ICICI Direct recommended hold rating on Jagran Prakashan with a target price of Rs 85 in its research report dated August August 02, 2019.
ICICI Direct's research report on Jagran Prakashan
Jagran Prakashan reported a weak quarter with weakness across segments. Print ad revenues declined 2.2% YoY (vs. our expectation of 2% YoY growth) to Rs 353 crore while circulation revenues were also weak Rs 108.6 crore (1% YoY decline). Radio revenues came in weak with 7.8% YoY decline (1% YoY growth expectations). The weakness in topline and negative operating leverage percolated to EBITDA, which came in at Rs 141.1 crore, down 13.7% YoY and a margin of 24.1%, ~300 bps YoY decline. The bottomline at Rs 66.4 crore, witnessed 24.6% YoY decline.
Despite alluring valuations of ~7.4x FY21, we have a HOLD rating as we await a recovery in ad growth. We cut our target price to Rs 85. Our target price implies 8x FY21E earnings, lower than earlier target multiple of 9x to account for lower growth trajectory.
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