ICICI Direct recommended buy rating on Jagran Prakashan with a target price of Rs 210 in its research report dated August 10, 2017.
ICICI Direct's research report on Jagran Prakashan
Ad revenues from the print business were impacted by legislation (GST, RERA) led uncertainty and consequently witnessed 3.8% YoY growth to Rs 361.6 crore, slightly lower than our expectation of 5% YoY growth. The company continued to witness healthy traction in the radio segment with revenues at Rs 70.3 crore, up ~12% YoY. Circulation revenues came in slightly lower than expectations at Rs 108.6 crore, up 1.5% YoY (our estimate: 3.3% YoY growth). Revenue from the digital segment grew a handsome 18.1% YoY to Rs 7.7 crore on a smaller base EBITDA came in at Rs 161.3 crore, ahead of our expectation of Rs 154.4 crore. With a slight beat on topline front, and controlled costs, subsequent margins were at 27.3%, higher than our 26.3% estimate PAT came in at Rs 86.6 crore (vs. expectation of Rs 88.6 crore), owing to higher-than-expected tax rate.
Jagran’s performance vis-à-vis regional print peer remains healthy (reported print ad growth ~4% YoY vs. DB Corp and HMVL who have reported growth of 4.5% and decline of 0.4% YoY, respectively). We highlight that Jagran Prakashan, a leading print media player, has diversified offerings with strong footing in the radio market (currently exhibiting superior growth than leader ENIL) and increasing presence in the digital space. We continue to believe the vernacular print segment is a lucrative space, and is bound to recover from H2FY18 onwards. We maintain BUY rating with a target price of Rs 210 on an SOTP basis.
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