Jagran Prakashan Initiating Coverage

8/7/2019 Jagran Prakashan Initiating Coverage

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Jagran

RESEARCH

Company Background:

Growth in EPS backed by Multiple Drivers

Valuation

Jagran Prakashan Ltd(JPL), publishes the Hindi newspaper Dainik Jagran,

which is the largest read Hindi daily in India. JPL was founded in 1942 by the

late Puran Chand Gupta. Dainik Jagran is circulated in Northern and Central

India. It has 37 editions circulated across eleven states Uttar Pradesh,

Uttarakhand, Punjab, Haryana, Bihar, Jharkhand, Himachal Pradesh,

Madhya Pradesh, Delhi, West Bengal and Jammu & Kashmir. It has been

the largest read daily of India for the last consecutive 11 rounds of the

Indian Readership Survey. This is a unique record in the history of Indian

media. The popularity of the newspaper can be gauged from the fact that

almost every third Hindi newspaper reader and every ninth any newspaper

reader in India reads Dainik Jagran. Besides newspapers, the company has

interests in other media viz; Out of home advertising, Internet, Below the

Line marketing solutions, and Mobile Value Added Services.

We initiate coverage on Jagran Prakashan Ltd. (JPL) with Buy on Dips and

target price of Rs. 144. Our Buy recommendation is predicated on Jagran's

strong leadership position in North Indian markets, robust top line growth

of 17 percent during FY11E -FY2012E and emerging importance of regional

advertising in India. JPL is publisher of Dainik Jagran, which is the largest

circulating newspaper in India in terms of readership (56.6mn, IRS 2010 R1)

with the leadership position in Uttar Pradesh and presence in all together

11 states, with either No.1 or No.2 position in all states.

We forecast JPL to deliver 37.5% growth in EPS for FY2011E backed by

multiple growth drivers like strong growth in advertisement volumes on

the back of robust economic growth, sustainable ad rate hikes, increasing

shift toward regional media and takeover of publication business of Mid-

Day. The revenues from the new business segments like Out Door

Advertisement and Event Management Business are expected to add to

Jagran's publication earnings.

We expect a growth of 17% in the top line of the business for the FY2011E &FY2012E. This growth is expected to be achieved with the advertisement

revenues inflow growing at 17% during the FY2011E and at 15% for the

FY2012E.

EUREKA RESEARCH www.eurekasecurities.com

BUY ON DIPS

5th August, 2010 INITIATING COVERAGE

JAGRAN PRAKASHAN LTD. (JPL)

Recommendation

CMP

TARGET

: Rs. 122

: Rs. 144

COMPANY DETAILS

SHARE HOLDING PATTERN %

BSE Code

NSE Symbol

Bloomberg

Market Cap. (Rs. Crs)

Free Float

52 Week High(Rs)

52 Week Low(Rs)

Dividend Yield -%

Beta

Foreign

Institutions

Non-Promoter Corp Holding

Promoters

Public &Others

TOTAL

532705

JAGRAN

JAPG IN

3674.28

44.66

142.3

80.25

1.65

0.7818

8.69

15.56

3.03

55.34

17.39

100

ANALYST

Sakshi Malhotra

[email protected]

9830084057 / 91-33-3918 0386 - 87


2/11

In terms of earnings we expect JPL to post a healthy growth of 37% and 13% during the FY 11E and FY12E respectively. This

increase is mainly expected to be driven by growth in advertisement revenues and efficient cost management.

JPL is the publisher of the Hindi daily Dainik Jagran, which is the most widely read newspaper in India (56.6mn average

readership, as per Indian Readership Survey 2010 Round 1 (IRS 2010 R1)).JPL publishes 31 editions in the North Indian states

including Uttar Pradesh, Bihar, Uttaranchal, Jammu and Kashmir, Jharkhand, Haryana and Madhya Pradesh. JPL also

publishes woman's magazine 'Sakhi' and 'Jagran Varshiki', which is an annual general knowledge digest. Dainik Jagran is the

market leader in UP and Uttaranchal (Average Issue Readership (AIR) - 94.7 lakhs) which also gives approx 50% of the

revenues to the publishing business. It is a strong No. 2 player in the states of Bihar and Jharkhand (AIR of 32.04 lakhs) and

15% contribution to the company's revenue inflow pie.

In the Hindi-speaking North Indian states, Dainik Jagran primarily competes with Dainik Bhaskar, Amar Ujala, Hindustan etc.

However, given the strong editorial content in JPL it has maintained its circulation in all its key markets way above its

competitors. The gap between Dainik Jagran and its closest competitor Dainik Bhaskar almost has a gap of 77 percent in

terms of readership.

The top 25 English papers have a combined readership of 48.7 million as against 56.6 million readers for Dainik Jagran. Other

inferences in favour of the Hindi print media is that the results of the Indian Readership Survey show that 6 out of the top 15

newspapers and the top 4 newspapers in terms of readership belong to the Hindi category.

Investment Highlights:

Strong hold in areas of operations:

Widening Gap between Dainik Jagranand other Competition

EUREKA RESEARCH 2

Jagran Prakashan Ltd. (JPL)

5th August, 2010

www.eurekasecurities.com

STATE

Himachal Pradesh

UP & Uttaranchal

Madhya Pradesh

Bihar & Jharkhand

RANK

3

1

5

2

AIR OF DAINIK JAGRAN

1,884,000

9,470,000

458,000

3,204,000

Source: Indian Readership Survey 2010,Q1.

Source: Indian Readership Survey 2010,Q1.

5.43

3.342.94 2.87

2.33 2.061.67 1.53 1.47 1.42 1.34 1.29 1.26 1.14 1.05

0

1

2

3

4

5

6Readership (in crs)


3/11

EUREKA RESEARCH 3


5th August, 2010


Strong Revenues from Advertising and ability to take price hikes

Increasing Colored Advertisement in the total advertisement pie to trigger the top line and bottom line of the business

Mid day acquisition a Positive Step towards a wider portfolio

I-Next and City Plus: Adding strength in Current Publishing Portfolio

Diversification into Out of Home (OOH) advertisement

Jagran is clearly witnessing a strong up-tick in advertising. March 2010 has been an excellent month and the company isconfident of strong growth in FY2011E. New emerging sectors like FMCG, Auto and Real Estate have led to volume recovery.

The advertising revenues from the educational sector are also likely to pick up during the admission season. Along with this

the national advertisers have also come back and are increasing their investments in publication business. Driven by

increased readership and the buoyancy in the advertising market, JPL has been able to execute consistent price hikes over

the last few years. Even with the slowdown in the economy in 2009 the company managed to do an advertisement rate hike

of 10%. This trend is expected to continue, and on a conservative basis, we expect the company to increase advertisement

rates by 10 percent during the period FY11 and 12E.

The share of colored advertisement in the entire advertisement pie is expanding for JPL over the years mainly because of

increased demand and Jagrans increased capacity to publish such advertisements. We see the share of color advertising for

JPL used to be about 20-25% around 4-5 years back and it has slowly improved to reach 45% of the entire advertisement

pool. JPL has been focusing more on color advertisements as they command a 25-40% premium on an average to black and

white rates. Yields on color advertising are thus very high as the incremental cost for color advertising is not proportionate to

the advertising rates.

JPL Ltd acquired the newspaper business of Mid-Day Multimedia Ltd in a share swap deal. Mid Day has 4 publications in its

kitty, Mid Day Mumbai, Pune, Bangalore and Delhi, Sunday Mid-Day, Gujarati Mid-Day and The Inquilab (largest read Urdu

newspaper in the country). With the takeover of this company the horizon of JPL will get broadened. JPL earlier had reach

only in northern India, but with the takeover of the publishing business of Mid Day they will be able to gain access in western

India and Mid Day will benefit from larger scale of operations and huge pool of resources of Jagran. With the synergy

between the two media companies, they will also fill the gaps in each other's portfolio. As JPL instead of being only a Hindi

Group will have English, Hindi, Gujarati and Urdu language newspapers in its kitty.

To increase the strength of the present publishing offerings JPL launched two new newspaper formats, I-Next and City Plus,

in existing as well as new markets. I-Next is India's first bilingual compact Hindi daily targeted at the youth. City Plus is the

Weekly English Tabloid from the group. It has a unique market and is distributed at up-market residential areas, malls,

airports, etc.

JPL forayed into the Out-of-Home market in 2004. It offers solutions to prospects & customers through its bouquet of

offerings of Hoardings & Billboards, Unique Street Furniture, and Transit & Mobile Media. This broadening of its advertising

offering will not only enable JPL to offer comprehensive and integrated advertising solutions to its clients but will also reduce

dependence on publishing revenues and enable it to participate in the OOH market growth in India. We are forecasting

revenue for this segment to increase by 25% during the FY11 and FY12.


4/11

EUREKA RESEARCH 4


5th August, 2010


Industry Overview:

According to the PwC-FICCI 2008 report on Indian Entertainment and Media industry ,the Indian print media industry isprojected to grow by 14% CAGR in the period 2008-2012 .The newspaper advertising segment is expected to reach Rs 170

billion 2012 from Rs 80 billion in 2007. India has low Advertisement to GDP Ratio (0.47) compared to other countries like USA

(1.34), UK (0.95) and China (0.54). Even though the Advertisement to GDP is low in comparison to most of the developed

counties and neighboring countries it has consistently been showing a slow and steady increasing trend. This shows huge

untapped potential for the newspaper advertising industry. JPL with its wide reach and dominant position is best placed to

exploit this opportunity.

Rs billion

Newspaper publishing

% change

Magazine publishing

% change

Total print industry% change

Advertising revenues

Newspaper ad.

Magazine ad.

% change

Circulation revenues

Newspaper circulation

Magazine circualtion

% change

Total

% change

2004

86

11.8

97.8

54.4

43.4

97.8

2005

96

12

13.5

14

109.512

62.7

15

46.8

8

109.5

12

2006

111.5

16

16.5

22

12817

78

24

50

7

128

17

2007

130

17

19

15

14916

94

80

14

21

55

50

5

10

149

16

2008

148

14

21.5

13

169.514

111

18

58.5

6

169.5

14

2009

169

14

25

16

19414

129

16

65

11

194

14

2010

195

15

28.7

15

223.715

152

18

71.7

10

223.7

15

2011E

219

12

32.5

13

251.512

175

15

76.5

7

251.5

12

2012E

243

11

38

15

28112

200

170

30

18

81

73

8

9

281

12

CAGR

(2008-12)

13

15

14

16

8

14

Source: PwC-FICCI 2008 report on Indian Entertainment and Print industry.

(in %) (in %)


5/11

EUREKA RESEARCH 5


5th August, 2010


Circulation revenues of the newspaper industry are expected to grow to Rs 73 billion in 2012 from Rs 50 billion in 2007. (PwC-

FICCI 2008 report) This would be contributed by increasing literacy levels in the country. Low levels of literacy in some of the

states of India has placed a limitation on the percentage growth of people reading newspapers, compared with the

percentage of population that is exposed to other media such as television and radio. With the literacy levels increasing over

the years in the states JPL is operational, it further increases the scope of the print business which the publishing business of

JPL is expected to take advantage of.

In order to expand its geographical reach, JPL acquired Mid Day in FY10. As mentioned earlier, Mid Day has 4 publications in

its kitty, Mid Day (Mumbai, Pune, Bangalore and Delhi), Sunday Mid-Day, Gujarati Mid-Day and The Inquilab (largest read

Urdu newspaper in the country). With the takeover of this company the horizon of JPL will get broadened. JPL earlier had

reach only in northern India, but with the takeover of the publishing business of Mid Day they will be able to gain access in

western India and Mid Day will benefit from larger scale of operations and huge pool of resources of Jagran. In FY 10 we saw

that the print business of Mid Day has experienced a de-growth in its top line from Rs 102 crs in FY09 to Rs 94.9 crs in FY10,

this was mainly because of loss in readership as it was facing immense competition from its competitors like HT Mumbai and

the likes. Even with falling revenues the company witnessed strong growth in EBIT and EBIT margins. Its EBIT Margin

increased from 13.1% in FY2008-09 to 16.9% in FY2009-10. EBIT increased because of cost efficiencies and low newsprint

prices during the year. The company has not taken over the loss making radio business of Mid-Day.

I-Next is a newly launched product. It is India's first bilingual compact Hindi daily targeted at the youth. In just 18 months it

has captured 1.4 Million readers. It covers 9 prominent cities in 4 states of India through its various editions and

infrastructure. It has a cover charge of Re1 and advertisement to editorial ratio of 30:70. I Next has made revenue of 35 crs

during the FY10. This segment is expected to show robust growth in the coming years as the management has a vision of

making I-Next a 220-250 Crores brand in the next 3-4 years.

Mid-day to fill the gap in JPL portfolio

I-Next

STATES

Himachal Pradesh

Madhya Pradesh

Uttarakhand

Punjab

West BengalHaryana

Jammu and Kashmir

Uttar Pradesh

Jharkhand

Bihar

Literacy Rate (%) - NFHS-3

81.3

76.5

75.7

74

71.671.4

66.7

61.6

58.6

54.1

Literacy Rate (%) - 2001 Census

76.48

70.53

71.62

69.65

68.6467.91

55.52

56.27

53.56

47

Source: NFHS 3

Particulars

MID-DAY- Business segments

Publishing

Radio (Not taken over by Jagran)

FY10 FY09

Sales(cr)

94.9

30.3

Sales(cr)

102.0

28.0

EBIT(cr)

16.9

(13.3)

EBIT(cr)

13.1

(16.1)

EBIT MARGINS (%)

17.8

(43.8)

EBIT MARGINS (%)

(12.8)

(57.5)

Source: Company, Eureka Research


6/11

EUREKA RESEARCH 6


5th August, 2010


City Plus

Other Non-Publishing businesses in the Portfolio

Out of Home Advertizing

Customer Relations Arrangements & Event Management

Online and Mobile based Services

Financial Performance

City Plus is the free Weekly English Tabloid from the group. It is targeted at youth and distributed at upmarket residentialareas, malls, airports, etc. It is English News-Information- Entertainment paper with 16 editions from Delhi, NCR, Bangalore

and Pune, targeting premium localities. It's a special publication with an advertisement to publication ratio of 40:60. In the

FY2010 it has an approx readership of about 0.4 million and revenue inflow of Rs. 5 crs with 14 editions and now they plan to

have 24 editions in FY11.

Jagran Engage is the Out- of- Home (OOH) advertising business of JPL. It was established to provide complete Out-of-Homeadvertising solutions to advertisers. Jagran Engage covers 900 + towns spread across 370 districts in 27 states. Engage offers

Out-Of-Home solutions to customers through its bouquet of offerings of Hoardings and Billboards, Unique Street Furniture

and Transit & Mobile Media to suit specific client requirements.

Currently, the division is doing business with leading OOH agencies like Ogilvy, Portland, MOMS, OAP, Initiative, Prime

Outdoor; ad agencies like Triton and Innocean; Fame and Rave multiplex chains; direct clients like Star Health Insurance,

Apollo Hospitals, Titan (sunglasses), Aircel and UB Group's Romanov. Out-of-Home advertisement business recorded de-

growth in FY10 while JPL showed a substantial growth of 13% in this business. The revenues for FY2010 for the Outdoor

advertisement business have also been substantial at Rs 47 Crores.

Jagran Solutions, a division of JPL specializes in providing versatile, complete and measurable solutions for organizing

corporate events, conventions, product launches, meetings, conferences, exhibitions and contests, etc.

Out of home advertisement and Event management business put together has recorded a growth of 28% during FY10. Event

management business has reported revenue of Rs 23 crore in FY10.

J9 is the online and mobile value added services and home shopping division of JPL. In 2007, through a strategic alliance with

Yahoo, jagran.com was launched as a co-branded site 'http://in.jagran.yahoo.com'. It is the world's largest portal in the

Hindi genre. It has also launched an Online Classified platform 'khojle.in', online Gaming Platform 'jeetle.in'. Mobile add-on

services (wap.jagran.com).

Jagran has recorded a steady 4 year CAGR growth of 11.6% in sales FY07-FY10 on the back of steady growth in advertisement

revenues. Advertisement revenues have grown from Rs 388 crore in FY07 to Rs 638 crore in FY10 growing at a CAGR of

13.24% in the period. With steady increase in sales, the company has also been able to increase its operating profit margin

from 24% in 2007 to 34% in FY10. Similarly capital efficiency ratio viz. return on capital employed (ROCE) has moved up from

18% in 2007 to 30% in FY10. ROE is expected to improve from 15.8% in 2007 to 30% in FY10.


7/11

EUREKA RESEARCH 7


5th August, 2010


Even in FY09 when the economy suffered a slowdown, advertisement revenues showed a growth of 10% over FY08. The total

contribution from advertisement from the publishing business has also been consistent over the years at about 69% of the

total revenues. Looking forward we expect the same trend to continue in next two years. The advertisement contribution is

expected to grow substantially, being on the conservative side we have expected it to grow at a rate of 17% for the FY2010-

11; this figure is inclusive of the growth in volumes as well as rates. For FY12 we expect 15% growth in advertising revenues.

The circulation revenues are expected to grow at a rate for 4% for the coming period.

! The Top line of the business grew at 14% on a QoQ basis and 16% on an YoY basis this lead to a growth in bottom line of

12.12% on a YoY basis( PAT of 55.5 crore as against Rs 49.5 crore) that is what has resulted in operating profit margins

going up to 33.42% from 30%.

! The advertisement revenue has recorded a robust growth of about 18% on quarter-on-quarter basis due to a

combination of advertisement rate hike and advertisement volume growth. The company hiked advertisement rates by

an average of 10% in April.

! The Inflow from Circulation revenues has been more or less flat with only an increase of 1.45%. The newsprint cost

increased by 8% on a YoY basis and 12% on QoQ basis.

Q1FY11 Result Highlights

498.79 551.71638.4

746.93858.97

181.12195.41

215.6

224.22233.19

0

200

400

600

800

1000

1200

FY08 FY09 FY10 FY11E FY12E

Break-up of revenue contribution (in crs)

Circulation Revenue

Advertisement Revenue


8/11

EUREKA RESEARCH 8


5th August, 2010


Conference Call Highlights:

! The company is positive about its results and expects the trend to continue for the rest of the year. Growth in revenues is

likely to be advertisement driven as the key advertisers are back with the education sector and the automobile sector

along with local retailers forming the key customers.

! The advertisement growth is expected to be 17% to 18% for the entire year. On the circulation side the company is

concentrating to increase penetration in the existing areas rather than coming up with new editions and areas. The

companies attempt to increase penetration can be seen even in the first quarter as we see that the number of copies

circulation increased by 2.5% which is 70000-75000 copies per day. Though the cover price has fallen in Jharkhand

towards the end of the quarter we cannot attribute the increase in circulation to this factor.

! Due to pressure from the competitors the management had to reduce cover charges in Jharkhand to Rs.2, but it is

expected that this move should not have any major impact on the bottom line.

! There has been a fall in the Other Income by about Rs. 10Crs. This has been because last year the company made Capital

Gain of Rs 7crs and Profit from foreign exchange of Rs.3 crs which was not the case this year.

! The other business segments like the Out Door Advertisement and Event Management are expected to grow at a rapid

rate of 25% on the Top Line and by next year they are expected to have operating margins of 20%-25%

! The takeover of Mid Day is in track and the investments by Blackstone are also in line with expectations. The company has

already started work on Mid Day by negotiating Newsprint prices, ink, aluminum etc for mid day so that the company can

Net Sales

Other Operating Income

Total

(Increase)/Decrease in SIT &WIP

Raw Material Consumed

Employee Expenses

Other Expenses

Total expenditure

PBIDT

PBIDT (%)

Other Income

Profit before Interest and

exceptional items

Interest

PBDT

Depreciation

Tax

PAT

PAT (%)

EPS

Q1 FY11

265

4.84

269.8

0.084

75.56

34.74

69.26

179.6

90.17

33.42

5.74

95.91

1.22

94.69

12.48

26.6

55.61

20.61

1.85

Q1 FY10

228.9

3.01

231.9

0.008

70.12

28.92

62.31

161.4

70.5

30.41

15.66

86.16

1.37

84.79

12.37

22.93

49.49

21.35

1.64

% Chg

15.78

11.33

27.89

3.011

12.35

-0.74

Q1 FY11

265

4.84

269.8

0.084

75.56

34.74

69.26

179.6

90.17

33.42

5.74

95.91

1.22

94.69

12.48

26.6

55.61

20.61

1.85

Q4 FY10

232.1

4.19

236.3

0.177

67.58

31.95

73.32

173

63.24

26.77

6.6

69.84

2.39

67.45

13.48

17.59

36.38

15.4

1.21

% Chg

14.17

3.824

42.57

6.651

52.83

5.21

FY10

927

14.5

942

0.03

274

121

265

660

282

30

34.3

317

6.57

310

50.8

83.3

176

18.7

5.84

FY09

807.3

16.1

823.4

-0.05

317.9

106.5

242.3

666.7

156.7

19.03

22.72

179.4

5.9

173.5

38.32

43.57

91.65

11.13

3.04

% Chg

14.88

-1.06

80.11

10.93

91.91

7.542


9/11

EUREKA RESEARCH 9


5th August, 2010


reap synergies from the Q4 FY11E onwards.

! Q2 FY10 was the festival season with Diwali falling within that quarter, but in case of FY11, Diwali is a part of Q3. Thus,going forward it is expected that Q2FY11E when compared on YoY basis will not show very robust results but this slight

expected fall should get compensated adequately in Q3FY11 with ease.

There is a risk of newsprint prices going up in FY2011. But the margins of the business are not expected to be effected

significantly because the company has entered into long term contracts stretching upto an year with its suppliers to supply

newsprint at $520/MT where the current market price of imported newsprint is at $600-650/MT. Along with this it has alsolimited its imported newsprint consumption to about 20% of the total which is substantially lower than that of its

competitors. It approximately has an import-domestic ratio of 20%-80%, this automatically brings the overall cost for

newsprint consumption down as domestic newsprint is cheaper by about 5% to 10% (depending on the quality used)

compared to imports.

Looking forward we expect that the newsprint prices will rise and to approximately reach the level of $700/MT by the end of

the FY2011E. Considering the present situation of the company where JPL has already entered into long term contracts with

foreign suppliers and medium term contracts with domestic suppliers we expect a total of 12% increase in Raw Material

prices for FY11E and 17% for FY2012E.

Dainik Jagran is facing stiff competition in the top six cities of Uttar Pradesh from Hindustan and Amar Ujala. To counter the

competition JPL has ventured into city news segment and has launched two newspapers I-Next and City Plus in key markets

of U.P, Bihar and Jharkhand.

Risks And Concern Of Business

Volatile Newsprint Prices

Competitive pressure


10/11

Financial Projections

Income Statement

Balance Sheet(Rs crores)

Share holders fund

Capital

Reserves & surplus

Total Share Holders Fund

Loan Funds

Deferred Tax Liabilities

TOTAL

Gross BlockLess: Accumulated depreciation

Fixed Assets

Investments

Current assets, Loans & Advances

Inventories

Sundry Debtors

Cash & bank Balances

Other Current Assets

Loans and Advances

Less: Current Liabilities & Provisions

Current Liabilities

Provisions

TOTAL

FY09

60.23

499.68

559.91

141.46

52.07

753.46

479.5180.55

398.96

156.8

31.8

158.57

82.75

21.41

65.49

88.64

73.73

753.46

FY10

60.23

552.26

612.49

121.35

58

791.86

563169

394.08

166.58

53.33

181.22

85.17

25.87

71.72

129.57

56.58

791.86

FY11E

63.09

695.14

758.23

101

58

917.23

643225.34

417.66

166.59

68.07

208.88

167.93

25

75.31

147.24

64.97

917.23

FY12E

63.09

871.98

935.07

81

58

1074.07

723284.84

438.16

166.59

79.70

244.55

378.1

25

79.07

175.16

66.76

1074.07

(Rs crores)

Net Sales

Other Operating Income

Total Income

Total Expenditure

PBIDT

Other Income

Profit before Interest and EI

Interest

PBDTDepreciation

PBT

Tax

Reported PAT

Equity

EPS

P/E

FY09

807.27

16.1

823.37

666.66

156.71

22.72

179.43

5.9

173.5338.33

135.2

43.57

91.63

60.23

3.04

FY10

927.4

14.5

941.9

659.61

282.29

34.25

316.54

6.57

309.9750.75

259.22

83.32

175.9

60.23

5.84

20.55

FY11E

1089.15

14

1103.15

730.79

372.37

42.81

415.18

6.06

409.1256.43

352.69

99.38

253.30

63.09

8.03

15

FY12E

1275.16

14

1289.16

837.87

451.29

53.52

504.80

4.86

499.9459.50

440.45

153.18

287.27

63.09

9.1

13.18

EUREKA RESEARCH 10


5th August, 2010



11/11

Ratio analysisOPM (%)

NPM (%)

ROE

ROCE

Debt-equity

EV/EBIDTA(x)

P/E(x)

P/BV(x)

EBITDA Margin

Debtors Turnover

Inventory Turnover

200919.4

11.4

16.7

19.7

0.3

19.0

5.09

25.36

201030.4

19.0

30.0

34.4

0.2

13.4

20.9

6.0

30.0

5.12

16.75

2011E34.2

23.3

37.0

42.0

0.1

10.6

15.2

5.1

33.8

5.21

16

2012E35.4

22.5

33.9

44.7

0.1

8.7

13.4

4.1

35.0

5.21

16


5th August, 2010

Ratio Analysis

Recommendation

We expect a growth of 17% in the top line of the business for the FY2011E & FY2012E. This growth is expected to be achieved

with the advertisement revenues inflow growing at 17% during the FY2011E and at 15% for the FY2012E. This would come on

the back of 10% hike in Ad rates with a corresponding increase in volumes. The circulation revenues are expected to remain

flat with a small increase of 4% in for FY2011E and FY2012E. Other factors which are expected to further trigger

advertisement growth are the increasing importance given by the Education Sector on advertisement and consumers

preferring colored advertisements to black and white. Since colored advertisement rates are higher in comparison to theblack and white by almost 15%, this would further increase the advertising revenues.

In terms of earnings we expect JPL to post a healthy growth of 37% and 13% during the FY 11E and FY12E respectively. This

increase is mainly expected to be driven by growth in advertisement revenues and efficient cost management. Acquisition

of the publishing business of Mid Day is a positive step and we expect benefits of the synergies to start flowing in from FY12.

We recommend a "Buy on Dips" on the stock with a target price ofRs 144 which is 16(x) FY12E EPS of Rs. 9.1.

EUREKA RESEARCH 11 www.eurekasecurities.com

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Corporate Office :

Mumbai Office :

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B3/4, Gillander House, 8 N S Road, 3rd Floor, Kolkata - 700001Phone : 91-33-2210 7500 / 01 / 02, Fax: 91-33-2210 5184

e: [email protected]

909 Raheja Chamber, 213 Nariman Point, Mumbai-400021Phone : 91-22-2202 5941 / 5942e: [email protected]

DISCLAIMER : The information in this report has been obtained from sources, which Eureka Research believes to be reliable, butwe do not hold ourselves responsible for its completeness in accuracy. All estimates and opinions in this report constitute ourjudgement as of this date and are subject to change without notice. Eureka Researchwill not be responsible for the consequenceof reliance upon our opinion or statement contained herein or for any omission. Any feedback can be mailed to the following ID.

Analyst : Sakshi Malhotra

Email : [email protected]

Phone : 9830084057 / 91-33-3918 0386 - 87

Jagran Prakashan Initiating Coverage

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