Hi @sarthakkumar19_ Jagran is currently trading at cheap valuations (P/E of ~3x normalized profits against historic average of low double digit P/E). However all media stocks will show performance but with a lag as they are the first derivative of growth numbers in GDP which are currently undergoing a downward revision. So business will take some time to recover and so will be the valuations as its a small cap and belongs to a sector which is not a fancy of the current set of investors. Also, company is strong enough from a balance sheet perspective to survive this crisis.
How fast the recovery will happen is anybody’s assumption and will depend on overall speed of Indian economic recovery. But if I have to hazard a guess I think if one can hold this for the next 18-24 months, one can get 2x to 4x returns.
Will this crises lead to permanent erosion in readership, advertisement channel preference by the advertisers?
Monetization in digital space does not look that great either!
But this cirsis also has led to reverse migration to majorly UP and a good chunk of these folks may not return back to metros because of the efforts UP govt is making in terms of relaxing labour laws and such. In that case, if UP economy grows at a faster clip driven by rural demand, I see some prospects in the next 2-3 years for the company. Also, 2022 is the state election year before which we could see some ramping up of govt ad spends. All in all, next couple of years look interesting for JPL.
Disclosure: Studying the stock and no holdings currently
I considered both - Jagran Prakashan and its subsidiary MBIL for investment. Happy to hear contradictory viewpoints : -
Jagran Prakashan :- This is a real Cigar-Butt valuation-wise. Taking a holding co. discount of 30-60% the co. is trading at 1.2 - 1.5 times trailing EV\EBITDA. While the co. will take some hit on topline this yr, the margins might be maintained owing to falling newsprint costs, Collaborative cost cutting by industry and circulation restored to 80% pre-covid levels.
Music Broadcast :- This is not an absolute cheap stock but a Fair business available at a cheap price. The company’s strong liquidity position will get it thru this phase where the topline hit might be 20-25%. Thus, here one is paying for a decent recovery and strong comeback of the business.
Which side to play is anybody’s call…
Disc. Not invested in Jagran. Exited MBIL in the recent run-up.
Check DB corp thread. Company Director mentions in a recent interviw that circulation is back to 80% in most places other than tier-1 cities. With railway stations, bus depots etc. closed, it is not possible to achieve pre-covid levels for the next few months. However, he also hints that ad revenues have dropped considerably. I feel the impact should be similar for Jagran too in circulation.
The company has successfully raised debentures at around 8.35/8.45 percent for 250 crores. No shares of company are pledged, it is a non-disposal undertaking meaning that promoters cannot sell their stake below 60 percent till the redemption of debentures. The company has no major governance issues and are very investor friendly as they have redistributed a lot of money back to the shareholders over the last 3-4 years by dividends and buybacks. The companies circulation revenue is around 80 percent as on June quarter and i expect to get back to pace by end of year. The advertisement revenue will take time to recover but taking precedence of 2008 crisis, advertisement revenue took around 12-18 months to return to normalcy. Assuming the same the company trades at around 4-5x of normalized profits and a 10 percent yield. The company also holds a big share in Radio City which is also currently struggling but is one of the best run radio stations in the country. The current market cap of 1100 crores is highly undervalued but traditional newsprint despite a slow growing business is not going anywhere anytime soon. Solid contra, dividend yield bet in my opinion.
Can you tell me that from where you got this information because i am unable to verify it anywhere.
"The company has successfully raised debentures at around 8.35/8.45 percent for 100 crores. No shares of company are pledged, it is a non-disposal undertaking meaning that promoters cannot sell their stake below 60 percent till the redemption of debentures. "
another of my safe bets reason for picking up this stock
1)P/E of 7 and average of P/E of past 4 years is around 4 .
2)dividend yield of around 8%
3)P/B ratio of close to 0.6
4)promoter bought own shares at 50 and 60 levels even higher
this stock for me is a no brainer gives more return than a FD ,divdend announcent of previous level or increase in ad revenue from election is going to make the stock trade at conservative 6 % div yield form current 8% even if it doesn’t i am happy keeping this stock with mouth watering dividends .
Jagran returned ~1k crore to shareholders in last 3 yrs through buybacks and dividends.
Today the market cap of Jagran is 1.1k crores
This is a 50 year old company and the leader in its segment. Newspaper reading habit cannot die a sudden death. It will be a prolonged decline by which time, it can grow its digital business. The promoters are good and realize this.
Discl: Adding this stock regularly at dips.
Not sure what mr. market is thinking. Is it taking such a short term view?
Even pvr, inox are doing so much better compared to this when it is not so clear abt their reopening status …
BREAKING NEWS september 8, 2020 (3.29pm)
BIG positive for JAGRAN PRAKASHAN
LOCKDOWN in UTTAR PRADESH LIFTED
Yogi Adiyanath-headed Uttar Pradesh government on Tuesday
announced that the ongoing Sunday lockdown in the state has been lifted
The latest decision comes after the state administration on September 1 had decided to lift the weekend lockdown in the state on Saturdays.
Jagran’s app is 69th on top grossing and 7th top trending in newspaper and magazine category on playstore. Is there a way to estimate the revenue it might be generating.
Invested in Jagran since August 2016.
Checked 5 daily publications in Delhi UP And Bihar.
Advertisements by Auto, both 2 wheelers and Cars etc. Are full page and range between 3-5 daily for past 1 month now, effectively much higher for last 15 days.
Real Estate also becoming good contributor.
Political advert in Bihar has started and covers 4-5 page of State Govt. Advert and political ads. Daily across editions.
FMCG ads by HUL and Dabur are a regular feature.
Many tender notices, gazettes etc. Are also in high frequency.
Many editions have seen price rise between 50 paise to Re.1 and weekend editions between Rs.1-2.
May ensure 100 crores plus of circulation revenue this quarter.
ALSO online MGMT. interviews suggesting 90% circulation numbers back on track and price rise will bring numbers on growth track.
One exceptional point, pagination has reduced by 15% across editions, reducing raw material cost straight away by 15 crores per quarter. fortunately, it has happened due to cut down on less sensational news/topics. This would recuperate losses suffered in last quarter and hopefully by end of this fiscal company will be back to 450 crores of FREE CASH GENERATION (STANDALONE). With 70% profit as dividend distribution expected. An 8-9 bucks dividend will be soon a reality re rating the stock and catapulting it to above 200. Although i don’t guarantee to wait till then for my portfolio.
Excellent article. Can Jagran and DB Corp copy NYT and WP over the next 15-20 years? They are the biggest hindi newspapers. There is no dearth of tech and product talent in India. The management of both these companies are good.
Another good thing is circulation is still going strong in India and is growing. Most people are misinformed and think this is a dying business. But they fail to understand the strong moat in newspapers. Citizen journalists and shouting matches on TV cannot replace quality journalism. Reading newspapers is a habit. These newspapers are strong household brands. They have a strong distribution and reach. They are almost part of Indian culture.
I am betting on their revival and believe that the market is wrong in giving them a 4 PE valuation. Hope I am right and the markets are wrong.
Discl:
Invested in both Jagran and DB Corp which together make up 10% of my pf
I was a newspaper reader since my childhood and I broke that habit for life in last 6 months! If see the continuous fall in the stock price and it is not able to sustain over 200 DMA since 2017. In term of profits also it kept falling since 2017. I agree it could a play for reversal to mean but difficult to take call looking at the situation unless upcoming numbers tell another story. Another point to add I could not find any ads on their websites so not sure how they are leveraging digital play
