Buy Jagran Prakashan Q3FY11 Result Update; Good show, Target: Rs 155: Emkay

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Jagran Prakashan

Good show, Reiterate BUY

BUY

CMP: Rs 120                                        Target Price: Rs 155

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n     PAT up 32.5% YoY to Rs526mn, higher than our estimate of Rs487mn, driven by strong ad revenue growth

n     Robust advertisement revenue growth of 31.3% yoy to Rs Rs1945mn, on the back of strong ad volumes

n     Circulation revenue up 7.2% to Rs570mn v/s our expectation of Rs540mn. Other business on track with revenue growth of 19.7% to Rs252mn

n     EPS estimate of Rs 6.9 and Rs 8.2 for FY11E and FY12E respectively. Retain BUY rating with target Rs 155

Results better than our estimates

Jagran Prakashan reported better than expected results with revenue growth of 26.1%

yoy to Rs2860mn, driven by strong ad revenue growth coupled with improvement in

circulation and better performance from other businesses (Event, Digital and Outdoor).

EBITDA was up 37.5% yoy to Rs897mn and EBITDA margin improved by 261bps to

31.4%. Impact of high newsprint price was offset by strong revenues. Despite of higher

interest cost and lower other income, it posted PAT growth of 32.5% yoy to Rs 526mn

(our estimate of Rs487mn).

Robust advertisement revenue growth

Ad revenue for the quarter stood at 1945mn up 31.3% yoy was better than our

expectations, led by strong volume growth and improvement in yields during the festive

season. Q3FY11 remained exceptionally strong quarter with the robust ad revenue

growth for entire print media pack (DB Corp, HT Media). Given the strong Q3

performance, we expect Jagran would surpass its ad revenue growth guidance of 18%

for FY11E. Further, management indicated additional ad revenue of Rs 40-50mn is

expected from the cricket world cup starting from Feb 19, 2011.

Increase in circulation pushes revenue

As indicated by the management in last concall that it would push the circulation across

the markets and that has resulted in 10.9% yoy increase in overall circulation in

Q3FY11. The circulation revenue improved 7.2% yoy to Rs570mn. The management

has indicated the further push in the circulation in couple of its markets and reduction in

cover price is also anticipated in FY12E to increase the volume based market share.

Other businesses on track

The company has seen a strong traction in other businesses (Event, Digital and

Outdoor) as well. Event business recorded revenue growth of ~30% yoy with PBT of

Rs14mn v/s loss of Rs 3.6mn. Digital revenue stood at Rs 22mn and PBT for Outdoor

was at Rs9.8mn v/s loss of Rs 1.5mn. It has also got a govt. contract in Event business

which would fetch ~Rs350mn annually for the next couple of years.

Retain BUY rating with target price Rs155

We retain our EPS estimates of Rs6.9 and Rs8.2 for FY11E and FY12E respectively.

Our estimates do not include the financials of Mid-day acquisition, which we believe is

EPS accretive. We retain BUY rating on the stock with target price of Rs155. At CMP of

Rs120, stock trades at 17.6x /14.7x our EPS estimate for FY11E/12E respectively