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A c q u i r e s ‘ N a i D u n i a ’ ; e n t e r s M P C G
Jagran Prakashan has acquired Suvi Info Management (Indore), which
owns the brand “Nai Dunia”. Nai Dunia is the third largest Hindi daily in
the Madhya Pradesh and Chhattisgarh (MPCG) market with a revenue of
~ | 100 crore and EBITDA loss of | 25 crore in FY11. With an enterprise
value of | 225 crore including a | 22 crore debt, Jagran Prakashan would
witness a cash outgo of ~ | 200 crore. The deal would imply a tax benefit
of | 75 crore for Jagran on account of accumulated losses of Nai Dunia of
| 250 crore. The deal would imply EV/sales (FY11) at 2.2x for Nai Dunia.
Suvi Info will be merged with Jagran in FY13.
Entry into Madhya Pradesh, Chhattisgarh
The deal will give Jagran an entry into the MPCG market, which is
currently dominated by Dainik Bhaskar. MP is a growth market
characterised by newspaper under penetration with a literacy rate of
~62% and a newspaper penetration of ~15%. The estimated market size
for ad revenue is | 450 crore in MPCG. Nai Dunia has ~22% share in
readership and ~15% share in ad revenue in MPCG. There is a wide
difference between DB Corp and the second place player in MPCG, giving
Jagran Prakashan a huge room for improvement – to be a strong No 2
player. National advertisers currently only contribute ~ 25% of ad
revenues for Nai Dunia while that for Jagran is ~ 40% providing further
room for growth.
Strategic fit makes deal attractive
The EV/sales of 2.2x looks attractive considering the strategic fit, which
gives Jagran Prakashan an entry into MPCG, which is a growth market.
On its own, Jagran Prakashan would have incurred a huge cost to launch
its edition in MPCG along with a long gestation period to gain significant
revenue as is the case with any new launch. However, with the
acquisition, Jagran is currently the third player in MPCG moving head to
head with Patrika on second and way behind DB Corp on first.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_JagranPrakashan_%20EventUpdate.pdf
A c q u i r e s ‘ N a i D u n i a ’ ; e n t e r s M P C G
Jagran Prakashan has acquired Suvi Info Management (Indore), which
owns the brand “Nai Dunia”. Nai Dunia is the third largest Hindi daily in
the Madhya Pradesh and Chhattisgarh (MPCG) market with a revenue of
~ | 100 crore and EBITDA loss of | 25 crore in FY11. With an enterprise
value of | 225 crore including a | 22 crore debt, Jagran Prakashan would
witness a cash outgo of ~ | 200 crore. The deal would imply a tax benefit
of | 75 crore for Jagran on account of accumulated losses of Nai Dunia of
| 250 crore. The deal would imply EV/sales (FY11) at 2.2x for Nai Dunia.
Suvi Info will be merged with Jagran in FY13.
Entry into Madhya Pradesh, Chhattisgarh
The deal will give Jagran an entry into the MPCG market, which is
currently dominated by Dainik Bhaskar. MP is a growth market
characterised by newspaper under penetration with a literacy rate of
~62% and a newspaper penetration of ~15%. The estimated market size
for ad revenue is | 450 crore in MPCG. Nai Dunia has ~22% share in
readership and ~15% share in ad revenue in MPCG. There is a wide
difference between DB Corp and the second place player in MPCG, giving
Jagran Prakashan a huge room for improvement – to be a strong No 2
player. National advertisers currently only contribute ~ 25% of ad
revenues for Nai Dunia while that for Jagran is ~ 40% providing further
room for growth.
Strategic fit makes deal attractive
The EV/sales of 2.2x looks attractive considering the strategic fit, which
gives Jagran Prakashan an entry into MPCG, which is a growth market.
On its own, Jagran Prakashan would have incurred a huge cost to launch
its edition in MPCG along with a long gestation period to gain significant
revenue as is the case with any new launch. However, with the
acquisition, Jagran is currently the third player in MPCG moving head to
head with Patrika on second and way behind DB Corp on first.
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