Buy Jagran Prakashan; target of Rs 131: KRChoksey

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Buy Jagran Prakashan; target of Rs 131: KRChoksey

KRChoksey is bullish on Jagran Prakashan and has recommended buy rating on the stock with a target of Rs 131 in its February 3, 2012 research report.

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KRChoksey is bullish on Jagran Prakashan and has recommended buy rating on the stock with a target of Rs 131 in its February 3, 2012 research report.

"Jagran Prakashan Ltd's Q3FY12 result was in line with our estimates. The company reported net sales of Rs 326cr, a growth of 6% QoQ and 13% YoY. Healthy growth in revenues was driven by increase in advertising revenue in spite of soft ad spend environment. EBITDA stood at Rs 85cr, higher by 7% QoQ however declined by 5% YoY due to higher newsprint cost. EBITDA margin for the quarter was 26.2%. Net profit was Rs 41.2cr, declined by 10% over Q2FY12 and sharp 21% over Q3FY11 due to increase in depreciation and interest outgo. Net profit margin was down by 230bps on sequential quarter and 530bps over same period last year. We believe newsprint prices are cooling off which will improve profitability in near future. We like Jagran's presence across media verticals, healthy growth in Mid Day and strong revenue outlook driven by innovative ideas. We maintain 'Buy' recommendation on the stock."

"In the midst of slowdown in adverting spend by major sectors of the economy, Jagran reported healthy 14% ad revenue growth to Rs 233cr in Q3FY12. This mainly driven by innovative ideas used to attract higher ad pie. Surprisingly, the national advertising share increased from 40% in Q3FY11 to 43% in Q3FY12. Ad revenue growth was mainly driven by volumes. Jagran witnessed 9% circulation revenue growth for Q3FY12. The management guided strong single digit circulation revenue to continue for FY12E. Instead of new launches, the company will monetize the existing properties. The company reported strong growth in its event and outdoor as well as digital segment. Event and outdoor grew by 14.6% YoY to Rs 28.8cr while digital has a growth of 15.5% to Rs 2.3cr. We believe other business will report strong revenues with revival in ad spend."

"Jagran reported strong numbers despite softness in advertising spend. We believe the company is well placed to demand premium in advertising yield with its strong presence in tier 2 and tier 3 markets. Other segments and Mid Day will compliment the core business and boost the revenue. The stock is trading at 14.7x and 13.2x PE to FY12E and FY13E earnings respectively. We maintain our Buy recommendation on the stock with target price of Rs 131, by assigning 17x PE to FY13E earnings, which is 29% potential upside from current price," says KRChoksey research report. 

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