Jagran Prakashan: An overview - Views on News from Equitymaster

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Jagran Prakashan: An overview

Apr 4, 2007

Overview-Financial Year 2005-06: Founded in 1942,Jagran Prakashan Pvt Ltd commands leadership position in newspaper media across all languages. The company went public in FY06. JPL's flagship newspaper- Dainik Jagran is the first newspaper in the country to cross the 20 million-readership mark. The company derives most of its income from advertising revenues. However, the company faces competition from other forms of media, such as, television, radio and websites. Jagran Prakashan Ltd(JPL) is the first print media Company having an overseas (European) strategic partner.Product Analysis: IRS (Indian Readership Survey) has ranked Dainik Jagran No.1 for past six years in a row. Even NRS (National Readership Survey) ranks Dainik Jagran No.1 for past two years. Dainik Jagran has more than 25 editions, thus widening its spread over a wider consumer base. Jallandhar, Ludhiana and Amritsar are some of the successful editions the company boasts of. Dainik Jagran provides news as also value added articles related to health, sports, entertainment, travel, lifestyles etc. through its supplements. 'Dainik Jagran' has also been termed as one of the "SUPER BRANDS" of the country. JPL provides promotional marketing, event management services and has outdoor advertising business. It has an Internet portal, which is the most visited Hindi portal. The Company also has Short Code Service (7272) for mobile phone users, a monthly magazine 'Sakhi' targeted at women, Jagran Varshiki, an annual general knowledge digest and various national and state statistical compilations.

Financial Performance: Between FY03 and FY06, the topline and the bottomline have grown at a CAGR of 24% and 26% respectively. Margins had dropped severely in FY05 but have recovered in FY06 and are expected to remain stable for the coming years. During the past few years, advertisement revenue grew at a CAGR of 23%. The company has a debt to equity ratio of 0.23 and interest coverage ratio of 6.4, leaving the company in a good position to cover its financial charges.

(Rs mn) FY03FY04FY05FY06CAGR* (%)
Net Sales 2,537 3,097 3,764 4,782 23.5%
Operating Profit 440 403 281 733 18.6%
OPM (%)17.3%13.0%7.5%15.3%
Interest67 66 88 96
PBT266 219 22 488
Tax91 71 8 141
PAT174 148 15 347 25.8%
NPM (%)6.9%4.8%0.4%7.3%
* (FY03-FY06)

Future Outlook: Given the expected growth in Indian economy, there is high potential for organic growth in the industry. Inorganic growth can also be expected due to the largely fragmented publication industry. The volume of advertisements in Hindi newspapers is increasing at a faster rate than in English newspapers. Sustained positioning of the brand "Dainik Jagran", brand loyalty, financial capacity, scale of operations, strategic overseas partnership are the key factors that will augment growth and create opportunities for the company. Aiming to increase market share, a second brand of low priced newspaper will be launched shortly. This move will create barriers to entry for any potential new low priced publications. Even if there is price competition, the company is financially strong to meet competition successfully.

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