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Jagran Prakashan (JAGP)
Media
In-line 2QFY12. JAGP reported weak 2QFY12 EBITDA of Rs794 mn (-13% yoy), in line
with expectations. Surprisingly, reported 2QFY12 PAT of Rs461 mn (-17% yoy) was also
largely in line despite (1) Rs135 mn forex losses (buyers credit, un-hedged ECBs) given
(2) ~Rs105 mn FMP interest/profit income; JAGP has well-defended its defensive
characteristic in a challenging environment despite renewed investments. Retain BUY
with FV of Rs160 (unchanged) led by robust leadership position in UP market, attractive
valuations (13X FY2013E) and high dividend yield (~3.3% FY2011).
2QFY12 results analysis: JAGP defends its defensive characteristic well
JAGP reported weak 2QFY12 EBITDA of Rs794 mn (-13% yoy), in line with our expectations.
JAGP reported forex losses of Rs135 mn (Rs25 mn buyers credit, Rs110 mn un-hedged ECBs)
below the EBITDA line. Nonetheless, 2QFY12 PAT of Rs461 mn (-17% yoy) was also in line with
our expectations led by ~Rs105 mn FMP interest/profit income; JAGP already had Rs67 mn of
gains in the balance sheet at end-FY2011 (market – book value of investments), which were
likely booked in 2QFY12. JAGP has defended its defensive characteristic well in a challenging
environment despite renewed investments in core markets.
JAGP reported 2QFY12 advertising revenues of Rs2.12 bn (+10% yoy), in line with our
expectations. JAGP’s advertising growth looks subdued versus peers, but is largely a result of
limited expansion in new markets. However, JAGP has renewed investments in flagship Dainik
Jagran (~10% yoy circulation growth) as well as Mid-Day, Inquilab, I-Next (~30% yoy) and
Punjabi Jagran, resulting in above-industry advertising growth.
Retain BUY: Renewed, continued investments across key markets
JAGP’s operational performance across markets (readership) has been patchy (gains in few markets
negated by losses in others, notably the key UP market) has been an area of concern, which the
company has addressed with renewed and continued (despite cyclical downturn in advertising)
investments across key markets such as UP and Bihar; the low penetration in these markets implies
that potential readership and advertising growth can sustain for a long period of time. The
downturn in the advertising cycle is more near-term concerns but we expect recovery in FY2013E
(domestic newsprint prices expected to stabilize in 2HFY12E).
Retain BUY with unchanged FY2013E fair value of Rs160 led by (1) leadership position in UP, the
largest Hindi print market in India, (2) renewed investments across core markets (as well as new
brands), (3) attractive valuations (~13X FY2013E EPS estimates) further supported by (4) high
~3.3% FY2011 dividend yield. However, FY2012E-13E would be investment years for JAGP, also
led by the acquisition of Mid-Day (Mid-Day and Inquilab brands).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jagran Prakashan (JAGP)
Media
In-line 2QFY12. JAGP reported weak 2QFY12 EBITDA of Rs794 mn (-13% yoy), in line
with expectations. Surprisingly, reported 2QFY12 PAT of Rs461 mn (-17% yoy) was also
largely in line despite (1) Rs135 mn forex losses (buyers credit, un-hedged ECBs) given
(2) ~Rs105 mn FMP interest/profit income; JAGP has well-defended its defensive
characteristic in a challenging environment despite renewed investments. Retain BUY
with FV of Rs160 (unchanged) led by robust leadership position in UP market, attractive
valuations (13X FY2013E) and high dividend yield (~3.3% FY2011).
2QFY12 results analysis: JAGP defends its defensive characteristic well
JAGP reported weak 2QFY12 EBITDA of Rs794 mn (-13% yoy), in line with our expectations.
JAGP reported forex losses of Rs135 mn (Rs25 mn buyers credit, Rs110 mn un-hedged ECBs)
below the EBITDA line. Nonetheless, 2QFY12 PAT of Rs461 mn (-17% yoy) was also in line with
our expectations led by ~Rs105 mn FMP interest/profit income; JAGP already had Rs67 mn of
gains in the balance sheet at end-FY2011 (market – book value of investments), which were
likely booked in 2QFY12. JAGP has defended its defensive characteristic well in a challenging
environment despite renewed investments in core markets.
JAGP reported 2QFY12 advertising revenues of Rs2.12 bn (+10% yoy), in line with our
expectations. JAGP’s advertising growth looks subdued versus peers, but is largely a result of
limited expansion in new markets. However, JAGP has renewed investments in flagship Dainik
Jagran (~10% yoy circulation growth) as well as Mid-Day, Inquilab, I-Next (~30% yoy) and
Punjabi Jagran, resulting in above-industry advertising growth.
Retain BUY: Renewed, continued investments across key markets
JAGP’s operational performance across markets (readership) has been patchy (gains in few markets
negated by losses in others, notably the key UP market) has been an area of concern, which the
company has addressed with renewed and continued (despite cyclical downturn in advertising)
investments across key markets such as UP and Bihar; the low penetration in these markets implies
that potential readership and advertising growth can sustain for a long period of time. The
downturn in the advertising cycle is more near-term concerns but we expect recovery in FY2013E
(domestic newsprint prices expected to stabilize in 2HFY12E).
Retain BUY with unchanged FY2013E fair value of Rs160 led by (1) leadership position in UP, the
largest Hindi print market in India, (2) renewed investments across core markets (as well as new
brands), (3) attractive valuations (~13X FY2013E EPS estimates) further supported by (4) high
~3.3% FY2011 dividend yield. However, FY2012E-13E would be investment years for JAGP, also
led by the acquisition of Mid-Day (Mid-Day and Inquilab brands).
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