Please Share:: 
Wait continues for adspend pick-up. Jagran’s PAT of `666 mn was 8% below our estimate due to lower ad revenue growth (5.6% yoy versus KIE’s 7.5% yoy) and forex losses. Moderating newsprint price and better performance of less-profitable editions resulted in a four-year peak in EBITDA margin of 28% (+400 bps yoy). While cost optimization is commendable, ad revenue growth acceleration is critical for stock performance. We incorporate Radio City acquisition and tweak our FY2015-17E EPS. We roll over to December 2016; maintain ADD with revised TP of `155 (`150 earlier).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
3QFY15—ad revenue growth disappoints, cost control saves the day Consolidated ad revenue growth of 5.6% yoy was muted— Dainik Jagran grew 8% yoy; Nai Dunia declined 18-20% yoy on a high base (gains from state election in 3Q last year) and Mid-Day grew about 20% aided by Maharashtra election. Circulation revenues grew 7% yoy. Newsprint costs declined 3% yoy (price decline 5%), employee costs rose 7% and other expenses declined 6% yoy due to a planned decrease in outdoor business (flat otherwise). Net result—3% revenue growth translated into 21% EBITDA growth (margin up 400 bps yoy at 28.2%). Elections helped Mid-Day deliver 20% EBITDA margin (5-10% otherwise). PAT of `666 mn missed our estimate by 8% due to marginal miss at the EBITDA level and forex loss of about `310 mn. A 2% yoy decline is on high base (tax benefits in 3Q last year). The radio business reported 38%/80% growth in revenue/EBITDA in 3QFY15 (EBITDA margin 37%). In 9MFY15, revenue/EBITDA grew 35%/80% (EBITDA margin 31%). We incorporate Radio City acquisition, revise FY2016-17 EPS estimates Jagran will pay about `4.3 bn for the Radio City acquisition, `2 bn as migration fee (renewal of licenses for 15 years) and invest about `0.5 bn in phase-III auctions. The company will raise debt, which would be repaid in 3-4 years. We expect the radio business to report 12%/21% revenue/EBITDA CAGR over FY2015-17. However, associated interest costs and amortization of license fees would translate into a nominal PBT and PAT (tax rate significantly below 33% in FY2016-17 due to accumulated losses). While Radio City acquisition is a good strategic move, it will not offer material upside to earnings or stock price in the next 1-2 years. Margin outlook improves, ad revenue growth pick-up is critical to stock performance UP/Bihar contribute about 50%/15% to Jagran’s ad revenues. Hindustan’s success in UP and DB Corp.’s entry in Bihar pose risks to Jagran’s market share. Investments in the radio business rule out expansion in the print business. Jagran’s print business growth will lag peers over FY2015- 17E. It would be mitigated by state elections in Bihar/UP in FY2016/17 and higher growth of radio. Valuations are inexpensive and margin outlook has improved and looks sustainable. An improved economic outlook may accelerate adspend growth, driving much higher profit growth.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily03022015ga.pdf
Wait continues for adspend pick-up. Jagran’s PAT of `666 mn was 8% below our estimate due to lower ad revenue growth (5.6% yoy versus KIE’s 7.5% yoy) and forex losses. Moderating newsprint price and better performance of less-profitable editions resulted in a four-year peak in EBITDA margin of 28% (+400 bps yoy). While cost optimization is commendable, ad revenue growth acceleration is critical for stock performance. We incorporate Radio City acquisition and tweak our FY2015-17E EPS. We roll over to December 2016; maintain ADD with revised TP of `155 (`150 earlier).
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
3QFY15—ad revenue growth disappoints, cost control saves the day Consolidated ad revenue growth of 5.6% yoy was muted— Dainik Jagran grew 8% yoy; Nai Dunia declined 18-20% yoy on a high base (gains from state election in 3Q last year) and Mid-Day grew about 20% aided by Maharashtra election. Circulation revenues grew 7% yoy. Newsprint costs declined 3% yoy (price decline 5%), employee costs rose 7% and other expenses declined 6% yoy due to a planned decrease in outdoor business (flat otherwise). Net result—3% revenue growth translated into 21% EBITDA growth (margin up 400 bps yoy at 28.2%). Elections helped Mid-Day deliver 20% EBITDA margin (5-10% otherwise). PAT of `666 mn missed our estimate by 8% due to marginal miss at the EBITDA level and forex loss of about `310 mn. A 2% yoy decline is on high base (tax benefits in 3Q last year). The radio business reported 38%/80% growth in revenue/EBITDA in 3QFY15 (EBITDA margin 37%). In 9MFY15, revenue/EBITDA grew 35%/80% (EBITDA margin 31%). We incorporate Radio City acquisition, revise FY2016-17 EPS estimates Jagran will pay about `4.3 bn for the Radio City acquisition, `2 bn as migration fee (renewal of licenses for 15 years) and invest about `0.5 bn in phase-III auctions. The company will raise debt, which would be repaid in 3-4 years. We expect the radio business to report 12%/21% revenue/EBITDA CAGR over FY2015-17. However, associated interest costs and amortization of license fees would translate into a nominal PBT and PAT (tax rate significantly below 33% in FY2016-17 due to accumulated losses). While Radio City acquisition is a good strategic move, it will not offer material upside to earnings or stock price in the next 1-2 years. Margin outlook improves, ad revenue growth pick-up is critical to stock performance UP/Bihar contribute about 50%/15% to Jagran’s ad revenues. Hindustan’s success in UP and DB Corp.’s entry in Bihar pose risks to Jagran’s market share. Investments in the radio business rule out expansion in the print business. Jagran’s print business growth will lag peers over FY2015- 17E. It would be mitigated by state elections in Bihar/UP in FY2016/17 and higher growth of radio. Valuations are inexpensive and margin outlook has improved and looks sustainable. An improved economic outlook may accelerate adspend growth, driving much higher profit growth.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily03022015ga.pdf
No comments:
Post a Comment