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Jagran Prakashan Ltd.
Initiation -Neutral
JAGP.BO, JAGP IN
Running into Competitive Headwinds. Initiate with Neutral
• Initiate with Neutral, price target of Rs140: While we like Jagran
Prakashan’s dominant Hindi print positioning in faster growing tier II
markets, we believe that in the near term, its margins would be exposed
to rising competitive intensity, driving reduction in cover prices and
forcing JAGP to print more copies to increase circulation. We believe
that current valuations at 17.1x FY12E P/E do not leave much room for
a meaningful upside in context of the impending margin pressures and a
below-par 3-year EPS CAGR of 14.6%. We would advise investors
consider buying the stock closer to Rs100-Rs110 levels.
• Strong Hindi player with largest readership in India: JAGP
publishes the leading Hindi language newspaper ‘Dainik Jagran’, with
total daily readership of 16MM. In addition, it also publishes a bi-lingual
daily ‘i-next’ targeted at the youth market. It also has presence in event
management and out-of-home media. Presence in higher growth tier II
markets bodes well, accentuated by opportunity to tap upcountry
markets, which are now becoming important consumption centers.
• Mid-Day acquisition provides growth enhancement opportunity:
JAGP has recently acquired the publishing business of Mid-Day
Multimedia, bringing to its fold the afternoon daily ‘Mid-Day’ with
editions in Mumbai, Pune, Bangalore and Delhi, the Sunday Mid-Day,
Gujarati Mid-Day, and the Urdu newspaper ‘Inquilab.’ We believe that
there is significant opportunity for JAGP to scale up the acquired
newspaper brands leveraging its distribution strength in its key markets.
• Price target, valuation, key risks: Our Sep-11 PT of Rs140 is based on
18x FY12E P/E, at 60% premium to regional publishers. Key downside
risks include increase in competitive intensity, increase in newsprint
costs and slowdown in economic growth. Key upside risks include rapid
scale up in profitability of Mid-Day and decline in competitive intensity.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Jagran Prakashan Ltd.
Initiation -Neutral
JAGP.BO, JAGP IN
Running into Competitive Headwinds. Initiate with Neutral
• Initiate with Neutral, price target of Rs140: While we like Jagran
Prakashan’s dominant Hindi print positioning in faster growing tier II
markets, we believe that in the near term, its margins would be exposed
to rising competitive intensity, driving reduction in cover prices and
forcing JAGP to print more copies to increase circulation. We believe
that current valuations at 17.1x FY12E P/E do not leave much room for
a meaningful upside in context of the impending margin pressures and a
below-par 3-year EPS CAGR of 14.6%. We would advise investors
consider buying the stock closer to Rs100-Rs110 levels.
• Strong Hindi player with largest readership in India: JAGP
publishes the leading Hindi language newspaper ‘Dainik Jagran’, with
total daily readership of 16MM. In addition, it also publishes a bi-lingual
daily ‘i-next’ targeted at the youth market. It also has presence in event
management and out-of-home media. Presence in higher growth tier II
markets bodes well, accentuated by opportunity to tap upcountry
markets, which are now becoming important consumption centers.
• Mid-Day acquisition provides growth enhancement opportunity:
JAGP has recently acquired the publishing business of Mid-Day
Multimedia, bringing to its fold the afternoon daily ‘Mid-Day’ with
editions in Mumbai, Pune, Bangalore and Delhi, the Sunday Mid-Day,
Gujarati Mid-Day, and the Urdu newspaper ‘Inquilab.’ We believe that
there is significant opportunity for JAGP to scale up the acquired
newspaper brands leveraging its distribution strength in its key markets.
• Price target, valuation, key risks: Our Sep-11 PT of Rs140 is based on
18x FY12E P/E, at 60% premium to regional publishers. Key downside
risks include increase in competitive intensity, increase in newsprint
costs and slowdown in economic growth. Key upside risks include rapid
scale up in profitability of Mid-Day and decline in competitive intensity.
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