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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaway
The seemingly fragmented Indian print industry is a collection of regional
oligopolies. This creates investment opportunities focused on highly profitable
regional leaders in high growth markets. These players tend to have a
disproportionate share of regional markets, sticky market share, high cash
flows and high return ratios. We initiate on Jagran Prakashan, DB Corp, HT
Media and HMVL with Buy. JAGP is our top pick with 46%upside
Media industry to see growth acceleration: India's M&E industry is on the cusp of
accelerated growth with rising consumption-driven advertisement spend. We expect the
industry to grow at 18% CAGR over the medium term.
Regional plays will be outperformers: The growth acceleration in media will be driven
by smaller cities, especially in the Hindi speaking belt. Regional players will be the key
beneficiaries.
Leadership important to benefit: The media industry is a collection of a large number
of oligopoly markets. Market leaders usually have close to 50% share of the regional
advertisement market and hence high earnings and cash flows.
Hindi newspapers the preferred pick: Newspapers are the best option to play the
regional consumer growth theme. They are the most cost-effective medium to reach
consumers in Tier II and III cities. We expect Hindi print to grow much faster than English
due to its larger reach and lower cost of advertisement. In our view competition in the Hindi
newspaper industry has peaked and firms should see margin expansion.
Unique business model: Indian newspapers have some unique features - low cover price,
home delivery and local content - which in our view will support the segment's readership
growth. Indian print firms are asset light compared to their counterparts in developed
countries.
Best defensive plays: Regional print firms provide good defensive plays in the market.
Low leverage, low capex requirement, and high RoEs characterize the industry. EPS growth
CAGR over FY11-14 is expected to be 20%+ for most firms. FY13 PE for the industry is 13.6x.
Jagran our preferred pick: We initiate coverage on Jagran Prakashan, DB Corp, HT Media
and Hindustan Media Venture with Buy. Our preferred pick is Jagran with high cashflows,
22% EPS CAGR, 30%+ RoE and 4% dividend yield. HT Media and HMVL have strong profit
growth but possible significant capex in new businesses makes us cautious. DB Corp is a
growth play with the company expanding aggressively.
India’s print industry provides investors a way to invest in specific fastgrowing
geographies, through the leaders in those regions. Leaders in the
media industry typically command more than 50% market share. Media
growth is expected to accelerate most in the Hindi belt. We believe print
firms are a good defensive play with high return on equity, 20%+EPS CAGR
(FY11-FY14) and high cash flows. We initiate coverage on Jagran Prakashan,
DB Corp, HT Media and HMVL with a Buy recommendation. JAGP is our top
pick with our Rs153 target price implying 46% potential upside.
Media growth to accelerate
India’s M&E industry is now at the cusp of accelerating growth and we expect it to grow
at 18% CAGR over the next eight years compared to 11% CAGR over the past five. While
highly competitive, the media industry provides a disproportionate advantage to leaders.
Leaders usually have close to half the advertisement share of the market allowing them to
earn high quality earnings and cash flows.
Beneficiary – Regional players
Consumption growth in Tier II and III cities in the Hindi belt comprising 40% of the
population will drive media growth acceleration. We expect this to continue over the
medium term. Regional media firms will be the chief beneficiary of the acceleration,
benefiting from both a higher share of national ad spends and also more local ads.
Newspapers the preferred pick
Print media is the most cost-effective way for advertisers to reach consumers and will be
the key beneficiary of the acceleration in ad spends. Television and radio are hampered by
regulations and competition, which has limited the profitability of players. We expect
print advertisements to grow at 20% CAGR over the medium term. We prefer Hindi
newspapers over English due to their better reach and lower ad cost. In our view
competition is peaking in the Hindi language market and firms should see margin
expansion.
Unique business model
The Indian print industry is highly fragmented at the national level. It is a collection of
regional oligopolistic markets divided along state and linguistic lines, due to preference
for local content and the sense of identity associated with newspapers. This allows
investors to invest in select high-consumption growth regions, in contrast to most
consumer firms, which provide an all-India play. Additionally, the low cover price, home
delivery model and local content makes Indian newspapers less susceptible to
substitution and supports its expanding reach.
Newspapers a defensive play
The Indian print industry, especially firms publishing Hindi language newspapers, have
defensive characteristics – low leverage, sticky market share, high cash flows and high
return on equity. Earnings CAGR is 20%+ for most firms. Regional firms earned consistent
cash flows and profits even in the midst of the 2009 crisis. Most stocks have high dividend
yield. The downside risk is low, given leadership in the home market and strong local
economy. The sector has underperformed unlike other defensives and is currently trading
at 13.6x FY13PE.
Jagran the preferred pick
We initiate coverage on Jagran Prakashan, DB Corp, HT Media and Hindustan Media
Venture with Buy on all stocks. We prefer Jagran with EPS CAGR of 22%, dividend yield of
4%, return on equity of around 30%, high cash flows and low capex requirement. HT
Media and HMVL have strong profit growth but possible significant capex in new
businesses makes us cautious. DB Corp is a growth play with the company expanding
aggressively.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaway
The seemingly fragmented Indian print industry is a collection of regional
oligopolies. This creates investment opportunities focused on highly profitable
regional leaders in high growth markets. These players tend to have a
disproportionate share of regional markets, sticky market share, high cash
flows and high return ratios. We initiate on Jagran Prakashan, DB Corp, HT
Media and HMVL with Buy. JAGP is our top pick with 46%upside
Media industry to see growth acceleration: India's M&E industry is on the cusp of
accelerated growth with rising consumption-driven advertisement spend. We expect the
industry to grow at 18% CAGR over the medium term.
Regional plays will be outperformers: The growth acceleration in media will be driven
by smaller cities, especially in the Hindi speaking belt. Regional players will be the key
beneficiaries.
Leadership important to benefit: The media industry is a collection of a large number
of oligopoly markets. Market leaders usually have close to 50% share of the regional
advertisement market and hence high earnings and cash flows.
Hindi newspapers the preferred pick: Newspapers are the best option to play the
regional consumer growth theme. They are the most cost-effective medium to reach
consumers in Tier II and III cities. We expect Hindi print to grow much faster than English
due to its larger reach and lower cost of advertisement. In our view competition in the Hindi
newspaper industry has peaked and firms should see margin expansion.
Unique business model: Indian newspapers have some unique features - low cover price,
home delivery and local content - which in our view will support the segment's readership
growth. Indian print firms are asset light compared to their counterparts in developed
countries.
Best defensive plays: Regional print firms provide good defensive plays in the market.
Low leverage, low capex requirement, and high RoEs characterize the industry. EPS growth
CAGR over FY11-14 is expected to be 20%+ for most firms. FY13 PE for the industry is 13.6x.
Jagran our preferred pick: We initiate coverage on Jagran Prakashan, DB Corp, HT Media
and Hindustan Media Venture with Buy. Our preferred pick is Jagran with high cashflows,
22% EPS CAGR, 30%+ RoE and 4% dividend yield. HT Media and HMVL have strong profit
growth but possible significant capex in new businesses makes us cautious. DB Corp is a
growth play with the company expanding aggressively.
India’s print industry provides investors a way to invest in specific fastgrowing
geographies, through the leaders in those regions. Leaders in the
media industry typically command more than 50% market share. Media
growth is expected to accelerate most in the Hindi belt. We believe print
firms are a good defensive play with high return on equity, 20%+EPS CAGR
(FY11-FY14) and high cash flows. We initiate coverage on Jagran Prakashan,
DB Corp, HT Media and HMVL with a Buy recommendation. JAGP is our top
pick with our Rs153 target price implying 46% potential upside.
Media growth to accelerate
India’s M&E industry is now at the cusp of accelerating growth and we expect it to grow
at 18% CAGR over the next eight years compared to 11% CAGR over the past five. While
highly competitive, the media industry provides a disproportionate advantage to leaders.
Leaders usually have close to half the advertisement share of the market allowing them to
earn high quality earnings and cash flows.
Beneficiary – Regional players
Consumption growth in Tier II and III cities in the Hindi belt comprising 40% of the
population will drive media growth acceleration. We expect this to continue over the
medium term. Regional media firms will be the chief beneficiary of the acceleration,
benefiting from both a higher share of national ad spends and also more local ads.
Newspapers the preferred pick
Print media is the most cost-effective way for advertisers to reach consumers and will be
the key beneficiary of the acceleration in ad spends. Television and radio are hampered by
regulations and competition, which has limited the profitability of players. We expect
print advertisements to grow at 20% CAGR over the medium term. We prefer Hindi
newspapers over English due to their better reach and lower ad cost. In our view
competition is peaking in the Hindi language market and firms should see margin
expansion.
Unique business model
The Indian print industry is highly fragmented at the national level. It is a collection of
regional oligopolistic markets divided along state and linguistic lines, due to preference
for local content and the sense of identity associated with newspapers. This allows
investors to invest in select high-consumption growth regions, in contrast to most
consumer firms, which provide an all-India play. Additionally, the low cover price, home
delivery model and local content makes Indian newspapers less susceptible to
substitution and supports its expanding reach.
Newspapers a defensive play
The Indian print industry, especially firms publishing Hindi language newspapers, have
defensive characteristics – low leverage, sticky market share, high cash flows and high
return on equity. Earnings CAGR is 20%+ for most firms. Regional firms earned consistent
cash flows and profits even in the midst of the 2009 crisis. Most stocks have high dividend
yield. The downside risk is low, given leadership in the home market and strong local
economy. The sector has underperformed unlike other defensives and is currently trading
at 13.6x FY13PE.
Jagran the preferred pick
We initiate coverage on Jagran Prakashan, DB Corp, HT Media and Hindustan Media
Venture with Buy on all stocks. We prefer Jagran with EPS CAGR of 22%, dividend yield of
4%, return on equity of around 30%, high cash flows and low capex requirement. HT
Media and HMVL have strong profit growth but possible significant capex in new
businesses makes us cautious. DB Corp is a growth play with the company expanding
aggressively.
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