversified viewer profile make television advertising indispensable. Additionally television is a better-suited medium for certain types of ads such as new product launches or brand building. Hence, the impact of the Internet on television would be lower as compared with print. An analysis of ad spends for the past ten years reveals that print ad spend is more sensitive to economic growth. These factors make television ad spend more resilient,” says Bijal Shah and Jaykumar Doshi of IIFL Institutional Equities, authors of the report.

     

    Print media ad spends growth decelerated sharply from 16% CAGR during CY03-07 to a meagre 4.5% CAGR in the past three years. The slowdown in English was more pronounced than in vernacular languages. Vernacular papers benefited from continued strength in smaller towns and villages. A drop in ad spend from large national categories such as BFSI, telecom, and consumer durables, partly explains the weaker growth for print. Additionally, education and real estate, the two big categories, witnessed a sharp deceleration. Local advertisers maintained their higher spends, riding on the buoyancy in consumption.

     

    FMCG, Consumer durables and Auto constitutes to 65% of overall ad spends on television. Both FMCG and Auto ad spends have shown signs of slowing down, where as the Consumer durable companies are witnessing sluggishness in sales volumes, impacting the Television ad spend going forward and we can witness marginal growth in this segment. However Mobile handsets and e-commerce ad spends have supplemented in the overall as spends on television and have emerged as new categories. The television ad spend growth is expected to soften to high single digits.

     

    A sustained 6%+ GDP growth could accelerate ad-spend growth to 15%+, compared with 9% CAGR over CY10-13, as per IIFL’s Institutional Equities research report on media industry. The report further states that in medium term, TV and print should dominate ad budgets whereas digital would play a complementary role. Digital advertising is gaining traction, but limited reach and minimal fresh and vernacular content are limitations.

     

    Following the general elections, government ad spend, a key tailwind for print media in FY14, would taper. Thus, print media ad-spend growth could remain lacklustre in FY15 unless GDP growth picks up.

     

    Some key highlights from the report are:

    · India’s low ad-spend-to-GDP ratio and rising consumerism make it one of the most promising ad markets

    · A sustained 6%+ GDP growth could accelerate ad-spend growth to 15%+ compared with 9% Cagr over CY10-13.

    · Given its miniscule reach and slow Internet speed in India, digital is unlikely to emerge as a key advertising vehicle in the short-to-medium term

    · However driven by rising Internet penetration digital ad spends will continue to grow by 2-3 times the total ad spends  

    · TV would continue to be the mainstay for advertisers, given limited fresh content and absence of certain key target audience group such adult females on digital

    · Television ad spend is double that of digital in the US

     

    Few stocks recommended in the media industry:

     

    Zee Entertainment

    Zee Entertainment (Zee) is the best play on structural improvement in India’s pay television market and resilient consumption. Zee’s distribution joint venture with Star network, coupled with digitisation, would help secure its rightful share of subscription revenue. Furthermore, a diversified bouquet of channels and improving network market share would translate into above-industry ad-revenue growth. Meanwhile, Zee is investing in new channels and markets, which we believe lays the foundation for long-term growth.

    Call: ADD

     

    SUN TV Network

    Sun TV Network (Sun) is a strong player in the Rs36bn southern ad market with a leadership position in three of the four markets. Its diversified revenue stream and bouquet of channels, large movie library, and low-cost operations are advantages that are difficult to replicate. Subscription revenue is growing at a brisk pace and the momentum is likely to sustain. We expect ad revenue growth to resume following a drop for two consecutive quarters. At PER of 16x FY16ii, Sun is trading at ~15% its median multiple and at 33% discount to Zee. We believe the risk-reward is favourable.

    Call: ADD

     

    DB Corp

    DB Corp, through its flagship brands Dainik Bhaskar, Divya Bhaskar, and Divya Marathi, enjoys a well-entrenched franchise in several print media markets. Over the past two decades, it has evolved from a single-city newspaper to a strong player in several regional markets. DB Corp delivered double-digit ad-revenue growth even during periods of subdued ad spend. It has built a strong readership base and it is poised for gains in revenue market share. Healthy ad-revenue growth along with margin expansion would drive 20% EPS CAGR over FY14-16ii. At 16.4x FY15ii, scope for re-rating is limited; we expect returns in line with earnings growth.

    Call: BUY

     

    Jagran Prakashan

    Jagran Prakashan (Jagran), publisher of Dainik Jagran, India’s most read Hindi daily, enjoys a strong brand franchise in the key Hindi markets of Uttar Pradesh (UP), and Bihar and Jharkhand (BJH). Competitive intensity is on the rise in UP and BJH, which together contribute ~75% to Jagran’s ad revenue. DB Corp’s entry in Bihar and Hindustan’s readership gains in UP as per IRS 2013 are medium-term risks. In the interim, lower losses at subsidiaries would help margins. At 12.3x FY15ii P/E, Jagran is valued attractively and it is trading at ~35% discount to its three-year median multiple despite 17% EPS CAGR FY14ii-16ii.

    Call: ADD

     

    HT Media

    HT Media is one of the largest print media players in India with a well-entrenched franchise in the English and Hindi markets. We believe the long investment phase in new businesses is nearing an end. Two key properties, HT Mumbai and Hindustan UP, are at inflection points and should boost ad-revenue growth in a weak environment. Losses in digital would continue but will likely remain stable. At PER of 9.8x/7.9X FY15ii/FY16ii, valuations are compelling, given upside risks to our forecast of 20% EPS CAGR.

    Call: BUY

    Disclaimer: The views expressed in the research report accurately reflect such research analyst’s personal views about the subject securities and companies; and that no part of his or her compensation was, is, or will be directly or indirectly related to the specific recommendation or views contained in the research report.`