Jagran Prakashan Result Updated

8/3/2019 Jagran Prakashan Result Updated

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

(` cr) 3QFY12 3QFY11 % yoy 2QFY12 %qoqRevenue 317 279 13.7 305 3.8EBITDA 78 82 (5.3) 79 (1.2)

OPM (%) 24.6 29.6 (494bp) 26 (125bp)

PAT 41 53 (21.5) 46 (9.8)Source: Company, Angel Research

For 3QFY2012, Jagran Prakashan (JPL) reported a healthy performance on the

revenue front. The company reported top-line growth of 13.7% yoy/6.5% qoq to

`317cr. The companys earnings declined on a yoy basis by ~21.5% as well as

sequentially by ~10% and came in at `41cr. The decline in earnings was due to a

496bp yoy contraction in operating margin on account of high raw-material

prices because of increased circulation and forex losses. We maintain our Buyrecommendation on the stock.Key highlights of the quarter: During the quarter, ad revenue grew by ~15% yoy.Circulation growth stood at ~9% yoy. Non-publishing business revenue, which

comprises event, outdoor and digital businesses grew by 15% yoy each. The

company also reported forex loss of `8.7cr on account of foreign exchange

fluctuations.

Outlook and valuation: Post 3QFY2012, we have maintained our earningsestimate. We expect JPL to post a 9% CAGR in its top line over FY2011-13E,

driven by a ~10% CAGR in ad revenue and a ~3% CAGR in circulation revenue.

In terms of earnings, we expect JPL to report a CAGR of 7% over FY2011-13E

(impacted by margin pressure). We believe underperformance of the stockprovides a good entry point. Hence, we maintain our Buy view with a revisedtarget price of `137.Key financials (Consolidated)

Y/E March (` cr) FY2010 FY2011 FY2012E FY2013ENet sales 942 1,221 1,336 1,447% chg 14.4 29.6 9.4 8.3

Net profit (Adj.) 176 210 210 241% chg 92.0 19.4 0.2 14.6

EBITDA margin (%) 30.0 29.2 27.6 28.2

EPS (`) 5.6 6.6 6.7 7.6P/E (x) 17.7 14.8 14.8 12.9

P/BV (x) 4.8 4.4 4.5 4.2

RoE (%) 30.0 31.6 30.2 33.8

RoCE (%) 30.0 33.3 31.8 35.2

EV/Sales (x) 3.5 2.7 2.4 2.3

EV/EBITDA (x) 11.6 9.2 8.9 8.0

Source: Company, Angel Research

BUYCMP `98Target Price `137

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 59.5

MF / Banks / Indian Fls 15.9

FII / NRIs / OCBs 11.5

Indian Public / Others 13.2

Abs. (%) 3m 1yr 3yr

Sensex (1.0) (4.0) 83.6

JAGP (10.3) (20.3) 122.6

MEDIA

Market Cap (` cr) 3,098

Beta 0.7

52 Week High / Low 132/90

Avg. Daily Volume 15,984

Face Value (`) 2

BSE Sensex 17,301

Nifty 5,236

Reuters Code JAGP.BO

JAGP@IN

Sreekanth P.V.S022 3935 7800 Ext: 6841

[email protected]

Jagran PrakashanPerformance Highlights

3QFY2012 Result Update | Media

February 2, 2012


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Jagran Prakashan | 3QFY2012 Result Update

February 2, 2012 2

Exhibit 1:Quarterly performance (Consolidated)Y/E March (` cr) 3QFY12 3QFY11 % yoy 2QFY12 % qoq 9MFY2012 9MFY2011 % chgNet Sales 317 279 13.7 305 3.8 920 821 12.2Consumption of RM 113 86 31.4 108 5.5 320 242 32.1(% of Sales) 35.8 31.0 35.2 34.8 29.5

Staff Costs 41 36 11.9 38 8.2 117 106 10.4

(% of Sales) 12.8 13.0 12.3 12.8 13.0

Other Expenses 85 74 15.2 81 4.4 250 215 16.2

(% of Sales) 26.7 26.4 26.6 27.2 26.3

Total Expenditure 239 196 21.7 226 5.6 688 564 22.0Operating Profit 78 82 (5.3) 79 (1.2) 232 257 (9.4)OPM 24.6 29.6 25.9 25.3 31.3

Interest 4 2 112.3 3 55.5 10 5 113.0

Depreciation 17 15 12.9 16 3.1 48 40 17.7

Other Income 3 13 (77.8) 4 (28.0) 21 32 (33.4)

PBT (excl. Ext Items) 60 79 (23.6) 64 (6.5) 196 243 (19.4)Ext Income/(Expense) - - - - -

PBT (incl. Ext Items) 60 79 (23.6) 64 (6.5) 196 243 (19.4)(% of Sales) 18.9 28.2 21.0 21.3 29.7

Provision for Taxation 19 26 (27.9) 18 1.8 59 80 (25.4)

(% of PBT) 31.2 33.0 28.6 30.3 32.7

Recurring PAT 41 53 (21.5) 46 (9.8) 137 164 (16.5)PATM 13.0 18.9 15.0 14.9 20.0

Reported PAT 41 53 (21.5) 46 (9.8) 137 164 (16.5)Equity shares (cr) 32 30 32 32 30

FDEPS (`) 1.3 1.7 (21.5) 1.4 (9.8) 4.3 5.2 (16.5)Source: Company, Angel Research

Healthy top line performance compared to other print cos

JPL reported top-line growth of 13.7% yoy/3.8% qoq to `317cr. The company

reported healthy ad revenue growth of ~14.9% yoy and 6% qoq. Circulation

growth stood at 9% yoy/~2% qoq. Ad revenue came in on account of ads from

both national as well as local advertisers. Earnings for the quarter fell by 21.5%

yoy. During the quarter, the companys other businesses also performed

sluggishly, with revenue growing by 14.1% yoy.


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February 2, 2012 3

Exhibit 2:Healthy ad revenue growth across editions...


Exhibit 3:Circulation revenue grew on a yoy/qoq basis...


Gross margin contracts and drags OPM

At the operating level, JPL delivered a 494bp yoy and 125bp qoq contraction in

OPM. The company faces gross margin pressure and witnessed a 482bp yoy gross

margin contraction, impacted by increased newsprint cost, which stood at `31/kg.

On a yoy basis, other expenses stood high (up 33bp) and staff cost remained flat.

The company reported a 21.5% yoy decline in its earnings, aided by a steepdecline in its OPM during the quarter.

Exhibit 4: Earnings decline as OPM contracts

Source: Company, Angel research

Exhibit 5:OPM and gross margin contract yoy


-

5.0

10.0

15.0

20.0

25.0

30.0

-

50

100

150

200

250

300

350

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

(%)

(`cr)

Top-line (LHS) yoy (RHS)

-

50

100

150

200

250

Ad-revenue Circulation revenue Non-publishing

business

(`cr)

3Q11 4Q11 1Q12 2Q12 3Q12

(40.0)(20.0)-20.040.060.080.0100.0120.0140.0160.0180.0

-

10

20

30

40

50

60

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

(%)

(`c

r)

PAT (LHS) yoy growth (RHS)

3428 27

32 32 3025 25 26

72 70 71 71 71 69 67 67 65

-

10

20

30

40

50

60

70

80

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

(%)

OPM Gross margins


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February 2, 2012 4

Investment rationale

Healthy ad revenue growth on account of higher color inventory, peg a 10%CAGR: For FY2012-13E, we expect ad revenue to grow by 8-12% yoy. We maintain a conservative stance on managements robust guidance of

14-15% yoy growth due to lower national advertisements (management

guidance) and low pick-up in advertisements from the education sector (expect

pressure to ease in 2HFY2012).

Underperformance a good entry point; JPL attractive at 13.8x FY2013E EPS:JPL acquired the print business from Mid-Day Multimedia, whose presence in

markets such as Mumbai, Delhi, Bangalore and Pune (recently launched) is

likely to fill the gap in JPLs portfolio vs. its peers HT Media (HTand Hindustan)

and DB Corp. (Dainik Bhaskar and DNA), which offer both English and Hindi

publications to their advertisers. Hence, we believe JPLs combined offerings

are going to record a healthy 9% CAGR in revenue over FY2011-13E.

With JPLs wider portfolio (including Mid-Day Publications), we believe the

company is well poised to benefit from steady growth in print media.

The underperformance of the stock and attractive valuations (at the CMP, the

stock trades at 12.9x FY2013E EPS) provide a good entry point for investors.

Outlook and valuation

Post 3QFY2012, we have maintained our earnings estimate. We expect JPL to post

a 9% CAGR in its top line over FY2011-13E, driven by a ~10% CAGR in ad

revenue and a ~3% CAGR in circulation revenue. In terms of earnings, we expect

JPL to report a CAGR of 7% over FY2011-13E (impacted by margin pressure).

We believe underperformance of the stock provides a good entry point. Hence, wemaintain our Buy view with a revised target price of `137, based on a P/E multipleof 18x FY2013E (in-line with its historical valuations).Downside risks to our estimates include 1) any further increase in newsprint

prices, 2) competition becoming fierce and 3) higher-than-anticipated slowdown in

the macroeconomic scenario.


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February 2, 2012 5

Exhibit 6:Key assumptions(` cr) FY2009 FY2010 FY2011 FY2012E FY2013E CAGRAd. Revenue 552 638 766 855 921 9.6Dainik Jagran 526 600 712 785 838 8.5I-Nxt 23 34 47 61 71 22.6

City plus 3 4 7 10 12 28.2

Circ. Revenue 195 214 221 226 236 3.3Dainik Jagran 187 204 209 212 222 3.0

I-Nxt 5 6 6 7 8 12.5

Others 4 4 6 6 6 1.9

Revenue from Mid-Day - - 107 120 136 13.0Revenue from others 78 90 126 134 155 10.6Non-Publishing 58 73 102 117 137 15.6

Others 19 16 24 18 18 (13.6)

Total 825 942 1,221 1,336 1,447 8.9

YoY growth (%)Advt Revenue 10.6 15.7 20.1 11.6 7.6Dainik Jagran 7.8 14.0 18.7 10.3 6.7

I-Nxt 148.5 49.5 39.3 27.6 17.7

City plus 90.6 65.9 63.1 40.3 17.2

Circ. Revenue 7.9 9.4 3.4 2.0 4.5Dainik Jagran 6.2 9.5 2.2 1.8 4.3

I-Nxt 219.0 8.0 10.0 10.0 15.0

Others (4.7) 7.0 60.5 2.6 1.2

Revenue from Mid-Day - - - 12.9 13.1Revenue from others 11.3 15.4 41.3 6.3 15.1Non-Publishing 4.4 25.6 39.1 14.2 17.0

Others 39.5 (15.9) 51.3 (27.1) 2.3

% of TotalAdvt Revenue 66.9 67.8 62.8 64.0 63.6

Circ. Revenue 23.7 22.7 18.1 16.9 16.3

Revenue from others 9.4 9.5 10.4 10.1 10.7



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February 2, 2012 6

Exhibit 7:Peer valuationCompany Reco Mcap CMP TP Upside P/E (x) EV/Sales (x) RoE (%) CAGR

(` cr) (`) (`) (%) FY12E FY13E FY12E FY13E FY12E FY13E Sales PATDB Corp Buy 3,565 195 274 40.9 15.0 12.9 8.3 7.3 26.2 25.4 12.6 2.1HT Media Buy 3,136 133 170 27.4 15.6 14.1 1.4 1.2 14.4 13.9 12.9 7.1

Jagran Buy 3,110 98 137 39.3 14.8 12.9 2.4 2.3 30.2 33.8 8.9 4.7Source: Company, Angel Research

Exhibit 8:Angel vs. consensus estimatesTop line (` cr) FY2012E FY2013E EPS (`) FY2012E FY2012EAngel estimates 1,336 1,447 Angel estimates 6.7 7.6

Consensus 1348 1503 Consensus 6.4 7.6

Diff (%) (0.9) (3.7) Diff (%) 3.9 0.3


Exhibit 9:Return of JPL vs. Sensex


Exhibit 10:One-year forward P/E band


0%

20%

40%

60%

80%

100%

120%

140%

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Feb-11

Mar-11

Apr-11

Apr-11

May-11

Jun-11

Jun-11

Jul-11

Aug-11

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Jan-12

Jan-12

Sensex Jagran

020

40

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80

100

120

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Feb-0

7

Jun-0

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Oct-07

Feb-0

8

Jun-0

8

Oct-08

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Jun-0

9

Oct-09

Feb-1

0

Jun-1

0

Oct-10

Feb-1

1

Jun-1

1

Oct-11

Feb-1

2

SharePrice(`)

10x 15x 20x 25x


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February 2, 2012 7

Profit & Loss Statement(Consolidated)Y/E March (` cr) FY2008 FY2009 FY2010 FY2011 FY2012E FY2013EGross sales 750 823 942 1,221 1,336 1,447Less: Excise duty - - - - - -Net Sales 750 823 942 1,221 1,336 1,447

Total operating income 750 823 942 1,221 1,336 1,447% chg 25.3 9.8 14.4 29.6 9.4 8.3

Total Expenditure 586 667 660 864 967 1,039Cost of Materials 295 341 296 390 440 472

SG&A Expenses 92 93 99 120 148 149

Personnel 91 107 121 173 174 203

Others 107 126 144 182 206 216

EBITDA 164 157 282 357 368 408% chg 36.7 (4.3) 80.1 26.4 3.2 10.8

(% of Net Sales) 21.9 19.0 30.0 29.2 27.6 28.2

Depreciation& Amortization 34 38 51 65 69 78

EBIT 130 118 232 291 300 330% chg 35.5 (9.1) 95.6 25.8 2.9 10.2

(% of Net Sales) 17.4 14.4 24.6 23.9 22.4 22.8

Interest & other Charges 6 6 7 9 11 9

Other Income 22 23 34 26 25 24

(% of PBT) 14.8 16.8 13.2 8.3 8.0 7.0

Share in profit of Associates - - - - - -

Recurring PBT 146 135 259 308 314 345% chg 27 (7) 92 19 2 10

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

PBT (reported) 146 135 259 306 314 345Tax 48 44 83 98 104 104

(% of PBT) 33 32 32 32 33 30

PAT (reported) 98 92 176 208 210 241 Add: Share of earnof asso - - - - - -

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

PAT after MI (reported) 98 92 176 208 210 241ADJ. PAT 98 92 176 210 210 241% chg 28.7 (6.6) 92.0 19.5 0.1 14.6(% of Net Sales) 13.1 11.1 18.7 17.2 15.8 16.7

Basic EPS (`) 3.3 3.0 5.8 6.6 6.7 7.6Fully Diluted EPS ( ) 3.1 2.9 5.6 6.6 6.7 7.6% chg 28.7 (6.6) 92.0 19.5 0.1 14.6


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February 2, 2012 8

Balance Sheet (Consolidated)

Y/E March (` cr) FY2008 FY2009 FY2010E FY2011 FY2012E FY2013ESOURCES OF FUNDSEquity Share Capital 60 60 60 63 63 63Preference Capital - - - - - -

Reserves& Surplus 479 500 552 639 629 670

Shareholders Funds 539 560 612 702 692 734Minority Interest - - - - - -Total Loans 79 141 121 192 172 152

Deferred Tax Liability 53 52 58 62 62 62

Total Liabilities 671 753 792 956 926 948APPLICATION OF FUNDSGross Block 392 480 564 730 763 867

Less: Acc. Depreciation 135 151 194 258 326 404Net Block 257 328 369 472 437 462Capital Work-in-Progress 48 71 25 74 38 43

Goodwill - - - - - -

Investments 183 157 167 202 202 202Current Assets 307 360 417 498 521 537

Cash 37 83 85 36 43 16

Loans & Advances 77 87 98 167 142 155

Other 193 190 235 295 336 366

Current liabilities 124 162 186 290 271 297

Net Current Assets 183 198 231 208 250 240Misc Exp - - - - - -

Total Assets 671 753 792 956 926 948


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February 2, 2012 9

Cash Flow Statement (Consolidated)

Y/E March (` cr) FY2008 FY2009 FY2010E FY2011 FY2012E FY2013EProfit before tax 146 135 259 310 314 345

Depreciation 34 38 51 65 69 78Change in Working Capital (33) (7) (12) (31) (46) (23)

Interest / Dividend (Net) (6) (2) (9) (1) 3 2

Direct taxes paid 48 44 83 98 104 104

Others 6 16 (21) 34 (29) 0

Cash Flow from Operations 98 136 185 280 206 299(Inc.)/ Dec. in Fixed Assets (68) (111) (38) (216) 3 (108)

(Inc.)/ Dec. in Investments (39) 27 (10) (35) - -

Cash Flow from Investing (106) (84) (48) (251) 3 (108)Issue of Equity - - - - - -

Inc./(Dec.) in loans (28) 62 (20) 71 (20) (20)

Dividend Paid (Incl. Tax) 35 70 123 155 185 200Interest / Dividend (Net) (6) (2) (9) (9) (2) (3)

Cash Flow from Financing (56) (6) (135) (75) (203) (217)Inc./(Dec.) in Cash (65) 46 2 (47) 7 (27)

Opening Cash balances 101 37 83 85 36 43Closing Cash balances 37 83 85 36 43 16


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February 2, 2012 10

Key Ratios

Y/E March FY2008 FY2009 FY2010E FY2011 FY2012E FY2013EValuation Ratio (x)P/E (on FDEPS) 31.7 33.9 17.7 14.8 14.8 12.9

P/CEPS 22.5 22.8 13.1 11.4 11.1 9.7

P/BV 5.5 5.3 4.8 4.4 4.5 4.2

Dividend yield (%) 2.0 2.0 3.6 4.3 5.1 5.5

EV/Sales 4.2 3.8 3.5 2.7 2.4 2.3

EV/EBITDA 19.2 20.2 11.6 9.2 8.9 8.0

EV / Total Assets 4.7 4.2 4.0 3.4 3.5 3.4

Per Share Data (`)EPS (Basic) 3.3 3.0 5.8 6.6 6.7 7.6

EPS (fully diluted) 3.1 2.9 5.6 6.6 6.7 7.6

Cash EPS 4.4 4.3 7.5 8.6 8.8 10.1

DPS 2.0 2.0 3.5 4.2 5.0 5.4

Book Value 17.9 18.6 20.3 22.2 21.9 23.2

DuPont analysisEBIT margin 17.4 14.4 24.6 23.9 22.4 22.8

Tax retention ratio 0.7 0.7 0.7 0.7 0.7 0.7

Asset turnover (x) 1.7 1.7 1.8 1.9 1.9 2.1

ROIC (Post-tax) 20.4 16.6 29.8 31.6 28.7 32.7

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

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

Operating ROE 14.9 13.0 24.0 27.2 26.3 29.6

Returns (%)RoCE 19.6 16.6 30.0 33.3 31.8 35.2

Angel RoIC (Pre-tax) 30.2 24.5 43.9 46.3 42.8 46.8

RoE 18.7 16.7 30.0 31.6 30.2 33.8

Turnover ratios (x) Asset Turnover 1.9 1.7 1.7 1.7 1.8 1.7

Inventory / Sales (days) 17 14 21 23 24 26

Receivables (days) 77 70 70 69 68 66

Payables (days) 41 39 50 46 50 50

Net Working capital (days) 71 51 57 51 56 57

Solvency ratios (x)Net Debt to equity (0.3) (0.2) -0.2 -0.1 -0.1 -0.1

Net Debt to EBITDA (0.9) (0.6) -0.5 -0.1 -0.2 -0.2

Interest Coverage 21.7 20.1 35.3 32.1 28.0 34.9


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February 2, 2012 11

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

DISCLAIMERThis 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

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

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

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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to thelatest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may haveinvestment positions in the stocks recommended in this report.

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 Result Updated

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