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Jagran Prakashan
Performance Highlights
(` cr) Revenue EBITDA OPM (%) PAT
Source: Company, Angel Research
BUY
CMP Target Price
2QFY11 277 89 32.1 56 % yoy 10.3 (10.9) (617bp) (17.5) 1QFY12 298 75 25 50 %qoq 2.5 5.0 60bp (7.9)
`105 `137
12 Months
Investment Period
Stock Info Sector Market Cap (`cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code
For 2QFY2012, Jagran Prakashan (JPL) reported a weak performance on the revenue and earnings front. The companys top-line growth was driven by subdued ad revenue and higher circulation revenue growth due to launch of Punjab Jagran. The companys earnings declined on a yoy basis as well as sequentially. The decline in earnings was due to a 617bp yoy contraction in operating margin on account of high raw-material prices because of increased circulation and forex losses. We maintain our Buy recommendation on the stock. Key highlights of the quarter: During the quarter, ad revenue grew by ~9.5% yoy (muted 3.7% qoq). Circulation growth during 2QFY2012 stood at ~11.6% yoy and ~5.2% qoq. Non-publishing business revenue, which comprises event, outdoor and digital businesses, grew by 13% yoy, though it declined by 27.1% qoq. During the quarter, readership for Dainik Jagran and I-Next increased by 4.82 lakhs 0.37 lakhs, respectively. During the quarter, circulation for Dainik Jagran and I-Next increased by 9.6% yoy and 30% yoy, respectively. Outlook and valuation: Post 2QFY2012, we have revised our earnings estimates downwards owing to sluggishness in ad revenue growth and margin pressures faced by the company. We expect JPL to post a 9% CAGR in its top line over FY2011-13E, driven by a ~10% CAGR in ad revenue and a ~3% CAGR in circulation revenue. In terms of earnings, we expect JPL to report a CAGR of 7% over FY2011-13E (impacted by margin pressure). We believe underperformance of the stock provides a good entry point. Hence, we maintain our Buy view with a revised target price of `137 (`148), based on a P/E multiple of 18x FY2013E (in-line with its historical valuations).
Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 59.5 24.5 11.1 4.9
3m (9.0) (4.7)
FY2010 942 14.4 176 92.0 30.0 5.6 18.9 5.2 30.0 30.0 3.7 12.3
FY2011 1,221 29.6 210 19.4 29.2 6.6 15.8 4.7 31.6 33.3 2.9 9.8
FY2012E 1,336 9.4 210 0.2 27.6 6.7 15.8 4.8 30.2 31.8 2.6 9.5
FY2013E 1,447 8.3 241 14.6 28.2 7.6 13.8 4.5 33.8 35.2 2.4 8.5
Sreekanth P.V.S
022 3935 7800 Ext: 6841
sreekanth.s@angelbroking.com
2QFY12 305 108 35.2 38 12.3 81 26.6 226 79 25.9 3 16 4 64 0 64 21.0 18 28.6 46 15.0 46 32 1.4
2QFY11 277 80 28.9 35 12.8 73 26.2 188 89 32.1 1 13 8 83 0 83 29.8 27 32.8 56 20.0 56 30 1.8
% yoy 10.3 34.2 6.2 11.9 20.3 (10.9) 103.7 20.6 (53.5) (22.3) (22.3) (32.1) (17.5) (17.5) (17.5)
1QFY12 298 99 33.2 39 13.2 84 28.3 223 75 25.3 3 15 14 72 0 72 24.2 22 31.0 50 16.7 50 32 1.6
% qoq 2.5 8.7 (4.3) (3.8) 1.7 5.0 3.3 6.7 (72.7) (10.9) (10.9) (17.7) (7.9) (7.9)
1HFY2012 603 206 34.2 77 12.7 166 27.5 449 154 25.6 6 31 18 136 0 136 22.6 41 29.9 95 15.8 95 32 3.0
1HFY2011 542 156 28.8 70 12.9 142 26.2 368 174 32.1 3 26 19 165 0 165 30.4 54 32.6 111 20.5 111 30 3.5
% chg 11.4 32.5 9.6 16.8 22.1 (11.3) 113.6 20.4 (3.4) (17.3) (17.3) (24.2) (14.0) (14.0) (14.0)
(` cr)
150 100 50 -
(%)
200
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
Circulation revenue
3Q11 4Q11 1Q12
Non-publishing business
2Q12
Top-line (LHS)
yoy (RHS)
(%)
80 70 60 50 40 30 20 10 -
72
70
71
71
71
69
67
67
65
34
28
27
32
32
30
25
25
26
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
PAT (LHS)
OPM
Gross margins
2Q12
Investment rationale
Healthy ad revenue growth on account of higher color inventory, peg a 10% CAGR: For FY2012-13E, we expect ad revenue to grow by 8-12% yoy. We maintain a conservative stance on managements robust guidance of 14-15% yoy growth due to lower national advertisements (management guidance) and low pick-up in advertisements from the education sector (expect pressure to ease in 2HFY2012). Underperformance a good entry point; JPL attractive at 13.8x FY2013E EPS: JPL acquired the print business from Mid-Day Multimedia, whose presence in markets such as Mumbai, Delhi, Bangalore and Pune (recently launched) is 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 both English and Hindi publications to their advertisers. Hence, we believe JPLs combined offerings are going to record a healthy 9% CAGR in revenue over FY2011-13E. With JPLs wider portfolio (including Mid-Day Publications), we believe the company is well poised to benefit from steady growth in print media. The underperformance of the stock and attractive valuations (at the CMP, the stock trades at 13.8x FY2013E EPS) provide a good entry point for investors.
% Chg. FY2012E
(0.2) (184bp) (7.5)
FY2012E
1,339 29.4 7.2
FY2013E
1,453 29.5 8.0
FY2013E
1,447 28.2 7.6
FY2013E
(0.4) (128bp) (4.6)
At the CMP, the stock is trading at 13.8x FY2013E EPS. We believe underperformance of the stock provides a good entry point. Hence, we maintain our Buy view with a revised target price of `137 (`148), based on a P/E multiple of 18x FY2013E (in-line with its historical valuations). Downside risks to our estimates include 1) any further increase in newsprint prices, 2) competition becoming fierce and 3) higher-than-anticipated slowdown in the macroeconomic scenario.
FY2011 FY2012E FY2013E 766 712 47 7 221 209 6 6 107 126 102 24 1,221 855 785 61 10 226 212 7 6 120 134 117 18 1,336 921 838 71 12 236 222 8 6 136 155 137 18 1,447
CAGR 9.6 8.5 22.6 28.2 3.3 3.0 12.5 1.9 13.0 10.6 15.6 (13.6) 8.9
10.6 7.8 148.5 90.6 7.9 6.2 219.0 (4.7) 11.3 4.4 39.5
15.7 14.0 49.5 65.9 9.4 9.5 8.0 7.0 15.4 25.6 (15.9)
20.1 18.7 39.3 63.1 3.4 2.2 10.0 60.5 41.3 39.1 51.3
11.6 10.3 27.6 40.3 2.0 1.8 10.0 2.6 12.9 6.3 14.2 (27.1)
7.6 6.7 17.7 17.2 4.5 4.3 15.0 1.2 13.1 15.1 17.0 2.3
Mcap (` cr)
3,243 3,329 4,032
CMP (`)
138 105 220
TP (`)
170 137 278
Upside (%)
23.2 30.2 26.4
CAGR Sales
12.9 8.9 12.6
FY13E
14.6 13.8 14.9
FY13E
1.1 2.2 2.3
FY13E
13.9 33.8 26.0
PAT
10.9 7.2 4.3
JPL DB Corp.
FY2012E
FY2013E
FY2012E
FY2012E
Share Price (`) Jan-11 Jun-11 Apr-11 Jul-11 Aug-11 Feb-11 Mar-11 Nov-10 May-11 Dec-10 Sep-11 Oct-10
100 50 0
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Feb-07
Feb-08
Feb-09
Feb-10
Feb-11
Oct-11
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 (0.3) (0.9) 21.7 (0.2) (0.6) 20.1 (0.2) (0.5) 35.3 (0.1) (0.1) 32.1 (0.1) (0.2) 28.0 (0.1) (0.2) 34.9 1.9 17 77 41 71 1.7 14 70 39 51 1.7 21 70 50 57 1.7 23 69 46 51 1.8 24 68 50 56 1.7 26 66 50 57 19.6 30.2 18.7 16.6 24.5 16.7 30.0 43.9 30.0 33.3 46.3 31.6 31.8 42.8 30.2 35.2 46.8 33.8 17.4 0.7 1.7 20.4 0.0 (0.3) 14.9 14.4 0.7 1.7 16.6 0.0 (0.2) 13.0 24.6 0.7 1.8 29.8 0.0 (0.2) 24.0 23.9 0.7 1.9 31.6 0.0 (0.1) 27.2 22.4 0.7 1.9 28.7 0.0 (0.1) 26.3 22.8 0.7 2.1 32.7 0.0 (0.1) 29.6 3.3 3.1 4.4 2.0 17.9 3.0 2.9 4.3 2.0 18.6 5.8 5.6 7.5 3.5 20.3 6.6 6.6 8.6 4.2 22.2 6.7 6.7 8.8 5.0 21.9 7.6 7.6 10.1 5.4 23.2 33.9 24.1 5.9 1.9 4.5 20.6 5.0 36.3 24.4 5.7 1.9 4.1 21.6 4.5 18.9 14.0 5.2 3.3 3.7 12.3 4.2 15.8 12.2 4.7 4.0 2.9 9.8 3.6 15.8 11.9 4.8 4.8 2.6 9.5 3.7 13.8 10.4 4.5 5.1 2.4 8.5 3.7 FY2008 FY2009 FY2010E FY2011 FY2012E FY2013E
10
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):
11