Jag. Prak.: Subscriptions top ad growth - Views on News from Equitymaster

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Jag. Prak.: Subscriptions top ad growth

Jul 31, 2012

Jagran Prakashan has announced results for first quarter of financial year 2012-2013. The company has reported a 4.2% YoY growth in sales and a 12.1% growth in net profits. Here is our analysis of the results.

Performance summary
  • Top line increased by 4.2% YoY during the quarter helped by 8% YoY growth in advertising revenue despite unfavourable economic conditions. Subscriptions registered an increase of 10% YoY.
  • Operating expenses grew by 7.5% YoY resulting in operating profits falling by 4.6% YoY. Operating margins fell by 2.3% in June quarter.
  • Interest expenses were higher by 175% YoY on account of recent acquisition of Nai Dunia.
  • Net profit for the quarter was up by 12.1% YoY.

Standalone financial snapshot
(Rs m) 1QFY12 1QFY13 Change
Net sales 3,046 3,175 4.2%
Expenditure 2,220 2,387 7.5%
Operating profit (EBDITA) 826 788 -4.6%
EBDITA margin (%) 27.1% 24.8%  
Other income 72 (7) -110.1%
Interest 28 76 175.2%
Depreciation & amortisation 150 148 -1.6%
Profit before tax 720 557 -22.6%
Profit before tax margin (%) 23.6% 17.6%  
Tax 223 - -100.0%
Profit after tax 497 557 12.1%
Net profit margin (%) 16.3% 17.6%  
No. of shares (m)     316.27
Diluted earnings per share (Rs)*     5.87
P/E (x)     14.82
*12 months trailing earning

What has driven performance in 1QFY13?
  • Jagran continued to perform better than its peers in the advertising segment and grew its advertising revenue by 8% YoY. Circulation revenues were up by 10% YoY.

  • Rising newsprint costs because of a falling rupee resulted in higher operating expenditure for the quarter. The recorded risein operating expenditure was 7.5% YoY.

  • Operating profits fell by 4.6% YoY and operating margins fell by 2.3% in June quarter.

  • Interest expenses were higher by 175% YoY on account of recent acquisition of Nai Dunia. The debt to equity ratio stood at 0.86 times in March 2012.

  • Net profit for the quarter was up by 12.1% YoY. Net profit margins expanded by 1.2% during the quarter.

    Cost breakup
    (% of sales) 1QFY12 1QFY13 Change
    Raw materials consumed 989 1,135 14.7%
    % sales 32.5% 35.7%  
    Staff cost 393 410 4.5%
    % sales 12.9% 12.9%  
    Other expenses 838 842 0.5%
    % sales 27.5% 26.5%  
    Total expenditure 2,220 2,387  

What to expect?
Jagran has yet again beaten its peers in advertising revenue growth. As per the management, their innovative solutions are helping them perform better than the overall industry. Jagran Prakashan's recent acquisition of Nai Dunia which earlier belonged to Suvi Infomanagement Private Ltd seems to be bringing in more revenues for the company. The Nai Dunia brand benefitted in terms of lower newsprint cost and higher revenue from the national market which was earlier negligible. Mid Day continues to do well with all three publications namely Mid Day, Mid Day Gujrati and Inquilab bringing in more readership. For Nai Dunia, Jagran does not have any ambitious expansion plans in mind and wants to focus on the existing editions. At Rs 87, the stock is trading at 11 times our expected FY15 earnings. Keeping in mind the uncertain economic environment for some more time to come, we maintain our Hold view on the stock.

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Jun 23, 2021 (Close)


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