Jagran Prakashan– dominates Hindi speaking belt :: ICICI Securities, PDF link

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Jagran Prakashan– dominates Hindi speaking belt
Jagran Prakashan is a leading print media player with its flagship
newspaper Dainik Jagran, which is the most read daily in India with an
average issue readership of 16.5 million (AIR) as per IRS Q3 2012. It
continues to dominate the market of Uttar Pradesh and is at the 2/3 spot
in several markets of Bihar, Haryana, Jharkhand, Uttarakhand, etc. It has
demonstrated 8.8% FY11-13 CAGR in its ad revenues, which is better
than its peer DB Corp that reported 8.4% CAGR in FY11-13. The company
went aggressive with its growth strategy in FY13 that impacted its
margins from 23.4% in FY12 to 19.4% in FY13. However, it revisited its
strategy and started aiming for profitable growth with margins
rebounding to 22.3%. Entire visible ad growth of 20% (exclusive of Nai
Duniya) in FY14 was a result of improvement in the yield. In the first half
of FY15, ad growth remained subdued at 7.3%, which will restrict full year
ad growth to 10.3%. However, even though overall revenue may grow at
a CAGR (FY14-16E) of 9.7%, EBITDA may grow at 20.2% to | 557.0 crore
led by softening newsprint prices and reducing losses in new ventures.
Other publications like Nai Duniya, Mid-Day catching up….
Revenues from new publications have grown at a decent 14.9% in the
past year to clock | 320.8 crore revenue. Despite the revenue growth,
operating losses remained at | 29.6 crore due to continued investments in
Nai Duniya to increase circulation. The company intends to continue with
its investments in Nai Duniya and other publications such as Mid-day and
Punjabi Jagran. There was a yield improvement across these publications
and the company intends to grow organically by turning this operations
EBITDA positive. However, in the current quarter, these publications
collectively posted a revenue decline of 4.9%, which was due to lower
government related ad spends in Punjab in case of Punjabi Jagran, and
lower print led activation in case of I-Next. However, operating losses
declined from | 6.8 crore in Q2FY14 to | 2.4 crore in this quarter.
Maintain BUY with target price of | 145…
Jagran Prakashan has been able to counter the economic slowdown with
a presence in the rural parts of the country. Going ahead, with the gradual
improvement in the economy and higher operating leverage kicking in,
we expect FY14-16E revenue, EBITDA, PAT CAGR of 9.7%, 20.7%, 20.3%.
We value it at a 14x FY16E EPS of | 10.4 and arrive at a target price of
| 145. We maintain BUY

LINK
http://content.icicidirect.com/mailimages/IDirect_JagranPrakashan_Q2FY15.pdf