Jagran prakashan

Stock Opportunities Not-so-Hidden Gems
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AND NOT TO FORGET…Warren buffet’s berkshire currently holds 69 newspapers…with over a dozen acquired in the last few years.

In warren’s words…’ the economics of a typical newspaper may not be as good as they were say 2 decades back. But as far as delivery of local news is concerned( like what is happening in a particular city, what happened in a local high school match, local real estate prices etc)…newspapers still reign supreme’.
Therefore buying into newspaper companies might not be such a bad idea…specially in India where the penetration of the internet is no where near the US.

DISC- Invested in Jagran Prakshan at Rs 134

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Radio city charges highest for ads…There is an article the problems faced by radio companies…they don’t have rooms of charging high ad rates…so margin play is not there…company has to play on volumes…radiocity has already penetrated In major cities…Bangalore…delhi…ahmedabad…mumbai…etc…I agree to what warren Buffett tells…but what if all the latest news are accessed online and other local news are accessed on radios…i don’t need a newspaper…growth In radio business is negligible…but print business can have good business because of the target market being poor or low class people…but again business expansion basis volume only…i don’t see any moat here…rather than that I would invest in EIL which is a epc contractor…has a wonderful market share…dealing In petrochemicals… Solar…fertilizers…metallurgy…infrastructure…all sectors emerging…if you want a mere 15% returns then why not invest in a large cap mutual fund…I just set my views here…I might be wrong…and I welcome views from members…this will be helpful for my growth also…thanks…

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Thanks hitesh for the reply. I am looking at db corp even though i feel growth will be atleast couple of years away

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Value research article. covers Jagran Prakashan & MPS.

Why print is here to stay
In spite of the advent of digital and online technologies, print hasn’t turned obsolete yet. On the contrary, it has been growing steadily

By Vikas Vardhan | Nov 10, 2015

Why print is here to stay

The rise of e-commerce and the growth in the use of the internet and smartphones are considered to be a big threat to the print media and book-publishing companies in India. So, what is the impact like? If we talk about the listed companies in India in the publishing industry, we didn’t find any adverse effect on them. On the contrary, they have been growing at a decent pace and have given exceptional returns on equity. We think that the edge in terms of return on equity will still stay for a long time.

Who will survive?
In print media it is the leader in the respective market that survives in the long term. It is the scenario where the winner takes it all. The four listed print-media companies - DB Corp, Jagran Prakashan, HT Media and Hindustan Media Venture - are the leaders in their respective regions. They have swept away the majority market share and thus command higher prices for advertising revenues. Since the revenue from advertising accounts for almost 70 per cent of the total revenue, their dependency on subscription revenue is low.

Advertising will keep the bells ringing
The advertising revenue will keep on rising for print-media companies, despite rising online digital marketing. This is so because, first, there is still a huge population which has access to newspapers only. Second, many ads and notices, like government tender notices and quarterly financial results, etc., go in print due to regulatory compulsions. These regulations are not going away any time soon, given the current scenario. Third, despite a rise in the literacy rate there is still a huge population that cannot read. In the case of the internet, not only does a person need to be literate but he should also be computer literate. On the other hand, in the case of print advertisements, even an illiterate person can connect to the visuals in newspapers.

Printing money
Company name Average 5Y RoE (%) Revenue (Rcr) 3Y sales CAGR (%) 3Y operating profit (Rcr) 3Y EBITDA CAGR (%)
Print media
DB Corp 24.99 1964 12.41 573 19.04
HMV 18.7 820 11.21 234 26.34
HT Media 12.51 2306 5.44 420 6.87
Jagran Prakashan 27.02 1644 10.18 488 14.33
Book publishing
MPS 35.25 210 9.76 90 46.63
Navneet Education 25.44 981 13.74 243 14.09
Data as of October 5, 2015

Subscriptions revenue will stay afloat
Despite a rise in online readership, subscription volumes will stay afloat in India. Newspaper readers are used to the printed version despite reading online. It will take time to change the lifestyle. In India there is a door-to-door delivery system. Therefore, the consumer may not easily do away with newspapers. In developed countries, like the United States, newspaper volumes have been falling because majority of sales come from newsstands, where people pick newspapers themselves.

India will keep witnessing a lot of population taking to newspaper readership with more people becoming literate. Television and newspapers will still remain the preferred path to accessing information in small towns, where still majority of Indians reside.

What will propel growth?
Domestic consumption in India is the biggest driving force behind economic growth. With this, consumer-product companies, like FMCG and automotive companies, will keep shelling out a lot of money on advertising. Newspapers will remain the preferred media channel to connect to the masses in India. In fact rising e-commerce has come as a blessing in disguise as they are using print media heavily to gain more market share. Amid rising digitisation, print-media companies are letting no stone unturned to take benefit of smartphones and online reading by focusing on websites, mobile-based applications and online content.

Why print is here to stay

Book publishing will benefit from digitisation
In the long term reading is expected to transform from physical-book reading to digital and online reading. This is beneficial for publishing companies. First, the delivery system will be faster and, second, companies will see logistics and printing costs come down heavily. This is a win-win situation for both readers and publishing companies. Access to e-books is convenient, fast and relatively cheap. Therefore, they will boost volume growth. The companies in the listed space, like Navneet Education and MPS, will continue with their high return on equity for the long term.

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why shud one not go for HMVL instead of jagaran prakashan?

HMVL has better valuation (quoting at oe of 13) and net cash balance of around 600 crores.

The company is not doing too badly on the growth front as well.

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HMVL does look like a very good opportunity as well.
Why do Jagran and DB corp command a premium over HMVL, in spite of growing slower can be 2 fold-

  1. Both Jagran and DB corp have high dividend payouts. HMVL is not paying out in spite of having so much cash. (However the management of HMVL has categorically stated that it will be used for inorganic expansion)
  2. HMVL’s OPM are lesser than both DB and Jagran. Their NPMs are higher because of the huge component of other income…due to interest recieved on a/m funds. As a result its ROE is also lower.
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Another factor that applies to all of them( HMVL,Jagran and db corp) is the fact that -last year all the navratra days fell in q2 but they fall in q3 in the present year. Therefore the q3 results of all of them are expected to be very good because of increased advertising revenues due to navratras and lower base effect.

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Sebi orders to seize Rs 10 cr gains in insider trading case

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The amt as per co is 10.41 lac only.
http://www.bseindia.com/corporates/anndet_new.aspx?newsid=73fa0952-f3eb-41de-9443-dbcc4cec10c3

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Investor and Analyst meet was held on 01st Dec and revised Analyst meet presentation is published.

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ICICI direct has mentioned Jagran as top pick for 2016 with target of 193.

http://content.icicidirect.com/mailimages/IDirect_MarketStrategy_2016.pdf

  • Jagran Prakashan, a leading print media player, is the most read daily in India with an average issue readership of 16.5 million (IRS Q3 2012). It continues to dominate the market of UP and is second/third in markets of Bihar, Haryana, Jharkhand, Uttaranchal, etc. It has demonstrated advertisement revenue CAGR of 14.0% in FY09-14 vs. industry average of 9.0%. Going ahead, with the economic revival in the offing, ad revenues are expected to grow at 10.8% CAGR in FY15-17E to 1531.4 crore. Circulation revenues are expected to grow at 4.1% in FY15-17E to 422.7 crore, aided by cover price hikes & increase in copies. High ad growth coupled with turnaround in other publications (Nai Duniya, Midday, etc) would aid margins. Ex-radio margins are expected to reach 26.2% in FY17E

  • Acquisition of “Radio City” (20 stations) and 11 frequencies in Phase III auctions in print rich areas is another growth trigger for Jagran. Radio City’s financials remain top notch with the segment posting 28% ad revenue growth in FY15 and operating margins of ~30%. We expect radio ad revenues to grow at 12.0% CAGR in FY15-17E to 258.2 crore with radio margins at 33.0% in FY17E

  • Te radio foray gives the investor a co-play of radio and print, both segments being outperformers in their respective genres. We believe the underlying value from Radio City will only be captured on an SOTP based valuation. We value the radio business at a 25x FY17E EPS (25% discount to ENIL’s target multiple) and the print business at a 16x FY17E EPS, to arrive at a revised target price of 193. We have a BUY recommendation

Disc- 5% of PF

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http://economictimes.indiatimes.com/opinion/interviews/expecting-15-growth-over-next-five-years-rk-agarwal-jagran-prakashan/articleshow/50573452.cms

management interview on et now .

I cant seem to locate the link to the video if any.

For me the salient point is that q3 is likely to be good. Both dussehra and diwali this year fell in q3 and advertisements of real estate and vehicles are more during these festivals.

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As expected good q3 numbers from Jagran.

Putting up the main numbers (all comparisions with q3 fy 15)

Op revenues up to 576 crores from 470 crores up by 22%.

Ad revenues up to 434 crores against 338 crores up by 28.5%

Op profit up to 172 crores vs 132.4 crores, up by 30%.

Net profit up to 93.3 crores from 66.6 crores up by 40%.

Qtr eps at 2.88 vs 2.12

9M eps at 7.67 per share. (not annualised and before extraordinary income)

Investment thesis here continues to play out well.

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Hiteshbhai,

excellent numbers indeed. Your thesis seems to be playing out very well (as always!)They are doing well on all fronts. For me the highlight of the result was improvement in profitability of Other Publications and margin expansion there. If they continue the momentum and expand margins in non-Jagran business and the base business is supported on ad revenue growth, it can generate very decent earning growth from here on.

On a different note, radio business of both DB & jagran are doing very well with decent growth in topline and improving EBIDTA margins. Looks like, 40% EBIDTA margins in radio business is becoming new normal! :slightly_smiling:

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CNBC interview transcript

Sonia: Can you tell us about the rest of the fiscal and FY17, what kind of ad revenue growth can you maintain?
A: Q4 should witness similar kind of a growth. As far as 2016-2017 is concerned, we expect a growth of nearly 15 percent.

Sonia: In ad revenues?
A: Yes.

Reema: You had guided for FY16 subscription revenues of 6-7 percent. How much of it has been achieved in the first nine months and are you on track to achieve your guidance?
A: I believe circulation revenue will fall short of our initial guidance. Although we have taken steps and circulation revenue will pickup from here, but we may fall short of circulation revenue by couple of percentage.

Reema: What will be your new guidance then?
A: It should be in the range of about 4-5 percent.
Reema: On circulation revenues?
A: Yes.
Reema: What about subscription?
A: When you say circulation revenue it is subscription only.

Tulsian: Just wanted to know about your other businesses also in which you have your presence like radio, digital, etc business. What are your views on the working or maybe the contribution from these businesses in FY17?
A: Radio has been pretty well. There was a beautiful acquisition which the company did. Margins have risen to 39.2 percent and for the year 2016-2017 also we expect that the margin would remain in the range of about 35 percent because next year we will be having new stations coming up. So, they will pull down margin a bit. So, radio we expect 35 percent margin for the year 2016-2017. Digital continues to be in investment phase. We will be doing some more investment in 2016-2017. As far as growth in revenues is concerned, that would continue in high double digit that is exceeding 35-40 percent. So, on that front there is no issue whatsoever.

Sonia: You said that ad revenue growth will be only 15 percent in FY17. It will slow down compared to this year, right? Is that just because of the base effect?
A: Yes. Let me clarify one thing, this year’s 28 percent growth is because we have included radio revenues first time. So, that is because of the base effect. However, 15 percent revenue growth in case you get in 2016-2017, in terms of operating profit, in terms of bottomline, you will see much better spike.

Tulsian: You have 11 titles and presence in 13 states and we know that now probably in FY17 you will be going to see the gains coming in from the elections which are coming largely maybe because of UP and West Bengal and all that. So, which are the titles and states on which you are banking more for FY17 which can be a good kicker for your FY17 performance in print business?
A: I believe economy doing better because as far as elections are concerned, I have always maintained that if you gain something in the next quarter you may lose something because of election code of conduct, you lose government revenue and therefore whatever you bet out of the election revenue that more or less gets compensated. Of course there will be an advantage of 2-3 percent; that cannot be denied.

Read more at: http://www.moneycontrol.com/news/results-boardroom/see-circulation-rev-down-to-4-5fy17-jagran-prakashan_5231321.html?utm_source=ref_article

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Hi Hitesh,

I have been invested in HMVL since 1 and half year and it has undoubtedly give me a hefty return. Can you please give some points why I would prefer Jagran Prakashan over HMVL ?

A good article from Safal Nivesh might help for reference.

http://www.safalniveshak.com/newspaper-stock-hmvl/

Dis closer :- Not Invested in Jagaran but invested in HMVL

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Recent ICICI report gives a good summary of top 3 leading newspapers in different states.

The estimated EPS are
FY16=13
FY17=11.6 on ground of higher depreciation. But they havent considered growth from new radio channels.
FY18=13.3

Pasted image1128×544 63.1 KB

@KC1986… Purely from growth of newspapers, HMVL is likely to churn better numbers as it reduces the gap between ad rates of Jagran in UP. Jagran commands a premium in ad rates because its the leader, and will continue to be the leader for some time.

Jagran’s radio city acquisition is a great fit and gives them an opportunity to use the cash generated from newspaper business at high returns. As @desaidhwanil…has posted on ENIL and Jagran thread here, Radio is a 35%+ EBITDA business. It requires a capex in certain years but over 5 year period it plays out very well and itself starts to generate cash. Coupled with this business structure of Jagran, the fact that radio is in very initial stages is a big advantage vs HMVL, where the cash is building up and management has not given any concrete plan to use it efficiently. HT media already owns a radio business so I would rule out HMVL’s entry in radio.

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krishnendu,

I have compared db corp with jagran and found jagran to be a better option atleast for the near term.

Once db corp growth comes on track it could also be worth looking into.

I dont have much idea about hmvl. So wont be able to compare with it.

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CONFERENCE CALL

Jagran Prakashan

Consolidated ad growth is expected to grow of 9.5% in FY16 and 15% in FY17

Jagran Prakashan (JPL) held a conference call to discuss the financial and operational performance for the quarter ended December 2015. Top management of the company addressed the call.
Highlights of the call:

For the quarter ended December 2015, the consolidated operating revenue increased by 22.5% to Rs 576.36 crore, Advertisement revenue increased 28.5% to Rs 434.82 crore. Circulation revenue was up by 2% to Rs 102.02 crore. The net profit increased by 40% to Rs 93.30 crore.

On standalone basis, the company reported 9.5% growth in revenue to Rs 482.71 crore. Advertising revenues grew 10.6% to Rs 347.35 crore, Circulation revenue was up by 2% to Rs 95.88 crore. The net profit grew 13% at Rs 69.70 crore.

New publications like Nai Dunia, Mid-Day & others have reported operating profit of Rs10 crore. These financials are after accounting for closure losses of City Plus and re-launch expenses of I-Next.

Margin improved due to increase in per copy realization in Mid Day, Dainik Jagran and Punjabi Jagran.

Outdoor & Event reported operating profit of Rs1.5 crore vs loss of Rs 1.7 crore in Q3 FY15.

The company reported digital ad revenue of Rs 4 crore, up 30% yoy

Radio operating revenue grew 15% to Rs 64.8 crore, OPM increased from 36.8% to 39.20%. The net profit declined by 11% to Rs 16.17 crore

Q3 FY15 ad revenue was benefitted from elections, resulting to lower growth in Q3 FY16.

Mid-Day ad revenue declined 6.5% yoy, due to high base of last year. In January 2016 growth has come back with healthy rate.

City Plus had recorded ad revenue of Rs 2.23 crore in Q3 FY15 while no revenue in Q3 FY16 as it has been discontinued from August’15. As such, advertisement revenue has been also impacted.

Government spends in MP market has been weak.

Government revenue register de-growth of 10% with contribution reducing to 16% vs 22% in Q3FY15. It has benefited its peer. The mgmt hope to get the revenue back in Q4.

Consumer durables, Real Estate, Lifestyle, Retail and Auto contributed to the growth. There was yield improvement on both yoy and qoq basis.

Dainik Jagran has recorded double digit growth in January.

Healthy spends from Real Estate, Retail and consumer durables is expected to continue in Q4 FY16 as well.

Education sector did not register de-growth, as it was registering for last 2 years. The company expects double digit growth in FY17.

The company has registered double digit growth in both Bihar and Jharkhand in last two quarters

The company has made senior level changes in Nai Dunia, which would result in better ad growth going forward.

Realization per copy improved for almost all the publications, however, the growth has been lower than mgmt target. This has been driven by change in strategy to focus on removing non-profitable copies from the system.

Realization per copy improved for Dainik Jagran was Rs 2.44. For 9MFY16 number of copies has increased by 2.5% while realization improved by 1% over the same period for Dainik Jagrran .

Circulation stood at 5 mn copies per day in Q3.

Circulation revenue was impacted by decline in circulation in Mid-Day.

Increase in newsprint cost due to increase in circulation

Newsprint prices were down 5.5%. Newsprint price are likely to be stable going forward.

Competitive position – 2 more editions launch by competitor in Bihar. The company is consolidating its position in Bihar and Jharkhand. For 9M, growth was good double digit. The company is gaining share in MP- CGIn coming qtr and next yr, hopeful of growth for MP - CG.

Increase in other operating cost is partially attributable to rise in Event and OOH business

Growth was lower in radio business due to base effect included election revenue in Q3 FY15 and foregone low yield business (Rs1 crore). Further, due to Chennai flood, Retail business was completely shut down and corporate business was also shut for 3 weeks, which impacted growth by 2%

In radio, the company took ad rate hike of 4% in H1 FY16 and 12% in Q3 FY16 and effective hike for FY16 would be 8%. Revenue growth in FY16 would be driven by equal mix of yield and volume improvement.

New stations will start getting operational between April-September.

Rs 275 crore net debt as on 31st Dec.

Consolidated ad growth is expected to grow of 9.5% in FY16 and 15% in FY17. Print ad is expected to grow by 12-13% in FY17

FY17 will have lower interest cost and lower deprecation which will result in good bottom line.

Depreciation in FY17 - radio will remain same while for print business it will be less by 5%.

Digital Ad rev – upwards of 50% FY17 expected

Tax rate – 27-28% consolidated in FY17. This year full tax rate.

As per the new accounting standard, the accumulated income from FMP’s cannot be accounted in P&L in a particular year. The company would have accounted Rs300mn on accrual basis in FY16 instead of Rs90mn actually accounted

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Isn’t Jagran Prakashan losing market share?It appears that the company is growing at a slower rate than the overall industry.

In 2015, it captured 5.7% of the overall market,while it was 5.96% in 2016, and even higher values as we move further back.