JagranPrakashan-2QFY2013RU

7/31/2019 JagranPrakashan-2QFY2013RU

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

Quarterly data (Standalone)

EBITDA 78 79 (1.1) 79 (0.8)

OPM (%) 24.3 25.9 (162)bp 25 (55)

Source: Company, Angel Research

For 2QFY2013, Jagran Prakashan (JPL) reported a robust 51.7% yoy growth in

net profit to `69cr aided by tax benefit due to accumulated losses at Nai Dunia.

On the operating front, JPL posted a 162bp yoy contraction in its OPM to 24.3%

primarily on account of 146bp yoy increase in staff cost (partly due to salary

increment in the quarter).

For 2QFY2013, JPL reported a sluggish top-line growth

of 5.5% yoy to `322cr as slowdown in GDP growth continues to affect advertising

revenue growth. The company reported ad revenue growth of 3.6% yoy to `220cr

and circulation revenue growth of 8.9% yoy to `67cr. The circulation revenue

growth is due to increase in cover prices in selective markets. During the quarter,

the companys non-publishing businesses comprising event, outdoor and digital

businesses grew by 17.1% yoy to `29cr.

At the current market price, JPL is trading at 13.8x

FY2014E consolidated EPS of `7.3.

based on 16x 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/increase

in the turnaround period for Nai Dunia/ Mid-day.

Key financials (Consolidated)

% chg 14.4 29.6 11.0 10.8 11.8

% chg 92.0 19.4 (15.1) 13.4 13.6

OPM (%) 30.0 29.2 21.9 23.1 23.1

P/E (x) 18.1 15.1 17.8 15.7 13.8

P/BV (x) 4.9 4.5 4.2 3.9 3.5

RoE (%) 30.0 31.6 24.5 25.8 26.5

RoCE (%) 30.0 33.6 18.6 16.4 18.1

EV/Sales (x) 3.4 2.6 2.6 2.3 2.0

EV/EBITDA (x) 11.4 8.9 12.0 10.1 8.8


CMP `100Target Price `117

Investment Period 12 Months

Stock Info

Sector

Net Debt (` cr) 296

Bloomberg Code JAGP@IN

Shareholding Pattern (%)

Promoters 59.7

MF / Banks / Indian Fls 14.8

FII / NRIs / OCBs 13.0

Indian Public / Others 12.5

Abs. (%) 3m 1yr 3yr

Sensex 6.9 3.5 15.9

JAGP 10.1 (7.2) (9.3)

Reuters Code JAGP.BO

BSE Sensex 18,431

Nifty 5,598

Avg. Daily Volume 33,937

Face Value (`) 2

Beta 0.5

52 Week High / Low 115/78

Media

Market Cap (` cr) 3,160

022-39357800 Ext: 6839

[email protected]

Performance Highlights

2QFY2013 Result Update | Media

October 30, 2012


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Jagran Prakashan | 2QFY2013 Result Update

October 30, 2012 2

Exhibit 1:Quarterly performance (Standalone)

Consumption of RM 111 108 3.1 113 (2.3) 224 206 8.7(% of Sales) 34.4 35.2 35.7 35.1 33.8

Staff Costs 44 38 18.0 41 8.1 85 77 11.1

(% of Sales) 13.8 12.3 12.9 13.3 12.6

Other Expenses 89 81 9.2 84 5.4 173 165 4.8

(% of Sales) 27.5 26.6 26.5 27.0 27.1

OPM 24.3 25.9 24.8 24.5 26.5

Interest 6 3 106.6 8 (22.5) 13 6 140.5

Depreciation 16 16 0.6 15 9.1 31 31 (0.4)

Other Income 13 4 (1) 13 11 13.1

Ext Income/(Expense) - - - - -

(% of Sales) 21.6 21.0 17.6 19.6 22.3

Provision for Taxation 0 18 0 41 (100.0)

(% of PBT) 0.0 28.6 0.0 0.0 29.9

PATM 21.6 15.0 17.6 19.6 15.7

Equity shares (cr) 32 32 32 32 32


Sluggish top-line performance

JPL reported a sluggish top-line growth of 5.5% yoy to `322cr as slowdown in GDP

growth continues to affect advertising revenue growth. The company reported ad

revenue growth of 3.6% yoy to `220cr and circulation revenue growth of 8.9% yoy

to `67cr. The circulation revenue growth is due to increase in cover prices in

selective markets. During the quarter, the companys non-publishing businessescomprising event, outdoor and digital businesses grew by 17.1% yoy to `29cr.


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October 30, 2012 3

Exhibit 2:Top-line growth at 5.5%


Exhibit 3:Ad revenue growth at 3.6% yoy


OPM contracts by 162bp yoy

At the operating level, JPL posted a 162bp yoy contraction in its OPM to 24.3%

mainly on account of a 146bp yoy increase in staff cost (due to salary increment in

the quarter). In spite of increase in newsprint prices in INR terms yoy, raw material

cost declined by 79bp yoy on account of stringent cost control measures

undertaken by the company such as improving pagination efficiency, and

improving ad-edit ratio, among others.

In the last few quarters, the print media companies are facing margin pressures

due to sluggish ad revenue (due to slowdown in GDP growth) and increase in

newsprint prices in INR terms (due to rupee depreciation). JPL reported a 162bpyoy contraction in OPM to 24.3%

Exhibit 4: OPM contracts 162bp yoy

Source: Company, Angel research

Exhibit 5:Robust net profit growth at 51.7% yoy

Source: Company, Angel research

Robust net profit growth yoy aided by tax benefit

The companys net profit rose by 51.7% yoy to `69cr aided by tax benefit (due to

accumulated losses at Nai Dunia subsidiary). During 1HFY2013, the losses in NaiDunia stood at `4cr (vs `28cr in 1HFY2012) due to cost and revenue synergies as

well as shutting down of the loss making Delhi edition.

277

279

276

298

305

317

303

318

322

12.2

25.0

16.6 12.410.3

13.7

10.1

6.65.5

-

5.0

10.0

15.0

20.0

25.0

30.0

250

260

270

280

290

300

310

320

330

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

(%)

(`cr)

Top-line (LHS) yoy (RHS)

212

61

25

224

62

31

210

63

30

221

64

26

220

67

29

-

50

100

150

200

250

Ad-revenue Circulation revenue Non-publishingbusiness

(`cr)

2Q12 3Q12 4Q12 1Q13 2Q13

3230

23 2526 25

1925 24

71 69 67 67 65 64 64 64 66

-

10

20

30

40

50

60

70

80

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

(%)

OPM Gross margins

56

53

42

50

46

41

43

56

69

10.432.5

15.7(10.6)

(17.5)(21.5) 1.8

12.1

51.7

(30.0)

(20.0)

(10.0)

-

10.0

20.0

30.0

40.0

50.0

60.0

-

10

20

30

40

50

60

70

80

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

(%)

(`cr)

PAT (LHS) yoy growth (RHS)


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October 30, 2012 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 FY2012-13E, we expect ad revenue to grow by

8-12% yoy.

JPL acquired the print business fromMid-Day Multimedia, which is present 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 (HTand 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.

Outlook and valuation

At the current market price, JPL is trading at 13.8x FY2014E consolidated EPS of

`7.3.

based on 16x 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/increase in the turnaround period

for Nai Dunia/ Mid-day.


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October 30, 2012 6

Profit & Loss Statement (Consolidated)

Less: Excise duty - - - - - -Net Sales 823 942 1,221 1,356 1,503 1,681

% chg 9.8 14.4 29.6 11.0 10.8 11.8

Cost of Materials 341 296 359 461 487 532

SG&A Expenses 93 99 134 164 191 220

Personnel 107 121 173 194 215 241

Others 126 144 199 240 263 300

% chg (4.3) 80.1 26.3 (16.9) 17.0 11.8

(% of Net Sales) 19.0 30.0 29.2 21.9 23.1 23.1

Depreciation& Amortization 38 51 65 71 100 110

% chg (9.1) 95.6 25.7 (22.6) 9.3 12.7

(% of Net Sales) 14.4 24.6 23.8 16.6 16.4 16.5

Interest & other Charges 6 7 9 16 23 25

Other Income 23 34 26 46 25 23

(% of PBT) 16.8 13.2 8.4 18.0 10.1 8.3

Share in profit of Associates - - - - - -

% chg (7) 92 19 (17) (3) 11

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

Tax 44 83 98 77 46 46

(% of PBT) 32 32 32 30 19 17

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

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

% chg (6.6) 92.0 19.5 (15.1) 13.3 13.6(% of Net Sales) 11.1 18.7 17.2 13.2 13.5 13.7

% chg (6.6) 92.0 19.4 (15.1) 13.4 13.6

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

previous year numbers


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October 30, 2012 7

Balance Sheet (Consolidated)

Equity Share Capital 60 60 63 63 63 63

Preference Capital - - - - - -

Reserves& Surplus 500 552 639 689 754 853

Minority Interest 8

Total Loans 141 121 174 643 623 550

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 1,252 1,293

Less: Acc. Depreciation 151 194 257 351 451 561

Capital Work-in-Progress 71 25 52 66 75 78

Goodwill - - - - - -

Long term loans n advances 134 137 148 165

Current Assets 360 417 519 666 731 828

Cash 83 85 35 100 124 149

Loans & Advances 87 98 55 63 70 79Other 190 235 429 504 537 600

Current liabilities 162 186 303 368 314 328

Other non CA - - 3 11 11 11




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October 30, 2012 9

Key Ratios

P/E (on FDEPS) 34.7 18.1 15.1 17.8 15.7 13.8

P/CEPS 23.3 13.3 11.6 12.7 10.5 9.3

P/BV 5.4 4.9 4.5 4.2 3.9 3.5

Dividend yield (%) 2.0 3.5 3.5 3.5 3.5 3.5

EV/Sales 3.9 3.4 2.6 2.6 2.3 2.0

EV/EBITDA 20.6 11.4 8.9 12.0 10.1 8.8

EV / Total Assets 4.3 4.1 3.4 2.4 2.3 2.2

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 10.7

DPS 2.0 3.5 3.5 3.5 3.5 3.5

Book Value 18.6 20.3 22.2 23.8 25.8 29.0

EBIT margin 14.4 24.6 23.8 16.6 16.4 16.5

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 17.5 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 23.8 25.0

RoCE 16.6 30.0 33.6 18.6 16.4 18.1

Angel RoIC (Pre-tax) 24.5 43.9 46.8 24.6 21.4 23.9

RoE 16.7 30.0 31.6 24.5 25.8 26.5

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 43

Net Working capital (days) 51 57 52 51 68 73

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 0.4

Interest Coverage 20.1 35.3 32.1 14.3 10.7 11.2




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October 30, 2012 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

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

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JagranPrakashan-2QFY2013RU

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