1QFY2017 Result Update | Media
August 12, 2016
Jagran Prakashan
ACCUMULATE
CMP
`184
Performance highlights
Target Price
`205
Quarterly data (Standalone)
Investment Period
12 Months
(` cr)
1QFY17
1QFY16
% yoy
4QFY16
% qoq
Revenue
473
436
8.6
442
7.1
Stock Info
EBITDA
130
123
5.8
112
16.0
Sector
Media
OPM (%)
27.5
28.3
(73)
25.4
212
PAT
74
70
5.4
61
21.4
Market Cap (` cr)
6,018
Source: Company, Angel Research
Net Debt (` cr)
(202)
Beta
0.5
For 1QFY2017, Jagran Prakashan (JPL) reported a
9% yoy growth in its
52 Week High / Low
190 / 110
standalone top-line but the growth in PAT was relatively lower mainly due to
higher employee and other operating expenditure. On a consolidated basis, the
Avg. Daily Volume
16,518
company reported healthy double digit growth numbers on the back of a
Face Value (`)
2
favorable performance in radio and other businesses. However, circulation
BSE Sensex
27,860
revenue growth trailed a bit during the quarter.
Nifty
8,592
Reuters Code
JAGP.BO
Standalone - Ad revenue up ~9% yoy, Circulation revenue up ~6% yoy: The
Bloomberg Code
JAGP@IN
company’s standalone top-line grew by 9% yoy to `473cr (on back of advertising
revenue growth of ~9% yoy to ~`333cr, primarily driven by improvement in
yields; and circulation revenue growth of 6% yoy to `100cr due to increase in cover
Shareholding Pattern (%)
prices). Further, income from other businesses grew by ~13% yoy to ~`40cr. On a
Promoters
60.8
consolidated basis, the top-line grew by ~17% yoy on back of strong advertising
MF / Banks / Indian Fls
12.7
revenue and other operating income growth.
FII / NRIs / OCBs
15.0
OPM improves: The standalone operating profit grew by ~6% yoy to `130cr and
Indian Public / Others
11.6
the OPM contracted by 80bp yoy to 27.5%, owing to higher employee and other
operating expenditure. The net profit grew by 5% yoy on back of poor operating
Abs. (%)
3m 1yr
3yr
performance and lower other income.
Sensex
7.8
(1.2)
46.6
Outlook and valuation: Considering Dainik Jagran’s status as the most read
JAGP
8.7
29.4
103.5
Hindi newspaper in the country and its strong presence in the rapidly growing
Hindi markets of Bihar, Haryana, Jharkhand, Punjab, Madhya Pradesh and Uttar
3-year price chart
Pradesh, we expect JPL to benefit the most from an eventual recovery in the Indian
200
economy. Further, the acquisition of Radio City is also expected to boost the
180
160
company’s profitability, going ahead. Hence, we maintain our Accumulate rating on
140
120
the stock with a target price of `205.
100
80
Key financials (Consolidated)
60
40
Y/E March (` cr)
FY2014
FY2015
FY2016
FY2017E FY2018E
20
Net Sales
1,703
1,770
2,107
2,355
2,635
0
% chg
11.9
3.9
19.0
11.0
11.9
Adj. Net Profit
234
225
328
353
409
% chg
(9.4)
(3.6)
45.9
7.5
15.7
Source: Company, Angel Research
OPM (%)
22.5
25.5
33.5
28.0
28.0
EPS (`)
7.1
6.9
10.0
10.8
12.5
P/E (x)
25.7
26.7
18.3
17.0
14.7
P/BV (x)
6.3
5.3
4.3
3.7
3.2
RoE (%)
23.5
19.9
23.3
21.7
21.7
RoCE (%)
20.9
19.5
31.3
24.3
24.9
Amarjeet S Maurya
EV/Sales (x)
3.6
3.3
2.9
2.6
2.3
022-39357800 Ext: 6831
EV/EBITDA (x)
16.0
12.9
8.7
9.2
8.0
[email protected]
Source: Company, Angel Research
Please refer to important disclosures at the end of this report
1
Jagran Prakashan | 1QFY2017 Result Update
Exhibit 1: Quarterly performance (Standalone)
Y/E March (` cr)
1QFY17
1QFY16
% yoy
4QFY16
% qoq
FY2016
FY2015
% chg
Net Sales
473
436
8.6
442
7.1
1,804
1,662
8.6
Consumption of RM
163
149
9.2
151
8.0
602
593
1.5
(% of Sales)
34.3
34.2
34.0
33.4
35.7
Staff Costs
66
62
6.3
61
8.1
247
230
7.1
(% of Sales)
13.9
14.2
13.7
13.7
13.9
Other Expenses
115
102
12.4
119
(3.1)
453
399
13.5
(% of Sales)
24.2
23.4
26.8
25.1
24.0
Total Expenditure
343
313
9.7
330
4.0
1,302
1,223
6.5
Operating Profit
130.4
123
5.8
112
16.0
502
439
14.4
OPM
27.5
28.3
25.4
27.8
26.4
Interest
10
16
(36.4)
12
(16.7)
57
35
60.7
Depreciation
19
20
(7.4)
20
(4.1)
84
95
(11.6)
Other Income
8
18
9
25
26
(3.4)
PBT (excl. Ext Items)
109
105
4.1
90
21.7
387
335
15.5
Ext Income/(Expense)
0
0
PBT (incl. Ext Items)
109
105
4.1
90
21.7
387
335
15.5
(% of Sales)
23.1
24.1
20.3
21.4
20.1
Provision for Taxation
36
35
29
132
111
18.5
(% of PBT)
32.6
33.5
32.5
34.0
33.2
Recurring PAT
74
70
5.4
61
21.4
255
224
14.1
PATM
15.6
16.0
13.7
14.1
13.5
Minority Interest After NP
Profit/Loss of Associate Company
0.0
Reported PAT
74
70
5.4
61
21.4
255
224
14.1
Extra-ordinary Items
4
2
Adj. PAT
74
66
11.1
61
21.4
255
221
15.3
Equity shares (cr)
33
33
33
33
32.69
FDEPS (`)
2.3
2.1
5.4
1.9
21.4
7.8
6.8
15.3
Source: Company, Angel Research
Exhibit 2: Quarterly performance (Consolidated)
1QFY17
1QFY16
yoy %
Operating Revenues
557.99
474.96
17%
Advertisement Revenues**
411.26
339.38
21%
Circulation Revenues
107
100.51
6%
Other Operating Revenues
39.73
35.07
13%
Operating Profit
154.59
134.13
15%
Source: Company, Angel Research note: Represents print, radio and digital advertisement revenues
August 12, 2016
2
Jagran Prakashan | 1QFY2017 Result Update
Standalone top-line grew by 9% yoy
The company’s standalone top-line grew by 9% yoy to `473cr (on back of
advertising revenue growth of
~9% yoy to
~`333cr, primarily driven by
improvement in yields; and circulation revenue was up 6% yoy to `100cr due to
increase in cover prices). Further, income from other businesses grew by ~13% yoy
to ~`40cr. On a consolidated basis, the top-line grew by ~17% yoy on back of
strong advertising revenue and other operating income growth.
Exhibit 3: Standalone Net sales trend
600
15
500
10
400
5
300
0
200
(5)
100
(10)
(15)
0
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17
Net sales
QoQ growth (%)
Source: Company, Angel Research
Standalone operating performance subdued
The company’s standalone EBITDA grew by ~5% yoy to `130cr and the OPM
contracted by 83bp yoy to 27.5% owing to higher employee costs and other
expenditure. JPL’s flagship daily Dainik Jagran and the radio business reported
operating margin contraction to
33.6% &
28.4% respectively while other
publications reported operating margin expansion.
Exhibit 4: Standalone operating margin trend
Exhibit 5: Standalone Net profit trend
160
30
80
40
140
29
70
30
120
28
60
20
100
27
50
10
80
40
26
60
0
30
40
25
(10)
20
20
24
(20)
10
0
23
0
(30)
Operating Profit
Margin (%)
PAT
QoQ growth (%)
Source: Company, Angel research
Source: Company, Angel research
August 12, 2016
3
Jagran Prakashan | 1QFY2017 Result Update
Exhibit 6: Operating performance
1QFY2017
1QFY2016
% yoy
Dainik Jagran
Operating Revenue
383.7
355.6
7.9
Operating Profit
128.8
121.8
5.7
Operating Margin (%)
33.6
34.2
(69bp)
Other Publications
Operating Revenue
84.0
78.6
6.9
Operating Profit
7.0
6.4
9.7
Operating Margin (%)
8.4
8.2
21bp
Radio
Operating Revenue
55.2
45.0
22.8
Operating Profit
15.7
13.2
18.8
Operating Margin (%)
28.4
29.4
(94bp)
Digital
Operating Revenue
7.1
5.8
24.0
Operating Profit
(3.9)
(1.4)
-
Outdoor and Activation business
Operating Revenue
32.3
25.4
27.2
Operating Profit
2.2
0.9
154.1
Operating Margin (%)
6.7
3.4
334bp
Source: Company, Angel Research
August 12, 2016
4
Jagran Prakashan | 1QFY2017 Result Update
Investment rationale
Advertising revenue expected to bounce on back of improvement in economy:
Considering Dainik Jagran’s status as the most read Hindi newspaper and its
strong presence in the rapidly growing Hindi markets of Bihar, Haryana,
Jharkhand, Punjab, Madhya Pradesh and Uttar Pradesh, we believe JPL will
benefit the most from an eventual recovery in the Indian economy.
Recent acquisitions to fuel growth: The acquisition of the radio business (Radio
City) would also boost the company's revenue going ahead. Radio City has
~20 stations across 7 states in the country and is second only to ENIL in all its
operating circles, ie Delhi, Mumbai, Bengaluru, Chennai, Ahmedabad,
Hyderabad, Pune and Lucknow. The company covers ~51% (~66mn people)
of the total radio population.
Falling raw material prices to boost profitability: Raw material prices
(newsprint costs) have been declining over the past 5 quarters and are
expected to remain stable, going forward. Thus, considering lower news print
costs, healthy sales, and higher margins in the radio business, we expect the
company to post higher profitability, going ahead.
Outlook and valuation
Considering Dainik Jagran’s status as the most read Hindi newspaper in the
country and its strong presence in the rapidly growing Hindi markets of Bihar,
Haryana, Jharkhand, Punjab, Madhya Pradesh and Uttar Pradesh, we expect JPL to
benefit the most from an eventual recovery in the Indian economy. Further, the
acquisition of Radio City will also boost the company’s profitability, going ahead.
Hence, we maintain our Accumulate rating on the stock with a target price of `205.
August 12, 2016
5
Jagran Prakashan | 1QFY2017 Result Update
Company Background
Dainik Jagran, with an 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 print media markets of 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.
August 12, 2016
6
Jagran Prakashan | 1QFY2017 Result Update
Profit & Loss Statement (Consolidated)
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E
FY18E
Total operating income
1,522
1,703
1,770
2,107
2,355
2,635
% chg
12.3
11.9
3.9
19.0
11.0
11.9
Total Expenditure
1,229
1,320
1,319
1,401
1,696
1,897
Cost of Materials
544
609
626
629
702
785
Personnel
227
240
263
320
360
406
Others
458
472
430
452
633
706
EBITDA
292
383
451
706
659
738
% chg
(7.7)
30.9
17.8
56.7
(6.6)
11.9
(% of Net Sales)
19.2
22.5
25.5
33.5
28.0
28.0
Depreciation& Amortisation
126
79
104
104
138
142
EBIT
167
304
347
601
521
596
% chg
(32.1)
82.0
14.3
73.3
(13.3)
14.3
(% of Net Sales)
11.0
17.8
19.6
28.6
22.1
22.6
Interest & other Charges
31
35
37
52
44
39
Other Income
119
47
108
35
27
27
(% of PBT)
46.6
14.8
25.9
5.9
5.4
4.7
Share in profit of Associates
-
-
-
-
-
-
Recurring PBT
255
316
418
584
505
584
% chg
(0.2)
23.8
32.5
39.5
(13.5)
15.7
Prior Period & Ex-ord. Exp./(Inc.)
-
10
-
-
-
-
PBT (reported)
255
306
418
584
505
584
Tax
0
79
110
139
151
175
(% of PBT)
0.2
26.0
26.3
23.8
30.0
30.0
PAT (reported)
255
226
308
445
353
409
Add: Share of earnings of asso.
(1)
(0)
0
-
0
0
Less: Minority interest (MI)
(0)
(0)
0
0
0
0
PAT after MI (reported)
255
226
308
445
353
409
Extra-ordinary Items
(3)
(7)
83
116
-
-
ADJ. PAT
258
234
225
328
353
409
% chg
44.6
(9.4)
(3.6)
45.9
7.5
15.7
(% of Net Sales)
16.9
13.7
12.7
15.6
15.0
15.5
Adj.Basic EPS (`)
7.9
7.1
6.9
10.0
10.8
12.5
% chg
44.6
(9.4)
(3.6)
45.9
7.5
15.7
August 12, 2016
7
Jagran Prakashan | 1QFY2017 Result Update
Balance Sheet (Consolidated)
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E
FY18E
SOURCES OF FUNDS
Equity Share Capital
63
62
63
63
63
64
Reserves& Surplus
869
899
1,071
1,346
1,565
1,819
Shareholders’ Funds
932
962
1,134
1,410
1,629
1,883
Minority Interest
1
1
1
1
1
1
Total Loans
484
490
648
512
512
512
Deferred Tax Liability
89
91
78
78
78
78
Total Liabilities
1,506
1,543
1,861
2,001
2,220
2,474
APPLICATION OF FUNDS
Gross Block
1,241
1,336
1,418
1,883
1,933
2,033
Less: Acc. Depreciation
466
545
644
749
887
1,029
Net Block
776
791
773
1,134
1,046
1,004
Capital Work-in-Progress
131
114
72
72
72
72
Investments
222
332
357
307
307
307
Current Assets
672
688
1,051
887
1,192
1,520
Inventories
83
100
93
69
90
116
Sundry Debtors
319
343
364
479
548
614
Cash
52
33
493
49
176
290
Loans & Advances
155
151
36
169
212
264
Other
62
62
65
121
165
237
Current liabilities
313
388
399
407
404
436
Net Current Assets
358
300
651
480
788
1,084
Deferred Tax Asset
19
6
7
7
7
7
Mis. Exp. not written off
-
-
-
-
-
-
Total Assets
1,506
1,543
1,861
2,001
2,220
2,474
August 12, 2016
8
Jagran Prakashan | 1QFY2017 Result Update
Cashflow Statement (Consolidated)
Y/E March (` cr)
FY13
FY14
FY15
FY16
FY17E
FY18E
Profit before tax
255
306
418
584
505
584
Depreciation
125
89
104
104
138
142
Change in Working Capital
(69)
(13)
(51)
(273)
(180)
(182)
Interest / Dividend (Net)
24
29
22
52
44
39
Direct taxes paid
(50)
(62)
(70)
(139)
(151)
(175)
Others
(83)
(19)
14
-
-
-
Cash Flow from Operations
202
331
437
328
355
408
(Inc.)/ Dec. in Fixed Assets
(194)
(60)
(415)
(500)
(51)
(101)
(Inc.)/ Dec. in Investments
30
(110)
(25)
50
-
-
Cash Flow from Investing
(164)
(170)
(441)
(450)
(51)
(101)
Issue of Equity
-
-
-
-
-
-
Inc./(Dec.) in loans
87
(26)
139
(101)
1
2
Dividend Paid (Incl. Tax)
(111)
(95)
(93)
(169)
(134)
(155)
Interest / Dividend (Net)
(63)
(59)
417
(52)
(44)
(39)
Cash Flow from Financing
(86)
(180)
463
(323)
(177)
(192)
Inc./(Dec.) in Cash
(48)
(20)
459
(444)
127
114
Opening Cash balances
100
52
33
493
49
176
Closing Cash balances
52
33
493
49
176
290
August 12, 2016
9
Jagran Prakashan | 1QFY2017 Result Update
Key Ratios
Y/E March
FY13
FY14
FY15
FY16
FY17E
FY18E
Valuation Ratio (x)
P/E (on FDEPS)
23.3
25.7
26.7
18.3
17.0
14.7
P/CEPS
15.8
19.7
14.6
11.0
12.2
10.9
P/BV
6.5
6.3
5.3
4.3
3.7
3.2
Dividend yield (%)
1.1
0.5
1.1
1.4
1.6
1.9
EV/Sales
4.1
3.6
3.3
2.9
2.6
2.3
EV/EBITDA
21.3
16.0
12.9
8.7
9.2
8.0
EV / Total Assets
3.4
3.2
2.6
2.6
2.3
2.0
Per Share Data (`)
EPS (Basic)
7.9
7.1
6.9
10.0
10.8
12.5
EPS (fully diluted)
7.9
7.1
6.9
10.0
10.8
12.5
Cash EPS
11.6
9.3
12.6
16.8
15.0
16.8
DPS
2.0
1.0
2.0
2.5
3.0
3.5
Book Value
28.5
29.4
34.7
43.1
49.8
57.6
Returns (%)
RoCE
11.8
20.9
19.5
31.3
24.3
24.9
Angel RoIC (Pre-tax)
14.6
27.9
37.2
38.4
31.4
33.1
RoE
27.4
23.5
19.9
23.3
21.7
21.7
Turnover ratios (x)
Asset Turnover
1.2
1.3
1.2
1.1
1.2
1.3
Inventory / Sales (days)
20
21
19
12
14
16
Receivables (days)
77
73
75
83
85
85
Payables (days)
27
28
24
25
26
28
Net WC (days)
69
67
71
70
73
73
August 12, 2016
10
Jagran Prakashan | 1QFY2017 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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offering of securities of the company covered by Analyst during the past twelve months.
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Disclosure of Interest Statement
Jagran Prakashan
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
August 12, 2016
11