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Jagran Prak: Boost from events and outdoors - Views on News from Equitymaster

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Jagran Prak: Boost from events and outdoors
Feb 10, 2010

Performance summary
  • Topline increases by 10% YoY during 3QFY10 led by a 9% growth in advertising revenues and and 8% growth in circulation revenues.
  • EBITDA margins improves from 15% in 3QFY09 to 29% during the quarter.
  • Other income, which includes revenues from outdoor advertising, event management activity and short code services grows by 55% YoY during 3QFY10.
  • Bottomline grows by 157% YoY during the quarter on account of topline growth, expansion in margins and higher other income.


Standalone financial snapshot
(Rs m) 3QFY09 3QFY10 Change 3QFY09 3QFY10 Change
Net sales 2,070 2,269 9.6% 6,221 7,056 13.4%
Expenditure 1,769 1,616 -8.7% 5,044 4,866 -3.5%
Operating profit (EBDITA) 301 653 117.1% 1,177 2,190 86.1%
EBDITA margin (%) 14.5% 28.8%   18.9% 31.0%  
Other income 45 70 54.8% 163 277 70.0%
Interest 18 13 -25.0% 39 42 6.5%
Depreciation 98 119 21.0% 271 373 37.7%
Profit before tax 229 590 157.2% 1,030 2,052 99.3%
Tax 75 193 157.9% 332 657 98.1%
Profit after tax/(loss) 155 397 156.9% 698 1,395 99.8%
Net profit margin (%) 7.5% 17.5%   11.2% 19.8%  
No. of shares (m)         301  
Diluted earnings per share (Rs)*         5  
Price to earnings ratio (x)*         23.9  
*On trailing 12 months earnings

What has driven performance in 3QFY10?
  • Jagaran Prakashan posted a topline growth of 10% YoY during 3QFY10 on the back of robust growth in advertising revenue of 9% and in circulation revenue of 8% over 3QFY09.

  • The company’s EBITDA margins improved from 15% in 3QFY09 to 29% during the quarter due to low newsprint prices and cost control. This is reflected in the 13% (as a percentalge of sales) decline in raw material costs.

    Cost break-up
    (Rs m) 3QFY09 3QFY10 Change
    Raw materials 879 674 -23.4%
    % sales 42.5% 29.7%  
    Staff cost 280 304 8.6%
    % sales 13.5% 13.4%  
    Other expenditure 610 639 4.7%
    % sales 29.5% 28.2%  
    Total cost 1,769 1,616 -8.7%
    % sales 85.5% 71.2%  

  • Jagran Prakashan’s revenue from out-of-home advertising and event management grew by 28% YoY this quarter to Rs 210 m. Other income as a whole grew by 55% during 3QFY10.

  • The company launched three more editions of City Plus from Navi Mumbai, Bengaluru and Pune. Another edition was lauched in Hyderabad in January taking the total number of editions of City Plus to 21.

What to expect?
Jagran Praksahan continues to be the leading newspaper company in the country. It is also witnessing a rise in circulation numbers. As it is more of a local player, the impact of slowdown was less than its peers. It has been unable to pass the price of higher newsprint costs and any further price hikes also seems doubtful. However, the benefit of softening newsprint prices have continued from the preceeding quarter. At the current share price of Rs 128, the company is trading at 19 times it estimated FY12 earnings. We would advice against adding fresh positions in the stock at this juncture.

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