X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Jagran Prakashan: Will acquisitions help? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Jagran Prakashan: Will acquisitions help?
Feb 22, 2012

The Print Media industry is ailing, and so undergoing a consolidation phase which will result in a few large players.

In this context, Print Media companies have been trying to establish a stronger hold in their existing markets as well as venture into newer geographies and newer markets in existing states.

The organic way to expand is to build from one's existing base. DB Corp, Jagran's main competitor, did this by launching new editions using internal branding and resources. Alternatively, a company can grow inorganically by acquiring other businesses.

We believe that Jagran Prakashan is moving towards a pan India presence. This seems likely since its primary competitor DB Corp. has expanded to different parts of the country (e.g. Maharashtra). Our analysis indicates that Jagran's strategy is to grow inorganically by acquiring companies. This approach was evident from its acquisition of Mid-Day Infomedia Ltd. (Mid-Day Multimedia Ltd.'s Print Media business) in 2010. Continuing with this same strategy, Jagran is now planning to acquire Nai Dunia. It is interesting to understand the implications that this acquisition would have on Jagran Prakashan.

Nai Dunia Acquisition - Increasing Market Share in Madhya Pradesh (MP) - Nai Dunia was founded by Babu Lalchand Chhajlani and Shri Basant Lal Sethia in 1974 in Indore. It is a Hindi newspaper that is published in 14 cities including Delhi, Indore, Bhopal, Gwalior, Jabalpur, Raipur and Bilaspur. In terms of readership numbers (Source: Indian Readership Survey), after Dainik Bhaskar, Nai Dunia is the second most widely read newspaper in MP. With the acquisition of Nai Dunia, Jagran is after a larger share of this market, and wants to compete more aggressively with the current leader - Dainik Bhaskar. The acquisition of Nai Dunia seems well thought out and is consistent with Jagran's inorganic growth strategy.

Jagran's Pan Expansion Strategy - As mentioned earlier, Jagran's seems to be moving towards a pan India presence for its Print Media business. As per the latest FICCI KPMG report, regional print will witness higher growth than Hindi/English print over next couple of years. Also, the acquisition of Mid-Day paved Jagran's entry into another new market area, the afternoon newspaper segment.

So beyond its strength in the UP market, and expansion in Madhya Pradesh, Jagran recently launched "Jagran Punjabi", a newspaper in Punjabi that caters to the Punjab market..

To further capitalize on this regional growth opportunity, Jagran recently launched "Inquilab" its Urdu daily from Lucknow. Inquilab was earlier a part of Mid-Day. The Urdu newspaper is expected to enter other markets of Uttar Pradesh, Bihar and Delhi soon.

Acquisition Valuation and Assessment - When Jagran bought Mid-Day Infomedia, the print business of Mid-Day Multimedia in 2010, it was valued at Rs. 1.75 bn, implying a price-earnings multiple of around 18.5. The acquisition was done via a share swap deal. For every 7 shares held in Mid-Day, Mid-Day shareholders got 2 shares of Jagran Prakashan. Our assessment is that the premium Jagran paid for Mid-Day Infomedia was nullified to the extent that shares of Jagran were themselves quoting at a premium to its intrinsic value at the time of deal. The acquisition entailed dilution in Jagran Prakashan's outstanding shares to the tune of 5%. For buying out Nai Dunia, we anticipate similar valuation and dilution.

We believe that inorganic growth via acquiring businesses is a better strategy than to grow organically from within only. Organic (internal) growth takes longer and it requires the company to spend heavily on the acquisition of assets, as well as initial start-up expenses. It is easier to turnaround an existing loss making entity into a profitable one than to launch newer editions.

Overall, the ailing Print Media industry is in a consolidation phase. Consolidation is good for the overall industry as it reduces the number of players in the market and eventually allows consumers to get better and more cost effective service. Consolidation will augment the profits of the existing players and consequently increase their pricing power. The newspaper companies that had to resort to lowering of cover prices will be able to hike their prices in the future, thus stabilizing their business models.

In this industry with heightened competition, we believe that Jagran intends to gain a pan India presence and its strategy to grow inorganically via acquisition seems to be the right approach.

Equitymaster requests your view! Post a comment on "Jagran Prakashan: Will acquisitions help?". Click here!

  

More Views on News

JAGRAN PRAKASHAN Announces Quarterly Results (4QFY18); Net Profit Down 17.3% (Quarterly Result Update)

Jun 11, 2018 | Updated on Jun 11, 2018

For the quarter ended March 2018, JAGRAN PRAKASHAN has posted a net profit of Rs 627 m (down 17.3% YoY). Sales on the other hand came in at Rs 5 bn (up 17.3% YoY). Read on for a complete analysis of JAGRAN PRAKASHAN's quarterly results.

GTPL Hathway Ltd. (IPO)

Jun 21, 2017

Should one subscribe to the IPO of GTPL Hathway Ltd?

S Chand and Company Ltd. (IPO)

Apr 26, 2017

Should you subscribe to the IPO of S Chand and Company Limited?

More Views on News

Most Popular

The Real Truth About India's FDI, Beyond WhatsApp(Vivek Kaul's Diary)

Jul 4, 2018

The FDI numbers do not look very impressive once we adjust for repatriations as well as the overall growth in the economy.

How to Avoid a 90% Loss Suffered by This Super Investor(The 5 Minute Wrapup)

Jul 12, 2018

Blindly following super investors is a dangerous game to play. Here's how you can avoid such mistakes.

The Answer to Your Wealth Worries: Small Caps (Especially Now)(Profit Hunter)

Jul 10, 2018

If you're worried about the markets - you are on the wrong track. This is opportunity - put your wealth-building hat on, instead - Richa shows you how...

New Fund Offer - ICICI Prudential Pharma Healthcare and Diagnostics Fund - Should You Invest?(Outside View)

Jul 6, 2018

ICICI AMC launches an open -ended equity fund following Pharma, Healthcare, Diagnostic and allied theme.

When Disappointment Panda is Around. Buy Quality Stock like This!(Chart Of The Day)

Jul 6, 2018

Buy Companies that can fight all kinds of Pandas and Bears in the long run.

More

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

JAGRAN PRAKASHAN SHARE PRICE


Jul 17, 2018 (Close)

TRACK JAGRAN PRAKASHAN

  • Track your investment in JAGRAN PRAKASHAN with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MORE ON JAGRAN PRAKASHAN

JAGRAN PRAKASHAN - CTC MEDIA COMPARISON

COMPARE JAGRAN PRAKASHAN WITH

MARKET STATS