For 1QFY2017, Jagran Prakashan (JPL) reported a 9% yoy growth in its
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
company reported healthy double digit growth numbers on the back of a
favorable performance in radio and other businesses. However, circulation
revenue growth trailed a bit during the quarter.
Standalone – Ad revenue up ~9% yoy, Circulation revenue up ~6% yoy: The
company’s standalone top-line grew by 9% yoy to Rs473cr (on back of advertising
revenue growth of ~9% yoy to ~Rs333cr, primarily driven by improvement in
yields; and circulation revenue growth of 6% yoy to Rs100cr due to increase in cover
prices). Further, income from other businesses grew by ~13% yoy to ~Rs40cr. On a
consolidated basis, the top-line grew by ~17% yoy on back of strong advertising
revenue and other operating income growth.
OPM improves: The standalone operating profit grew by ~6% yoy to Rs130cr and
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
performance and lower other income.
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 is also expected to boost the
company’s profitability, going ahead. Hence, we maintain our Accumulate rating on
the stock with a target price of Rs205.

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