Jagran Prakashan 4Q FY 2013

7/28/2019 Jagran Prakashan 4Q FY 2013

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

Quarterly data (Standalone)(` cr) 4QFY13 4QFY12 % yoy 3QFY13 %qoqRevenue 334 303 10.2 342 (2.2)EBITDA 45 59 (22.8) 84 (45.9)

OPM (%) 13.6 19.4 (581)bp 24.6 (1,097)bp

PAT 39 43 (10.1) 66 (41.6)Source: Company, Angel Research

For 4QFY2013, Jagran Prakashans (JPL) top-line performance was in-line with

our estimates, growing by 10.2% yoy to `334cr. However, on the operating front,

margin contracted by 581bp yoy to `13.6% (on account of operating losses in

emerging editions, namely, Nai Dunia, Punjabi jagran and Inquilab). Consequently,

net profit was below our expectations, declining by 10.1% yoy to `39cr.Ad revenue up 8.2% yoy: JPL reported 8.2% yoy growth in advertising revenue to`228cr, driven by good growth in advertising in Nai Dunia, I-next, City-Plus and

Punjabi jagran editions. Due to slowdown in economy, the company had reduced

its ad yields in FY2013 to increase volumes. However, the company has now

shifted back its focus from ad volume growth to ad yield growth and expects to

sustain ad growth momentum through increase in ad yields.

Circulation revenue up 21.3% yoy: Circulation revenue grew by robust 21.3% yoyto `76cr, aided by increase in circulation of Nai Dunia and Mid-Day editions as

well as hike in cover prices over the year. Circulation revenue is expected to

continue double digit growth driven by launch of multiple editions of Inquilab in

Bihar as well as increase in circulation of Nai Dunia editions.

Outlook and valuation: At the current market price, JPL is trading at 11.0xFY2015E consolidated EPS of `7.8. We maintain our Buy view on the stock with arevised target price of `119, based on 15.3x FY2015E EPS. Downside risks to ourestimates 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 FY2015ENet Sales 1,221 1,356 1,526 1,664 1,825% chg 29.6 11.0 12.5 9.1 9.7

Net Profit 210 178 255 203 246% chg 19.4 (15.1) 43.1 (20.4) 20.8

OPM (%) 29.2 21.9 19.2 20.9 23.0

EPS (`) 6.6 5.6 8.1 6.4 7.8P/E (x) 12.9 15.2 10.6 13.3 11.0

P/BV (x) 3.9 3.6 2.9 2.7 2.4

RoE (%) 31.6 24.5 30.3 21.0 23.1

RoCE (%) 33.6 18.6 11.4 14.7 17.9

EV/Sales (x) 2.2 2.3 1.9 1.8 1.6

EV/EBITDA (x) 7.6 10.4 10.1 8.5 6.9

Source: Company, Angel Research

BUYCMP `86Target Price `119

Investment Period 12 Months

Stock Info

Sector

Net Debt (` cr) 269

Bloomberg Code JAGP@IN

Shareholding Pattern (%)

Promoters 61.6

MF / Banks / Indian Fls 13.0

FII / NRIs / OCBs 12.6

Indian Public / Others 12.8

Abs. (%) 3m 1yr 3yr

Sensex 5.2 22.7 19.5

JAGP (13.6) (0.2) (20.1)

Media

Market Cap (` cr) 2,840

Beta 0.5

52 Week High / Low 118/82

Avg. Daily Volume 30,292Face Value (`) 2

BSE Sensex 20,148

Nifty 6,104

Reuters Code JAGP.BO

Amit Patil022-39357800 Ext: 6839

[email protected]

Jagran PrakashanPerformance Highlights

4QFY2013 Result Update | Media

May 29, 2013


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Jagran Prakashan | 4QFY2013 Result Update

May 29, 2013 2

Exhibit 1:Quarterly performance (Standalone)Y/E March (` cr) 4QFY13 4QFY12 % yoy 3QFY13 % qoq FY13 FY12 % chgNet Sales 334 303 10.2 342 (2.2) 1,376 1,216 13.2Consumption of RM 124 108 14.6 118 5.2 506 428 18.1(% of Sales) 37.1 35.7 34.5 36 34

Staff Costs 49 43 14.8 43 13.9 196 160 22.1

(% of Sales) 14.7 14.1 12.6 13 13

Other Expenses 116 93 23.8 97 19.6 414 343 20.5

(% of Sales) 34.6 30.8 28.3 30 27

Total Expenditure 289 245 18.1 258 12.0 1,115 932 19.7Operating Profit 45 59 (22.8) 84 (45.9) 261 284 (8.2)OPM 13.6 19.4 24.6 19.0 23.4

Interest 7 5 44.1 8 (15.3) 29 15 97.9

Depreciation 19 18 2.2 17 11.9 69 66 5.8

Other Income 19 25 6 57 54 5.9

PBT (excl. Ext Items) 40 62 (35.3) 66 (39.6) 220 258 (14.8)Ext Income/(Expense) (1.7) - - (2) 0

PBT (incl. Ext Items) 38 62 (38.1) 66 (42.2) 218 258 (15.4)(% of Sales) 11.4 20.3 19.3 15.8 21.2

Provision for Taxation (0) 19 0 (0) 78 (100.5)

(% of PBT) (1.1) 30.4 0.0 (0.2) 30.3

Recurring PAT 40 43 (6.1) 66 (38.9) 220 180 22.5PATM 12.0 14.1 19.3 16.0 14.8

Reported PAT 39 43 (10.1) 66 (41.6) 218 180 21.6Equity shares (cr) 32 32 32 32 32

FDEPS (`) 1.2 1.4 (10.1) 2.1 (41.6) 6.9 5.7 21.6Source: Company, Angel Research

Top-line performance driven by ad growth

Jagran Prakashans (JPL) top-line performance was in-line with our estimates,

growing by 10.2% yoy to `334cr. Advertising revenue grew by 8.2% yoy to `228cr,

driven by good growth in advertising in Nai Dunia, I-next, City-Plus and Punjabi

jagran editions. Nai Dunia benefited from robust growth in national advertising

revenues while I-next, City-Plus and Punjabi jagran benefited from robust growth in

local ad revenues.

Due to slowdown in economy, the company had reduced its ad yields in FY2013 to

increase volumes. However, the company has now shifted back its focus from ad

volume growth to ad yield growth and expects to sustain ad growth momentum

through increase in ad yields.


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May 29, 2013 3

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


Exhibit 3:...driven by 8.2% yoy ad revenue growth


Robust growth in circulation revenue

Circulation revenue grew by robust 21.3% yoy to `76cr, aided by increase in

circulation of Nai Dunia and Mid-Day editions as well as hike in cover prices over

the year. Circulation revenue is expected to continue double digit growth driven by

launch of multiple editions of Inquilab in Bihar as well as increase in circulation of

Nai Dunia editions.

Exhibit 4:Gross margin and OPM contraction...

Source: Company, Angel research

Exhibit 5:...led to 6.1% yoy decline in net profit

Source: Company, Angel research

OPM contracts due to losses in emerging editions

JPLs operating margin contracted by 581bp yoy to 13.6% on account of operating

losses in emerging editions, namely, Nai Dunia, Punjabi jagran and Inquilab (its

strategy to ramp up circulation of its emerging editions further exacerbated the

loss).However, the company has assured that it targets to reduce its losses fromemerging editions to `18cr in FY2013 (from `42cr in FY2013).

276

298

305

317

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322

342

334

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1Q12

2Q12

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2Q13

3Q13

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(%)

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Top-line (LHS) yoy (RHS)

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63

30

221

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26

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67

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31

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Ad-revenue Circulation revenue Non-publishing

business

(`

cr)

4Q12 1Q13 2Q13 3Q13 4Q13

23 25 26 2519

25 24 25

14

67 67 65 64 64 64 66 66 63

-

10

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4Q11

1Q12

2Q12

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(%)

OPM Gross margins

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39

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(18)

(22)

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12

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(%)

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PAT (LHS) yoy growth (RHS)


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May 29, 2013 4

Investment rationale

Healthy ad revenue growth: JPLs ad revenue grew by ~12.6% yoy to `939crin 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

8-10% yoy driven by increase in ad yields.

Recent acquisitions to fuel growth: JPL acquired the print business fromMid-Day Multimedia, which has presence in markets such as Mumbai, Delhi,

Bangalore and Pune. It 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 JPLs 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 JPLs 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 11.0x FY2015E consolidated EPS of

`7.8. We maintain our Buy view on the stock with a revised target price of `119,based on 15.3x 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.


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Exhibit 6:Peer valuationCompany Reco Mcap CMP TP Upside P/E (x) EV/Sales (x) RoE (%) CAGR

(` cr) (`) (`) (%) FY13E FY14E FY13E FY14E FY13E FY14E Sales PATHT Media Buy 2,355 100 117 17 12.1 11.0 0.7 0.6 11.5 11.4 7.8 13.0JPL Buy 2,706 86 119 39 13.3 11.0 1.7 1.5 21.0 23.1 9.4 -DB Corp. Accum. 4,739 259 285 10 18.2 15.4 2.6 2.3 23.4 23.4 9.9 18.6


Exhibit 7:Angel vs. consensus estimatesTop line (` cr) FY2013E FY2014E EPS (`) FY2013E FY2014EAngel estimates 1,664 1,825 Angel estimates 6.4 7.8

Consensus 1,725 1,920 Consensus 7.2 8.6

Diff (%) (3.5) (4.9) Diff (%) (10.7) (9.7)


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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Profit & Loss Statement(Consolidated)Y/E March (` cr) FY2010 FY2011 FY2012 FY2013 FY2014E FY2015EGross sales 942 1,221 1,356 1,526 1,664 1,825Less: Excise duty - - - - - -Net Sales 942 1,221 1,356 1,526 1,664 1,825

Total operating income 942 1,221 1,356 1,526 1,664 1,825% chg 14.4 29.6 11.0 12.5 9.1 9.7

Total Expenditure 660 865 1,059 1,232 1,317 1,405Cost of Materials 296 359 461 544 549 562

SG&A Expenses 99 134 164 194 223 246

Personnel 121 173 194 227 248 266

Others 144 199 240 267 298 330

EBITDA 282 356 296 293 347 420% chg 80.1 26.3 (16.9) (0.9) 18.3 21.0

(% of Net Sales) 30.0 29.2 21.9 19.2 20.9 23.0

Depreciation& Amortization 51 65 71 126 126 138

EBIT 232 291 225 168 221 282% chg 95.6 25.7 (22.6) (25.5) 31.5 27.9

(% of Net Sales) 24.6 23.8 16.6 11.0 13.3 15.5

Interest & other Charges 7 9 16 31 28 27

Other Income 34 26 46 119 75 68

(% of PBT) 13.2 8.4 18.0 46.3 28.0 21.0

Share in profit of Associates - - - - - -

Recurring PBT 259 308 256 256 267 323% chg 92 19 (17) 0 5 21

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

PBT (reported) 259 306 256 256 267 323Tax 83 98 77 0 64 78

(% of PBT) 32 32 30 0 24 24

PAT (reported) 176 208 178 255 203 246Add: Share of earnings. of asso. - - - - - -

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

PAT after MI (reported) 176 208 178 255 203 246ADJ. PAT 176 210 178 255 203 246% chg 92.0 19.5 (15.1) 43.0 (20.4) 20.8(% of Net Sales) 18.7 17.2 13.2 16.7 12.2 13.5

Basic EPS (`) 5.8 6.6 5.6 8.1 6.4 7.8Fully Diluted EPS ( ) 5.6 6.6 5.6 8.1 6.4 7.8% chg 92.0 19.4 (15.1) 43.1 (20.4) 20.8

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

previous year numbers


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Balance Sheet (Consolidated)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015ESOURCES OF FUNDSEquity Share Capital 60 63 63 63 63 63Preference Capital - - - - - -

Reserves& Surplus 552 639 689 869 942 1,057

Shareholders Funds 612 702 752 932 1,005 1,120Minority 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 1,534 1,634APPLICATION OF FUNDSGross Block 564 730 1,217 1,304 1,486 1,659

Less: Acc. Depreciation 194 257 351 477 603 741

Net Block 369 473 865 827 883 918Capital Work-in-Progress 25 52 66 80 74 83

Goodwill - - - - - -

Investments 167 200 248 222 207 215Long term loans and adv. 134 137 148 165 165

Current Assets 417 519 666 609 660 728

Cash 85 35 100 52 60 76

Loans & Advances 98 55 63 7 5 14

Other 235 429 504 550 596 638

Current liabilities 186 303 368 314 353 371

Net Current Assets 231 217 298 296 308 356Other non CA - 3 11 62 62 62

Total Assets 792 944 1,488 1,487 1,534 1,634Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with



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Cashflow Statement

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013E FY2014E FY2015EProfit before tax 259 310 256 256 267 323

Depreciation 51 65 71 126 126 138Change in Working Capital (12) (37) (14) (7) (57) (32)

Interest / Dividend (Net) (9) (3) 0 13 8 7

Direct taxes paid 83 98 77 0 64 78

Others (21) (1) (3) (97) 59 -

Cash Flow from Operations 185 238 233 289 340 359(Inc.)/ Dec. in Fixed Assets (38) (181) (149) (101) (176) (182)

(Inc.)/ Dec. in Investments (10) (29) (79) 26 15 (8)

Cash Flow from Investing (48) (210) (228) (76) (161) (190)Issue of Equity - - - - - -

Inc./(Dec.) in loans (20) 53 185 (181) (33) (15)

Dividend Paid (Incl. Tax) 123 128 129 67 130 130

Interest / Dividend (Net) (9) (3) (3) 13 8 7

Cash Flow from Financing (135) (73) 59 (261) (171) (152)Inc./(Dec.) in Cash 2 (46) 65 (47) 7 17

Opening Cash balances 83 85 35 100 52 60Closing Cash balances 85 35 100 52 60 76Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with



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May 29, 2013 9

Key Ratios

Y/E March FY2010 FY2011 FY2012 FY2013E FY2014E FY2015EValuation Ratio (x)P/E (on FDEPS) 15.4 12.9 15.2 10.6 13.3 11.0

P/CEPS 11.4 9.9 10.9 7.1 8.2 7.1

P/BV 4.2 3.9 3.6 2.9 2.7 2.4

Dividend yield (%) 4.1 4.1 4.1 2.1 4.1 4.1

EV/Sales 2.9 2.2 2.3 1.9 1.8 1.6

EV/EBITDA 9.7 7.6 10.4 10.1 8.5 6.9

EV / Total Assets 3.5 2.9 2.1 2.0 1.9 1.8

Per Share Data (`)EPS (Basic) 5.8 6.6 5.6 8.1 6.4 7.8

EPS (fully diluted) 5.6 6.6 5.6 8.1 6.4 7.8

Cash EPS 7.5 8.6 7.9 12.0 10.4 12.1

DPS 3.5 3.5 3.5 1.8 3.5 3.5

Book Value 20.3 22.2 23.8 29.5 31.8 35.4

DuPont analysisEBIT margin 24.6 23.8 16.6 11.0 13.3 15.5

Tax retention ratio 0.7 0.7 0.7 1.0 0.8 0.8

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 13.6 16.6

Cost of Debt (Post-tax) 0.0 0.0 0.0 0.1 0.0 0.0

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

Operating ROE 24.0 27.2 19.8 18.6 16.1 18.8

Returns (%)RoCE 30.0 33.6 18.6 11.4 14.7 17.9

Angel RoIC (Pre-tax) 43.9 46.8 24.6 14.4 17.9 21.8

RoE 30.0 31.6 24.5 30.3 21.0 23.1

Turnover ratios (x)Asset Turnover 1.7 1.7 1.1 1.2 1.1 1.1

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

Receivables (days) 70 69 78 73 73 73

Payables (days) 50 52 64 56 60 59

Net Working capital (days) 57 52 51 56 53 54

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 0.5 0.3

Interest Coverage 35.3 32.1 14.3 5.5 7.8 10.3

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



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May 29, 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`

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Jagran Prakashan 4Q FY 2013

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