4QFY2013 Result Update | Media May 29, 2013

Jagran Prakashan
Performance Highlights
Quarterly data (Standalone)
(` cr) Revenue EBITDA OPM (%) PAT
Source: Company, Angel Research

BUY
CMP Target Price
% yoy 10.2 (22.8) (581)bp (10.1) 3QFY13 342 84 24.6 66 %qoq (2.2) (45.9) (1,097)bp (41.6)

`86 `119
12 Months

4QFY13 334 45 13.6 39

4QFY12 303 59 19.4 43

Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Media 2,840 269 0.5 118/82 30,292 2 20,148 6,104 JAGP.BO JAGP@IN

For 4QFY2013, Jagran Prakashans (JPL) top-line performance was in-line with our estimates, growing by 10.2% yoy to `334cr. However, on the operating front, margin contracted by 581bp yoy to `13.6% (on account of operating losses in emerging editions, namely, Nai Dunia, Punjabi jagran and Inquilab). Consequently, net profit was below our expectations, declining by 10.1% yoy to `39cr. Ad revenue up 8.2% yoy: JPL reported 8.2% yoy growth in advertising revenue to `228cr, driven by good growth in advertising in Nai Dunia, I-next, City-Plus and Punjabi jagran editions. Due to slowdown in economy, the company had reduced its ad yields in FY2013 to increase volumes. However, the company has now shifted back its focus from ad volume growth to ad yield growth and expects to sustain ad growth momentum through increase in ad yields. Circulation revenue up 21.3% yoy: Circulation revenue grew by robust 21.3% yoy to `76cr, aided by increase in circulation of Nai Dunia and Mid-Day editions as well as hike in cover prices over the year. Circulation revenue is expected to continue double digit growth driven by launch of multiple editions of Inquilab in Bihar as well as increase in circulation of Nai Dunia editions. Outlook and valuation: At the current market price, JPL is trading at 11.0x FY2015E consolidated EPS of `7.8. We maintain our Buy view on the stock with a revised target price of `119, based on 15.3x FY2015E EPS. Downside risks to our estimates include 1) sharp rise in newsprint prices, 2) higher-than-expected losses on account of increase in turnaround period for Nai Dunia/ Mid-day.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 61.6 13.0 12.6 12.8

Abs. (%) Sensex JAGP

3m 5.2 (13.6)

1yr 22.7

3yr 19.5

(0.2) (20.1)

Key financials (Consolidated)

Y/E March (` cr) Net Sales % chg Net Profit % chg OPM (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2011 1,221 29.6 210 19.4 29.2 6.6 12.9 3.9 31.6 33.6 2.2 7.6

FY2012 1,356 11.0 178 (15.1) 21.9 5.6 15.2 3.6 24.5 18.6 2.3 10.4

FY2013E 1,526 12.5 255 43.1 19.2 8.1 10.6 2.9 30.3 11.4 1.9 10.1

FY2014E 1,664 9.1 203 (20.4) 20.9 6.4 13.3 2.7 21.0 14.7 1.8 8.5

FY2015E 1,825 9.7 246 20.8 23.0 7.8 11.0 2.4 23.1 17.9 1.6 6.9
Amit Patil 022-39357800 Ext: 6839 amit.patil@angelbroking.com

Please refer to important disclosures at the end of this report

Jagran Prakashan | 4QFY2013 Result Update

Exhibit 1: Quarterly performance (Standalone)

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM Interest Depreciation Other Income PBT (excl. Ext Items) Ext Income/(Expense) PBT (incl. Ext Items) (% of Sales) Provision for Taxation (% of PBT) Recurring PAT PATM Reported PAT Equity shares (cr) FDEPS (`)
Source: Company, Angel Research

4QFY13 334 124 37.1 49 14.7 116 34.6 289 45 13.6 7 19 19 40 (1.7) 38 11.4 (0) (1.1) 40 12.0 39 32 1.2

4QFY12 303 108 35.7 43 14.1 93 30.8 245 59 19.4 5 18 25 62 62 20.3 19 30.4 43 14.1 43 32 1.4

% yoy 10.2 14.6 14.8 23.8 18.1 (22.8) 44.1 2.2 (35.3) (38.1)

3QFY13 342 118 34.5 43 12.6 97 28.3 258 84 24.6 8 17 6 66 66 19.3 0 0.0

% qoq (2.2) 5.2 13.9 19.6 12.0 (45.9) (15.3) 11.9 (39.6) (42.2)

FY13 1,376 506 36 196 13 414 30 1,115 261 19.0 29 69 57 220 (2) 218 15.8 (0) (0.2)

FY12 1,216 428 34 160 13 343 27 932 284 23.4 15 66 54 258 0 258 21.2 78 30.3 180 14.8 180 32 5.7

% chg 13.2 18.1 22.1 20.5 19.7 (8.2) 97.9 5.8 5.9 (14.8) (15.4) (100.5) 22.5 21.6 21.6

(6.1) (10.1) (10.1)

66 19.3 66 32 2.1

(38.9) (41.6) (41.6)

220 16.0 218 32 6.9

Top-line performance driven by ad growth

Jagran Prakashans (JPL) top-line performance was in-line with our estimates, growing by 10.2% yoy to `334cr. Advertising revenue grew by 8.2% yoy to `228cr, driven by good growth in advertising in Nai Dunia, I-next, City-Plus and Punjabi jagran editions. Nai Dunia benefited from robust growth in national advertising revenues while I-next, City-Plus and Punjabi jagran benefited from robust growth in local ad revenues. Due to slowdown in economy, the company had reduced its ad yields in FY2013 to increase volumes. However, the company has now shifted back its focus from ad volume growth to ad yield growth and expects to sustain ad growth momentum through increase in ad yields.

May 29, 2013

Jagran Prakashan | 4QFY2013 Result Update

Exhibit 2: Double-digit top-line growth...

400 350 300 250 17 14 12 10

Exhibit 3: ...driven by 8.2% yoy ad revenue growth

8
10 18 16 14 12 300 250 239 228 221220 210

10

200
(%)
( ` cr)

( ` cr)

200 150 100

10
8

150 100 50 76 63 64 67 70 30 26 29 33 31

6
298 317 318 342 334 4Q13
276 305 303 322

4 2 -

50 -

1Q12

3Q12

1Q13

3Q13

4Q11

2Q12

4Q12

2Q13

Ad-revenue 4Q12 1Q13 Circulation revenue 2Q13 3Q13 4Q13 Non-publishing business

Top-line (LHS)

yoy (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Robust growth in circulation revenue

Circulation revenue grew by robust 21.3% yoy to `76cr, aided by increase in circulation of Nai Dunia and Mid-Day editions as well as hike in cover prices over the year. Circulation revenue is expected to continue double digit growth driven by launch of multiple editions of Inquilab in Bihar as well as increase in circulation of Nai Dunia editions.

Exhibit 4: Gross margin and OPM contraction...

80 70 60 50
(%)

Exhibit 5: ...led to 6.1% yoy decline in net profit

80

67

67

52
12 (11) (18) (22) 2

60

70 60

65

64

64

64

66

66

63

70

60
50

16

50
40

( ` cr)

(6)

30 20

40
30 20 10 -

40 30

23

25

26

25

19

25

24

25 14

10
(10)

20

42

50

46

41

56

66

39

43

69

10
-

(20)
(30)

4Q11

1Q12

2Q12

3Q12

1Q13

3Q13

4Q11

2Q12

3Q12

4Q12

2Q13

3Q13

4Q13

1Q12

1Q13

OPM

Gross margins

PAT (LHS)

yoy growth (RHS)

Source: Company, Angel research

Source: Company, Angel research

OPM contracts due to losses in emerging editions

JPLs operating margin contracted by 581bp yoy to 13.6% on account of operating losses in emerging editions, namely, Nai Dunia, Punjabi jagran and Inquilab (its strategy to ramp up circulation of its emerging editions further exacerbated the loss). However, the company has assured that it targets to reduce its losses from emerging editions to `18cr in FY2013 (from `42cr in FY2013).

May 29, 2013

4Q13

4Q12

2Q13

(%)

Jagran Prakashan | 4QFY2013 Result Update

Investment rationale
Healthy ad revenue growth: JPLs ad revenue grew by ~12.6% yoy to `939cr in FY2013. Unlike its peers, JPL continues to post good growth in national advertising revenue due to innovative terms of offerings and presentation of advertisements. For FY2014, we expect ad revenue to grow by 8-10% yoy driven by increase in ad yields. Recent acquisitions to fuel growth: JPL acquired the print business from Mid-Day Multimedia, which has presence in markets such as Mumbai, Delhi, Bangalore and Pune. It acquired Suvi Info Management, the publisher of Nai Dunia, which is present in markets such as Madhya Pradesh and Chhattisgarh. These acquisitions are likely to fill the gap in JPLs portfolio vs its peers HT Media (HT and Hindustan) and DB Corp (Dainik Bhaskar and DNA), which offer English and Hindi publications to their advertisers. With JPLs wider portfolio, we believe the company is well poised to benefit from the steady growth in the print media space.

Outlook and valuation

At the current market price, JPL is trading at 11.0x FY2015E consolidated EPS of `7.8. We maintain our Buy view on the stock with a revised target price of `119, based on 15.3x FY2015E EPS. Downside risks to our estimates include 1) sharp rise in newsprint prices, 2) higher-than-expected losses on account of increase in turnaround period for Nai Dunia/ Mid-day.

May 29, 2013

Jagran Prakashan | 4QFY2013 Result Update

Exhibit 6: Peer valuation

Company HT Media JPL DB Corp. Reco Buy Buy Accum. Mcap (` cr) 2,355 2,706 4,739 CMP (`) 100 86 259 TP (`) 117 119 285 Upside (%) 17 39 10 P/E (x) FY13E 12.1 13.3 18.2 FY14E 11.0 11.0 15.4 EV/Sales (x) FY13E 0.7 1.7 2.6 FY14E 0.6 1.5 2.3 RoE (%) FY13E 11.5 21.0 23.4 FY14E 11.4 23.1 23.4 CAGR Sales 7.8 9.4 9.9 PAT 13.0 18.6

Source: Company, Angel Research

Exhibit 7: Angel vs. consensus estimates

Top line (` cr) Angel estimates Consensus Diff (%)
Source: Company, Angel Research

FY2013E 1,664 1,725 (3.5)

FY2014E 1,825 1,920 (4.9)

EPS (`) Angel estimates Consensus Diff (%)

FY2013E 6.4 7.2 (10.7)

FY2014E 7.8 8.6 (9.7)

Exhibit 8: Return of JPL vs. Sensex

200%

Exhibit 9: One-year forward P/E band

JPL

180%
160% 140% 120% 100%

Sensex

160 140

8x

11x

14x

17x

Share Price ( `)

120 100

80%
60%

80 60 40

40%
20%

Jun-11

Aug-11

Jun-12

Aug-12

Apr-11

Apr-12

Oct-10

Oct-12

Oct-11

Feb-11

Feb-12

Dec-11

Aug-10

Aug-11

Aug-12

Source: Company, Angel Research

Source: Company, Angel Research

Company Background
Dainik Jagran with AIR of ~16.4mn is the most read newspaper in India published by Jagran Prakashan (JPL). The company enjoys a leadership position in Uttar Pradesh, the largest Hindi market for almost a decade now. The company is present in the rapidly growing Hindi markets in Bihar, Delhi, Haryana, Jharkhand, Punjab and Uttar Pradesh. Apart from its commanding position in print media, JPL is also present in the internet, OOH and event management businesses.

May 29, 2013

Dec-12

Dec-10

Dec-10

Dec-11

Dec-12

Feb-13

Feb-12

Feb-13

Feb-11

Oct-10

Oct-11

Oct-12

Apr-13

0%
Jun-10 Jun-11 Apr-10 Apr-11
Jun-12

20
Apr-13
Apr-12

Jagran Prakashan | 4QFY2013 Result Update

Profit & Loss Statement (Consolidated)

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Total operating income % chg Total Expenditure Cost of Materials SG&A Expenses Personnel Others EBITDA % chg (% of Net Sales) Depreciation& Amortization EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Share in profit of Associates Recurring PBT % chg Prior Period & Extra Exp/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earnings. of asso. Less: Minority interest (MI) PAT after MI (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg
previous year numbers

FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E 942 942 942 14.4 660 296 99 121 144 282 80.1 30.0 51 232 95.6 24.6 7 34 13.2 259 92 259 83 32 176 176 176 92.0 18.7 5.8 5.6 92.0 1,221 1,221 1,221 29.6 865 359 134 173 199 356 26.3 29.2 65 291 25.7 23.8 9 26 8.4 308 19 2 306 98 32 208 208 210 19.5 17.2 6.6 6.6 19.4 1,356 1,356 1,356 11.0 1,059 461 164 194 240 296 (16.9) 21.9 71 225 (22.6) 16.6 16 46 18.0 256 (17) 256 77 30 178 178 178 (15.1) 13.2 5.6 5.6 (15.1) 1,526 1,526 1,526 12.5 1,232 544 194 227 267 293 (0.9) 19.2 126 168 (25.5) 11.0 31 119 46.3 256 0 256 0 0 255 255 255 43.0 16.7 8.1 8.1 43.1 1,664 1,664 1,664 9.1 1,317 549 223 248 298 347 18.3 20.9 126 221 31.5 13.3 28 75 28.0 267 5 267 64 24 203 203 203 (20.4) 12.2 6.4 6.4 (20.4) 1,825 1,825 1,825 9.7 1,405 562 246 266 330 420 21.0 23.0 138 282 27.9 15.5 27 68 21.0 323 21 323 78 24 246 246 246 20.8 13.5 7.8 7.8 20.8

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

May 29, 2013

Jagran Prakashan | 4QFY2013 Result Update

Balance Sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Other long term liablities Long term provisions Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Long term loans and adv. Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Other non CA Total Assets
previous year numbers

FY2010 FY2011 60 552 612 121 58 63 639 702 174 62 6 792 564 194 369 25 167 417 85 98 235 186 231 792 944 730 257 473 52 200 134 519 35 55 429 303 217 3 944

FY2012 FY2013E 63 689 752 8 643 70 6 9 1,488 1,217 351 865 66 248 137 666 100 63 504 368 298 11 1,488 63 869 932 1 462 70 13 8 1,487 1,304 477 827 80 222 148 609 52 7 550 314 296 62 1,487

FY2014E 63 942 1,005 429 78 13 8 1,534 1,486 603 883 74 207 165 660 60 5 596 353 308 62 1,534

FY2015E 63 1,057 1,120 414 78 13 8 1,634 1,659 741 918 83 215 165 728 76 14 638 371 356 62 1,634

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

May 29, 2013

Jagran Prakashan | 4QFY2013 Result Update

Cashflow Statement
Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Interest / Dividend (Net) Direct taxes paid Others Cash Flow from Operations (Inc.)/ Dec. in Fixed Assets (Inc.)/ Dec. in Investments Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Interest / Dividend (Net) Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances
previous year numbers

FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E 259 51 (12) (9) 83 (21) 185 (38) (10) (48) (20) 123 (9) (135) 2 83 85 310 65 (37) (3) 98 (1) 238 (181) (29) (210) 53 128 (3) (73) (46) 85 35 256 71 (14) 0 77 (3) 233 (149) (79) (228) 185 129 (3) 59 65 35 100 256 126 (7) 13 0 (97) 289 (101) 26 (76) (181) 67 13 (261) (47) 100 52 267 126 (57) 8 64 59 340 (176) 15 (161) (33) 130 8 (171) 7 52 60 323 138 (32) 7 78 359 (182) (8) (190) (15) 130 7 (152) 17 60 76

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

May 29, 2013

Jagran Prakashan | 4QFY2013 Result Update

Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post-tax) Leverage (x) Operating ROE Returns (%) RoCE Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover Inventory / Sales (days) Receivables (days) Payables (days) Net Working capital (days) Solvency ratios (x) Net Debt to equity Net Debt to EBITDA Interest Coverage
previous year numbers

FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E 15.4 11.4 4.2 4.1 2.9 9.7 3.5 5.8 5.6 7.5 3.5 20.3 24.6 0.7 1.8 29.8 0.0 (0.2) 24.0 30.0 43.9 30.0 1.7 21 70 50 57 (0.2) (0.5) 35.3 12.9 9.9 3.9 4.1 2.2 7.6 2.9 6.6 6.6 8.6 3.5 22.2 23.8 0.7 2.0 32.0 0.0 (0.1) 27.2 33.6 46.8 31.6 1.7 19 69 52 52 (0.1) (0.2) 32.1 15.2 10.9 3.6 4.1 2.3 10.4 2.1 5.6 5.6 7.9 3.5 23.8 16.6 0.7 1.5 17.1 0.0 0.2 19.8 18.6 24.6 24.5 1.1 21 78 64 51 0.4 1.0 14.3 10.6 7.1 2.9 2.1 1.9 10.1 2.0 8.1 8.1 12.0 1.8 29.5 11.0 1.0 1.3 14.3 0.1 0.3 18.6 11.4 14.4 30.3 1.2 21 73 56 56 0.2 0.6 5.5 13.3 8.2 2.7 4.1 1.8 8.5 1.9 6.4 6.4 10.4 3.5 31.8 13.3 0.8 1.4 13.6 0.0 0.2 16.1 14.7 17.9 21.0 1.1 21 73 60 53 0.2 0.5 7.8 11.0 7.1 2.4 4.1 1.6 6.9 1.8 7.8 7.8 12.1 3.5 35.4 15.5 0.8 1.4 16.6 0.0 0.1 18.8 17.9 21.8 23.1 1.1 21 73 59 54 0.1 0.3 10.3

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

May 29, 2013

Jagran Prakashan | 4QFY2013 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Jagran No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

May 29, 2013

10