Jagran Prakashan, 5th February, 2013

7/29/2019 Jagran Prakashan, 5th February, 2013

1/10

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

Quarterly data (Standalone)

EBITDA 84 78 7.4 78 7.3

OPM (%) 24.6 24.6 (8)bp 24.3 29bp

Source: Company, Angel Research

For 3QFY2013, Jagran Prakashan (JPL) reported a robust 59.5% yoy growth in

net profit to `66cr aided by tax benefit (due to accumulated losses at Nai Dunia).

JPLs gross margin expanded by 129bp yoy to 65.5% as newsprint prices

stabilized and Indian currency fluctuation minimized. However, the OPM came in

flat yoy at 24.6% due to forex loss of `5.5cr.

For 3QFY2013, JPL reported a moderate top-line

growth of 7.8% yoy to `342cr, in-line with our expectation of `344cr. In spite of

the festive season, the company posted a modest 7.1% yoy growth in its

advertising revenue to `239cr (due to high base effect). The increase in circulation

and 5% hike in cover price led to 12.2% yoy growth in subscription revenue to

`70cr. During the quarter, the companys non-publishing businesses comprising

event, outdoor and digital media grew by 6.6% yoy to `33cr.

At the current market price, JPL is trading at 14.5x

FY2014E consolidated EPS of `7.3.

based on 17x FY2014E EPS, valuing it at 10%

premium to our Sensex target valuation multiple. 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)

% chg 14.4 29.6 11.0 11.5 12.4

% chg 92.0 19.4 (15.1) 14.1 13.4

OPM (%) 30.0 29.2 21.9 23.2 23.4

P/E (x) 19.0 15.9 18.7 16.4 14.5

P/BV (x) 5.2 4.8 4.4 4.1 3.6

RoE (%) 30.0 31.6 24.5 25.9 26.6

RoCE (%) 30.0 33.6 18.6 16.7 18.8

EV/Sales (x) 3.6 2.7 2.7 2.4 2.1

EV/EBITDA (x) 12.0 9.3 12.5 10.5 9.0


CMP `106Target Price `125

Investment Period 12 Months

Stock Info

Sector

Net Debt (` cr) 296

Bloomberg Code JAGP@IN

Shareholding Pattern (%)

Promoters 59.7

MF / Banks / Indian Fls 14.2

FII / NRIs / OCBs 12.9

Indian Public / Others 13.2

Abs. (%) 3m 1yr 3yr

Sensex 5.3 12.2 21.7

JAGP 4.9 4.3 (18.3)

Reuters Code JAGP.BO

BSE Sensex 19,751

Nifty 5,987

Avg. Daily Volume 34,965

Face Value (`) 2

Beta 0.5

52 Week High / Low 118/78

Media

Market Cap (` cr) 3,338

022-39357800 Ext: 6839

[email protected]

Performance Highlights

3QFY2013 Result Update | Media

February 4, 2013


2/10

Jagran Prakashan | 3QFY2013 Result Update

February 4, 2013 2

Exhibit 1:Quarterly performance (Standalone)

Consumption of RM 118 113 3.9 111 6.3 342 320 7.0(% of Sales) 34.5 35.8 34.4 35 34.3

Staff Costs 43 41 6.2 44 (2.6) 129 117 9.4

(% of Sales) 12.6 12.8 13.8 13 12.6

Other Expenses 97 85 14.1 89 9.0 270 250 7.9

(% of Sales) 28.3 26.7 27.5 27 26.7

OPM 24.6 24.6 24.3 24.5 26.4

Interest 8 4 74.2 6 31.2 21 10 111.3

Depreciation 17 17 0.4 16 2.9 47 48 (0.1)

Other Income 6 3 13 19 7 172.0

Ext Income/(Expense) - - - - -

(% of Sales) 19.3 18.9 21.6 19.5 21.0

Provision for Taxation 0 19 0 0 59 (100.0)

(% of PBT) 0.0 31.2 0.0 0.0 30.3

PATM 19.3 13.0 21.6 19.5 14.6

Equity shares (cr) 32 32 32 32 32


Moderate top-line performance

JPL reported a moderate top-line growth of 7.8% yoy to `342cr, in-line with our

expectation of `344cr. In spite of festival season, the company posted a modest

7.1% yoy growth in advertising revenue to `239cr (due to high base effect). The

increase in circulation and 5% hike in cover price led to 12.2% yoy growth in

subscription revenue to `70cr. During the quarter, the companys non-publishingbusinesses comprising event, outdoor and digital media grew by 6.6% yoy to

`33cr.


3/10


February 4, 2013 3

Exhibit 2:Top-line growth at 7.8%


Exhibit 3:Ad revenue growth at 7.1% yoy


Gross margin expands, however OPM remains flat yoy

JPLs gross margin expanded by 129bp yoy to 65.5% as newsprint prices stabilized

and Indian currency fluctuation minimized. However, the OPM came in flat yoy at

24.6% due to forex loss of `5.5cr. The company has undertaken stringent cost

control measures such as improving pagination efficiency, reducing wastage and

improving ad-edit ratio, among others.

Exhibit 4:OPM contracts 162bp yoy

Source: Company, Angel research

Exhibit 5:Robust net profit growth at 59.5% yoy

Source: Company, Angel research

Robust net profit growth yoy aided by tax benefit

For 3QFY2013, JPL reported a robust 59.5% yoy growth in net profit to `66cr

aided by tax benefit (due to accumulated losses at Nai Dunia). During 9MFY2013,

the losses in Nai Dunia and Mid-Day stood at `4.2cr and `3cr respectively. Mid-

Day achieved EBIT breakeven during the 3QFY2013.

279

276

298

305

317

303

318

322

342

25.0

16.6

12.410.3

13.710.1

6.6

5.5

7.8

-

5.0

10.0

15.0

20.0

25.0

30.0

-

50

100

150

200

250

300

350

400

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

(%)

(`cr)

Top-line (LHS) yoy (RHS)

224

62

31

210

63

30

221

64

26

220

67

29

239

70

33

-

50

100

150

200

250

300

Ad-revenue Circulation revenue Non-publishingbusiness

(`cr)

3Q12 4Q12 1Q13 2Q13 3Q13

3023 25 26 25

1925 24 25

69 67 67 65 64 64 64 66 66

-

10

20

30

40

50

60

70

80

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

(%)

OPM Gross margins

53

42

50

46

41

43

56

69

66

32.5

15.7

(10.6)

(17.5) (21.6)

1.8

12.1

51.7 59.5

(30.0)

(20.0)

(10.0)

-

10.0

20.0

30.0

40.050.0

60.0

70.0

-

10

20

30

40

50

60

70

80

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

(%)

(`cr)

PAT (LHS) yoy growth (RHS)


4/10


February 4, 2013 4

Investment rationale

JPLs ad revenue grew by ~10% to `938cr inFY2012. Unlike its peers, JPL continues to post good growth in national

advertising revenue due to innovative terms of offerings and presentation

of advertisements. For FY2013, we expect ad revenue to grow by

8-12% yoy.

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 14.5x FY2014E consolidated EPS of

`7.3.

based on 17x FY2014E EPS, valuing it at 10% premium to our Sensex target

valuation multiple. 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.


5/10

Februa

Exhibi

HT M

DB Co

Source:

Exhibi

Angel

Conse

Diff (%

Source:

Exhibi

Source:

60%

80%

100%

120%

140%

A

r-10

ry 4, 2013

t 6:Peer va

dia Buy

rp. Accu

Company, Ang

t 7:Angelestimates

nsus

)

Company, Ang

t 8:Return

Company, Ang

Jun-1

0

Aug-1

0

Oct-10

luation

2,416

4,387

l Research

s. consensu

l Research

of JPL vs. S

l Research

ec-

Feb-1

1

Apr-11

Jun-1

1

Sensex

103 121

239 266

s estimates

1,511

1,558

(3.0)

nsex

ug-

Oct-11

Dec-1

1

Feb-1

2

Jagr

18

11

1,6

1,7

(1.

Compan

Dainik Jag

by Jagran

Pradesh, t

present in tPunjab an

is also pres

Apr-12

Jun-1

2

Aug-1

2

Oct-12

n

14.0 1

20.2 1

8

0

)

Exhi

Sourc

Backgro

an with AIR

Prakashan (

e largest H

he rapidly gUttar Prade

ent in the int

Dec-1

2

1

1

1

1

1

SharePrice(`)

Jagra

2.5 0.8

6.5 2.6

ngel estimate

onsensus

iff (%)

it 9:One-

: Company, An

nd

f ~16.4mn i

JPL). The co

indi market

owing Hindih. Apart fro

rnet, OOH

0

0

0

0

0

0

0

Oct-10

Dec-1

0

Feb-1

1

Prakasha

0.7

2.3

ear forwar

gel Research

s the most re

pany enjoy

for almost a

markets in Biits comma

nd event ma

Apr-11

Jun-1

1

Aug-1

1

14x

| 3QFY2

11.3 11

21.4 2

(1

P/E band

ad newspap

s a leadersh

decade no

har, Delhi, Hding positio

nagement bu

Oct-11

Dec-1

1

Feb-1

2

A

r-12

7x 20

13 Result

.4 6.5

.4 11.0

6.4

6.5

.0)

r in India pu

ip position i

. The com

aryana, Jharin print me

sinesses.

Jun-1

2

Aug-1

2

Oct-12

23x

pdate

5

8.3

14.8

7.3

7.2

1.4

blished

n Uttar

any is

khand,ia, JPL

Dec-1

2


6/10


February 4, 2013 6

Profit & Loss Statement (Consolidated)

Less: Excise duty - - - - - -Net Sales 823 942 1,221 1,356 1,511 1,698

% chg 9.8 14.4 29.6 11.0 11.5 12.4

Cost of Materials 341 296 359 461 487 532

SG&A Expenses 93 99 134 164 192 222

Personnel 107 121 173 194 217 243

Others 126 144 199 240 264 304

% chg (4.3) 80.1 26.3 (16.9) 18.5 13.1

(% of Net Sales) 19.0 30.0 29.2 21.9 23.2 23.4

Depreciation& Amortization 38 51 65 71 101 111

% chg (9.1) 95.6 25.7 (22.6) 11.1 14.3

(% of Net Sales) 14.4 24.6 23.8 16.6 16.6 16.8

Interest & other Charges 6 7 9 16 26 27

Other Income 23 34 26 46 25 23

(% of PBT) 16.8 13.2 8.4 18.0 10.0 8.2

Share in profit of Associates - - - - - -

% chg (7) 92 19 (17) (2) 13

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

Tax 44 83 98 77 46 51

(% of PBT) 32 32 32 30 18 18

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

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

% chg (6.6) 92.0 19.5 (15.1) 14.1 13.4(% of Net Sales) 11.1 18.7 17.2 13.2 13.5 13.6

% chg (6.6) 92.0 19.4 (15.1) 14.1 13.4

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

previous year numbers


7/10


February 4, 2013 7

Balance Sheet (Consolidated)

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

Reserves& Surplus 500 552 639 689 755 856

Minority Interest 8

Total Loans 141 121 174 643 613 540

Deferred Tax Liability 52 58 62 70 78 78

Other long term liablities - 6 - -

Long term provisions 6 9 13 13

Gross Block 480 564 730 1,217 1,259 1,306

Less: Acc. Depreciation 151 194 257 351 452 563

Capital Work-in-Progress 71 25 52 66 76 78

Goodwill - - - - - -

Long term loans and adv. 134 137 148 165

Current Assets 360 417 519 666 716 809

Cash 83 85 35 100 105 123

Loans & Advances 87 98 55 63 71 81

Other 190 235 429 504 539 605

Current liabilities 162 186 303 368 314 329

Other non CA - - 3 11 11 11




8/10


February 4, 2013 8

Cashflow Statement

Profit before tax 135 259 310 256 250 282

Depreciation 38 51 65 71 101 111

Change in Working Capital (7) (12) (37) (14) (110) (61)

Interest / Dividend (Net) (2) (9) (3) 0 8 7

Direct taxes paid 44 83 98 77 46 51

Others 16 (21) (1) (3) 4 (1)

(Inc.)/ Dec. in Fixed Assets (111) (38) (181) (149) (52) (50)

(Inc.)/ Dec. in Investments 27 (10) (29) (79) 20 (10)

Issue of Equity - - - - - -

Inc./(Dec.) in loans 62 (20) 53 185 (30) (73)Dividend Paid (Incl. Tax) 70 123 128 129 130 130

Interest / Dividend (Net) (2) (9) (3) (3) 8 7

Inc./(Dec.) in Cash 46 2 (46) 65 6 17




9/10


February 4, 2013 9

Key Ratios

P/E (on FDEPS) 36.4 19.0 15.9 18.7 16.4 14.5

P/CEPS 24.5 14.0 12.2 13.4 11.0 9.8

P/BV 5.7 5.2 4.8 4.4 4.1 3.6

Dividend yield (%) 1.9 3.3 3.3 3.3 3.3 3.3

EV/Sales 4.1 3.6 2.7 2.7 2.4 2.1

EV/EBITDA 21.7 12.0 9.3 12.5 10.5 9.0

EV / Total Assets 4.5 4.3 3.5 2.5 2.4 2.3

EPS (Basic) 3.0 5.8 6.6 5.6 6.4 7.3

EPS (fully diluted) 2.9 5.6 6.6 5.6 6.4 7.3

Cash EPS 4.3 7.5 8.6 7.9 9.6 10.8

DPS 2.0 3.5 3.5 3.5 3.5 3.5

Book Value 18.6 20.3 22.2 23.8 25.9 29.1

EBIT margin 14.4 24.6 23.8 16.6 16.6 16.8

Tax retention ratio 0.7 0.7 0.7 0.7 0.8 0.8

Asset turnover (x) 1.7 1.8 2.0 1.5 1.3 1.4

ROIC (Post-tax) 16.6 29.8 32.0 17.1 17.7 19.9

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

Leverage (x) (0.2) -0.2 -0.1 0.2 0.4 0.3

Operating ROE 13.0 24.0 27.2 19.8 24.2 25.2

RoCE 16.6 30.0 33.6 18.6 16.7 18.8

Angel RoIC (Pre-tax) 24.5 43.9 46.8 24.6 21.7 24.3

RoE 16.7 30.0 31.6 24.5 25.9 26.6

Asset Turnover 1.7 1.7 1.7 1.1 1.2 1.3

Inventory / Sales (days) 14 21 19 21 21 21

Receivables (days) 70 70 69 78 73 73

Payables (days) 39 50 52 64 44 42

Net Working capital (days) 51 57 52 51 68 74

Net Debt to equity (0.2) -0.2 -0.1 0.4 0.3 0.2

Net Debt to EBITDA (0.6) -0.5 -0.2 1.0 0.8 0.5

Interest Coverage 20.1 35.3 32.1 14.3 9.7 10.6




10/10


February 4, 2013 10

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

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make

such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies

referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and

risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make

investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this

document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any wayresponsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report .Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. WhileAngel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,

redistributed or passed on, directly or indirectly.

Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or

other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in

the past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in

connection with the use of this information.

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

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, 5th February, 2013

Documents

Transcript of Jagran Prakashan, 5th February, 2013