Jagran Prakashan, 1Q FY 2014

7/27/2019 Jagran Prakashan, 1Q FY 2014

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Please refer to important disclosures at the end of this report 1

Quarterly data (Standalone)(` cr) 1QFY14 1QFY13 % yoy 4QFY13 %qoq

Revenue 385 318 21.2 334 15.1

EBITDA 101 79 28.6 45 123.1

OPM (%) 26.3 24.8 151bp 13.6 1,275bp

PAT 59 56 6.6 39 54.2

Source: Company, Angel Research

For 1QFY2014, Jagran Prakashan’s (JPL) top-line performance was better than

our estimates, growing by 21.2% yoy to ` 385cr (our estimate was of ` 358cr). The

OPM expanded by 151bp yoy to 26.3% while profit came in at ` 59cr (our estimate

of ` 52cr). However, Nai Dunia’s financials have been included in 1QFY2014’s

results. Hence, comparing on like to like (LTL) basis, the top-line grew by 12.5% yoy

while net profit grew by 9.0% yoy to ` 59cr. JPL incurred a mark to market (MTM)

forex loss of ` 13cr in the quarter, which the company expects to reverse in the

coming quarters.

Ad revenue up 12.8% yoy & circulation revenue up 14.7% yoy on LTL basis:

Advertising revenue is up 12.8% yoy to ` 269cr on LTL basis (standalone

advertising revenue up 21.7% yoy), primarily driven by yields. Circulation revenue

is up by 14.7% yoy to ` 80cr on LTL basis (standalone circulation revenue up

24.0% yoy) due to combination of yield and volume growth.

Losses in emerging editions weigh on margins: Although JPL’s flagship daily Dainik Jagran’s margin expanded by 652bp yoy to 36.7%, increase in EBITDA

losses of other publications from ` 6cr in 1QFY2013 to ` 12cr in 1QFY2014 pulled

down consolidated margins to 26.3%. Nai Dunia and Mid-Day publications are in

investment phase and hence the losses are expected to continue. The

Management expects Mid-Day to break even by the end of FY2014 and Nai

Dunia by the end of FY2016.

Outlook and valuation: At the current market price, JPL is trading at 11.4x

FY2015E consolidated EPS of ` 7.8. We maintain our Buy view on the stock with a

target price of `116, based on 15x FY2015E EPS. Downside risks to our estimates

include 1) sharp rise in newsprint prices, 2) higher-than-expected losses on

account of increase in turnaround period for Nai Dunia/ Mid-day.

Key financials (Consolidated)

Y/E March (` cr) FY2011 FY2012 FY2013E FY2014E FY2015E

Net Sales 1,221 1,356 1,526 1,683 1,845

% chg 29.6 11.0 12.5 10.3 9.6

Net Profit 210 178 255 207 246

% chg 19.4 (15.1) 43.1 (19.0) 18.8

OPM (%) 29.2 21.9 19.2 22.3 23.7

EPS (`) 6.6 5.6 8.1 6.5 7.8

P/E (x) 13.4 15.7 11.0 13.6 11.4

P/BV (x) 4.0 3.7 3.0 2.8 2.5

RoE (%) 31.6 24.5 30.3 21.3 23.0

RoCE (%) 33.6 18.6 11.4 18.2 20.7

EV/Sales (x) 2.3 2.3 2.0 1.8 1.6

EV/EBITDA (x) 7.9 10.7 10.5 8.1 6.8

Source: Company, Angel Research Note: CMP as on 2nd August, 2013.

BUYCMP ` 89Target Price ` 116

Investment Period 12 Months

Stock Info

Sector

Net Debt ( ` cr) 269

Bloomberg Code JAGP@IN

Shareholding Pattern (%)

Promoters 61.6

MF / Banks / Indian Fls 12.3

FII / NRIs / OCBs 12.8Indian Public / Others 13.3

Abs. (%) 3m 1yr 3yr

Sensex (2.1) 11.0 6.0

JAGP (3.7) (2.8) (26.9)

Media

Market Cap ( ` cr) 2,946

Beta 0.5

52 Week High / Low 118/80

Avg. Daily Volume 25,373

Face Value ( ` ) 2

BSE Sensex 19,164

Nifty 5,678

Reuters Code JAGP.BO

Amit Patil

022-39357800 Ext: 6839

[email protected]

Jagran Prakashan

Performance Highlights

1QFY2014 Result Update | Media

August 5, 2013



Jagran Prakashan | 1QFY2014 Result Update

August 5, 2013 2

Exhibit 1: Quarterly performance (Standalone)

Y/E March (` cr) 1QFY14 1QFY13 % yoy 4QFY13 % qoq FY13 FY12 % chg

Net Sales 385 318 21.2 334 15.1 1,376 1,216 13.2

Consumption of RM 132 113 16.7 124 6.8 506 428 18.1(% of Sales) 34.4 35.7 37.1 36 34

Staff Costs 52 41 26.5 49 5.6 196 160 22.1

(% of Sales) 13.5 12.9 14.7 13 13

Other Expenses 99 84 17.7 116 (14.3) 414 343 20.5

(% of Sales) 25.8 26.5 34.6 30 27

Total Expenditure 283 239 18.7 289 (1.9) 1,115 932 19.7

Operating Profit 101 79 28.6 45 123.1 261 284 (8.2)

OPM 26.3 24.8 13.6 19.0 23.4

Interest 7 8 (10.2) 7 4.3 29 15 97.9

Depreciation 17 15 12.1 19 (10.7) 69 66 5.8

Other Income (1) (1) 19 57 54 5.9

PBT (excl. Ext Items) 77 56 38.4 40 93.7 220 258 (14.8)

Ext Income/(Expense) - - (1.73) (2) 0

PBT (incl. Ext Items) 77 56 38.4 38 102.5 218 258 (15.4)

(% of Sales) 20.0 17.6 11.4 15.8 21.2

Provision for Taxation 18 0 (0) (0) 78 (100.5)

(% of PBT) 23.0 0.0 (1.1) (0.2) 30.3

Recurring PAT 59 56 6.6 40 47.6 220 180 22.5

PATM 15.4 17.6 12.0 16.0 14.8

Reported PAT 59 56 6.6 39 54.2 218 180 21.6

Equity shares (cr) 32 32 32 32 32

FDEPS (`) 1.9 1.8 6.6 1.2 54.2 6.9 5.7 21.6


Top-line performance driven by healthy ad growth

For 1QFY2014, JPL’s top-line performance was better than our estimates, growing

by 21.2% yoy to ` 385cr (our estimate of ` 358cr), driven by a 21.7% yoy growth in

advertising revenue to ` 269cr. However, Nai Dunia’s financials have been included

in 1QFY2014 results. Hence, comparing on like to like (LTL) basis, the top-line grew

by 12.5% yoy to ` 385cr, driven by 12.8% yoy growth in advertising revenue to ` 269cr.

Strong advertising growth was mainly driven by increase in ad yield with good

performance from all sectors except BFSI (excluding banks) and entertainment

sector. Nai Dunia reported a robust growth, with advertising revenue growing by

27% yoy. However, Mid-Day’s advertising revenues suffered due to closing down

of retail markets for 7 to 8 days in Mumbai.




August 5, 2013 3

Exhibit 2: Double-digit top-line growth...


Exhibit 3: ...driven by 21.7% yoy ad revenue growth


Robust growth in circulation revenueCirculation revenue grew by 14.7% yoy to ` 80cr on LTL basis (standalone

circulation revenue up 24.0% yoy) due to combination of yield and volume growth.

The Management indicated at an increase in circulation yield for Dianik Jagran

and Inext and volume growth for Nai Dunia and Mid-Day Gujrati.

Exhibit 4: Gross margin and OPM expansion...

Source: Company, Angel research

Exhibit 5: ...led to 6.6% yoy growth in net profit

Source: Company, Angel research

Losses in emerging editions weigh on margins

Although JPL’s flagship daily Dainik Jagran’s margin expanded by 652bp yoy to

36.7%, increase in EBITDA losses in other publications from ` 6cr in 1QFY2013 to

` 12cr in 1QFY2014 and MTM forex loss of ` 13cr in the quarter pulled down

consolidated margins to 26.3% (however, margin has expanded by 151bp yoy).

The Management expects to reverse the MTM forex loss in the coming quarters.

Nai Dunia and Mid-Day publications are in investment phase and hence the losses

are expected to continue. The Management expects Mid-Day to break even by the

end of FY2014 and Nai Dunia by end of FY2016.

2 9 8

3 0 5

3 1 7

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Top-line (LHS) yoy (RHS)

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269

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Ad-revenue Circulation revenue Non-publishing

business

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14

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67 65 64 64 64 66 6663

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OPM Gross margins

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(11)(18) (22) 2

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PAT (LHS) yoy growth (RHS)




August 5, 2013 4

Investment rationale

Healthy ad revenue growth: JPL’s ad revenue grew by ~12.6% yoy to ` 939cr

in FY2013. Unlike its peers, JPL continues to post good growth in national

advertising revenue due to innovative terms of offerings and presentation

of advertisements. For FY2014, we expect ad revenue to grow by

10-12% yoy driven by increase in ad yields.

Recent acquisitions to fuel growth: JPL acquired the print business from

Mid-Day Multimedia, which has presence in markets such as Mumbai, Delhi,

Bangalore and Pune. It also acquired Suvi Info Management, the publisher of

Nai Dunia, which is present in markets such as Madhya Pradesh and

Chhattisgarh. These acquisitions are likely to fill the gap in JPL’s portfolio vs its

peers HT Media (HT and Hindustan) and DB Corp (Dainik Bhaskar and DNA),

which offer English and Hindi publications to their advertisers. With JPL’s wider

portfolio, we believe the company is well poised to benefit from the steady

growth in the print media space.

Outlook and valuation

At the current market price, JPL is trading at 11.4x FY2015E consolidated EPS of

` 7.8. We maintain our Buy view on the stock with a target price of `116, based on

15x FY2015E EPS. Downside risks to our estimates include 1) sharp rise in

newsprint prices, 2) higher-than-expected losses on account of increase in

turnaround period for Nai Dunia/ Mid-day.




August 5, 2013 5

Exhibit 6: Peer valuation

Company Reco Mcap CMP TP Upside P/E (x) EV/Sales (x) RoE (%) CAGR

(` cr) (`) (`) (%) FY14E FY15E FY14E FY15E FY14E FY15E Sales PAT

HT Media Buy 2276 97 117 21 11.7 10.5 0.7 0.5 11.6 11.6 7.8 14.0JPL Buy 2807 89 116 31 13.6 11.4 1.7 1.5 21.3 23.0 10.0 -

DB Corp. Buy 4452 243 302 24 16.7 14.1 2.4 2.1 23.9 24.2 11.2 20.4


Exhibit 7: Angel vs. consensus estimates

Top line (` cr) FY2014E FY2015E EPS (`) FY2014E FY2015E

Angel estimates 1,683 1,845 Angel estimates 6.5 7.8

Consensus 1,694 1,894 Consensus 6.7 7.8

Diff (%) (0.6) (2.6) Diff (%) (2.4) (0.4)


Exhibit 8: Return of JPL vs. Sensex


Exhibit 9: One-year forward P/E band


Company Background

Dainik Jagran with AIR of ~16.4mn is the most read newspaper in India published

by Jagran Prakashan (JPL). The company enjoys a leadership position in Uttar

Pradesh, the largest Hindi market for almost a decade now. The company is

present in the rapidly growing Hindi markets in Bihar, Delhi, Haryana, Jharkhand,Punjab and Uttar Pradesh. Apart from its commanding position in print media, JPL

is also present in the internet, OOH and event management businesses.

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S h a r e P r i c e ( ` )

9x 12x 15x 18x




August 5, 2013 6

Profit & Loss Statement (Consolidated)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E

Gross sales 942 1,221 1,356 1,526 1,683 1,845

Less: Excise duty - - - - - -Net Sales 942 1,221 1,356 1,526 1,683 1,845

Total operating income 942 1,221 1,356 1,526 1,683 1,845

% chg 14.4 29.6 11.0 12.5 10.3 9.6

Total Expenditure 660 865 1,059 1,232 1,308 1,407

Cost of Materials 296 359 461 544 549 562

SG&A Expenses 99 134 164 194 214 249

Personnel 121 173 194 227 251 269

Others 144 199 240 267 295 327

EBITDA 282 356 296 293 375 438

% chg 80.1 26.3 (16.9) (0.9) 27.9 16.7

(% of Net Sales) 30.0 29.2 21.9 19.2 22.3 23.7

Depreciation& Amortization 51 65 71 126 102 110

EBIT 232 291 225 168 274 327

% chg 95.6 25.7 (22.6) (25.5) 63.0 19.7

(% of Net Sales) 24.6 23.8 16.6 11.0 16.3 17.7

Interest & other Charges 7 9 16 31 28 27

Other Income 34 26 46 119 42 51

(% of PBT) 13.2 8.4 18.0 46.3 14.6 14.5

Share in profit of Associates - - - - - -

Recurring PBT 259 308 256 256 287 351

% chg 92 19 (17) 0 12 22

Prior Period & Extra Exp/(Inc.) - 2 - - - -

PBT (reported) 259 306 256 256 287 351

Tax 83 98 77 0 80 105

(% of PBT) 32 32 30 0 28 30

PAT (reported) 176 208 178 255 207 246

Add: Share of earnings. of asso. - - - - - -

Less: Minority interest (MI) - - - - - -

PAT after MI (reported) 176 208 178 255 207 246

ADJ. PAT 176 210 178 255 207 246

% chg 92.0 19.5 (15.1) 43.0 (19.0) 18.8(% of Net Sales) 18.7 17.2 13.2 16.7 12.3 13.3

Basic EPS (`) 5.8 6.6 5.6 8.1 6.5 7.8

Fully Diluted EPS (̀ ) 5.6 6.6 5.6 8.1 6.5 7.8

% chg 92.0 19.4 (15.1) 43.1 (19.0) 18.8

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

previous year numbers




August 5, 2013 7

Balance Sheet (Consolidated)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E

SOURCES OF FUNDS

Equity Share Capital 60 63 63 63 63 63Preference Capital - - - - - -

Reserves& Surplus 552 639 689 869 946 1,061

Shareholders Funds 612 702 752 932 1,009 1,124

Minority Interest - - 8 1 - -

Total Loans 121 174 643 462 429 414

Deferred Tax Liability 58 62 70 70 78 78

Other long term liablities - 6 13 13 13

Long term provisions 6 9 8 8 8

Total Liabilities 792 944 1,488 1,487 1,538 1,638

APPLICATION OF FUNDS

Gross Block 564 730 1,217 1,304 1,451 1,577

Less: Acc. Depreciation 194 257 351 477 578 689

Net Block 369 473 865 827 872 888

Capital Work-in-Progress 25 52 66 80 73 79

Goodwill - - - - - -

Investments 167 200 248 222 207 215

Long term loans and adv. 134 137 148 165 165

Current Assets 417 519 666 609 675 766

Cash 85 35 100 52 68 108

Loans & Advances 98 55 63 7 7 16

Other 235 429 504 550 601 643

Current liabilities 186 303 368 314 352 372

Net Current Assets 231 217 298 296 323 394

Other non CA - 3 11 62 62 62

Total Assets 792 944 1,488 1,487 1,538 1,638






August 5, 2013 9

Key Ratios

Y/E March FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E

Valuation Ratio (x)

P/E (on FDEPS) 16.0 13.4 15.7 11.0 13.6 11.4

P/CEPS 11.8 10.3 11.3 7.4 9.1 7.9

P/BV 4.4 4.0 3.7 3.0 2.8 2.5

Dividend yield (%) 3.9 3.9 3.9 2.1 3.9 3.9

EV/Sales 3.0 2.3 2.3 2.0 1.8 1.6

EV/EBITDA 10.1 7.9 10.7 10.5 8.1 6.8

EV / Total Assets 3.6 3.0 2.1 2.1 2.0 1.8

Per Share Data (`)

EPS (Basic) 5.8 6.6 5.6 8.1 6.5 7.8

EPS (fully diluted) 5.6 6.6 5.6 8.1 6.5 7.8

Cash EPS 7.5 8.6 7.9 12.0 9.8 11.3

DPS 3.5 3.5 3.5 1.8 3.5 3.5

Book Value 20.3 22.2 23.8 29.5 31.9 35.5

DuPont analysis

EBIT margin 24.6 23.8 16.6 11.0 16.3 17.7

Tax retention ratio 0.7 0.7 0.7 1.0 0.7 0.7

Asset turnover (x) 1.8 2.0 1.5 1.3 1.4 1.4

ROIC (Post-tax) 29.8 32.0 17.1 14.3 16.0 17.9

Cost of Debt (Post-tax) 3.4 4.2 2.7 5.5 4.6 4.5

Leverage (x) (0.2) (0.1) 0.2 0.3 0.2 0.1

Operating ROE 29.8 31.9 17.2 14.4 16.0 17.9

Returns (%)

RoCE 30.0 33.6 18.6 11.4 18.2 20.7

Angel RoIC (Pre-tax) 43.9 46.8 24.6 14.4 22.3 25.6

RoE 30.0 31.6 24.5 30.3 21.3 23.0

Turnover ratios (x)

Asset Turnover 1.7 1.7 1.1 1.2 1.2 1.2

Inventory / Sales (days) 21 19 21 21 21 21

Receivables (days) 70 69 78 73 73 73

Payables (days) 50 52 64 56 59 58

Net Working capital (days) 57 52 51 56 54 55

Solvency ratios (x)

Net Debt to equity (0.2) (0.1) 0.4 0.2 0.2 0.1

Net Debt to EBITDA (0.5) (0.2) 1.0 0.6 0.4 0.2

Interest Coverage 35.3 32.1 14.3 5.5 9.7 12.0






August 5, 2013 10

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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Disclosure of Interest Statement Jagran

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

Note: We have not considered any Exposure below`

1 lakh for Angel, its Group companies and Directors

Jagran Prakashan, 1Q FY 2014

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