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Jagran Prakashan: Stronghold in Hindi heartland
We spoke with the management of Jagran Prakashan (JAGP IN) to
understand the outlook for the Indian Print media players, business drivers of
the company, and its positioning vs. offerings of other Indian media vendors.
Jagran Prakashan was founded in 1942 and its flagship brand is ‘Dainik
Jagran’. It publishes 37 editions and over 200 sub editions, across 11 states.
The company has dominant position in two of the largest Hindi-speaking
markets and has taken the inorganic route to establish a presence in Mumbai.
Dominant position in UP and Bihar Markets
Market Leader in UP. The main markets for the company are the states of
UP, Bihar and Haryana. It is ranked No. 1 in UP, No 2 in Bihar and No 3 in
Haryana, with 41%, 32% and 20% readership market share, respectively.
Main markets poised to grow strongly in FY12. UP and Bihar have shown
respective average GDP growth rates of 8% and 13% for 2005-10. These
states have reaped the benefit of the NREGA scheme and good governance,
which has led to increased income in the hands of the common man. This
trend should continue giving JPL the advantage of increased consumerism in
Tier2/3 cities of UP and Bihar.
Network zdvantage. Hindi is the common language spoken across UP and
Bihar. This makes it very attractive for advertisers to avail of group rates for
booking advertisements in JPL’s publications. This situation is unique to JPL
which the company uses to its advantage for garnering higher volume of
advertisements and increasing the average yield per client.
Mid-Day acquisition marks the foray in Mumbai and Gujarat market. JPL
acquired the print business of Mid-Day Multimedia (MML) in May 2010 in a
share-swap agreement. Following the acquisition JPL has added ‘Mid Day’
and ‘Inquilab’ publications to its bouquet, complementing its existing compact
newspapers I-Next and City Plus.
Jagran Prakashan to focus on expansion
Colour advertising contributes 45% of advertising revenues. As the
economy continues to do well in Tier 2/3 cities, there will be an increased
demand for coloured ads. Higher contribution of colour advertisements should
contribute to improved revenue yields for JPL. Leadership position in the UP
and Bihar market should help them sustain premium ad rates and drive
growth. Even so, we would watch out for competitive intensity in Bihar.
Risks & valuation
Newsprint prices contribute ~27% of top line. Jagran Prakashan will be
affected by fluctuations in the prices of inputs in the global market, which can
lead to margin pressure and reduced profitability. The company maintains 3-6
months inventory levels and uses both domestic and imported newsprint in
the ratio of 75%-25%, respectively.
Based on consensus estimates, Jagran Prakashan is expected to deliver 2-
year EPS CAGR of 16% over FY10–12E and is trading at 14x FY12.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
MacVisit
Jagran Prakashan: Stronghold in Hindi heartland
We spoke with the management of Jagran Prakashan (JAGP IN) to
understand the outlook for the Indian Print media players, business drivers of
the company, and its positioning vs. offerings of other Indian media vendors.
Jagran Prakashan was founded in 1942 and its flagship brand is ‘Dainik
Jagran’. It publishes 37 editions and over 200 sub editions, across 11 states.
The company has dominant position in two of the largest Hindi-speaking
markets and has taken the inorganic route to establish a presence in Mumbai.
Dominant position in UP and Bihar Markets
Market Leader in UP. The main markets for the company are the states of
UP, Bihar and Haryana. It is ranked No. 1 in UP, No 2 in Bihar and No 3 in
Haryana, with 41%, 32% and 20% readership market share, respectively.
Main markets poised to grow strongly in FY12. UP and Bihar have shown
respective average GDP growth rates of 8% and 13% for 2005-10. These
states have reaped the benefit of the NREGA scheme and good governance,
which has led to increased income in the hands of the common man. This
trend should continue giving JPL the advantage of increased consumerism in
Tier2/3 cities of UP and Bihar.
Network zdvantage. Hindi is the common language spoken across UP and
Bihar. This makes it very attractive for advertisers to avail of group rates for
booking advertisements in JPL’s publications. This situation is unique to JPL
which the company uses to its advantage for garnering higher volume of
advertisements and increasing the average yield per client.
Mid-Day acquisition marks the foray in Mumbai and Gujarat market. JPL
acquired the print business of Mid-Day Multimedia (MML) in May 2010 in a
share-swap agreement. Following the acquisition JPL has added ‘Mid Day’
and ‘Inquilab’ publications to its bouquet, complementing its existing compact
newspapers I-Next and City Plus.
Jagran Prakashan to focus on expansion
Colour advertising contributes 45% of advertising revenues. As the
economy continues to do well in Tier 2/3 cities, there will be an increased
demand for coloured ads. Higher contribution of colour advertisements should
contribute to improved revenue yields for JPL. Leadership position in the UP
and Bihar market should help them sustain premium ad rates and drive
growth. Even so, we would watch out for competitive intensity in Bihar.
Risks & valuation
Newsprint prices contribute ~27% of top line. Jagran Prakashan will be
affected by fluctuations in the prices of inputs in the global market, which can
lead to margin pressure and reduced profitability. The company maintains 3-6
months inventory levels and uses both domestic and imported newsprint in
the ratio of 75%-25%, respectively.
Based on consensus estimates, Jagran Prakashan is expected to deliver 2-
year EPS CAGR of 16% over FY10–12E and is trading at 14x FY12.
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