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Jagran Prakashan: Strong bounce back - Views on News from Equitymaster

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Jagran Prakashan: Strong bounce back

Aug 1, 2009

Performance summary
  • Topline increases by 12% YoY during 1QFY10 led by better than expected advertising revenues.
  • EBITDA margins improved from 24% in 1QFY09 to 30% during the quarter due to low newsprint prices and cost control.
  • Other income, which includes revenues from outdoor advertising, event management activity and short code services increases by 149% YoY during 1QFY10.
  • Bottomline grows by 56% YoY during the quarter on account of topline growth, expansion in margins and higher other income.

Standalone financial snapshot
(Rs m) 1QFY09 1QFY10 Change
Net sales 2,065 2,319 12.3%
Expenditure 1,568 1,614 2.9%
Operating profit (EBDITA) 496 705 42.0%
EBDITA margin (%) 24.0% 30.4%  
Other income 63 157 148.7%
Interest 10 14 39.0%
Depreciation 84 124 48.0%
Profit before tax 466 724 55.5%
Tax 150 229 53.4%
Profit after tax/(loss) 316 495 56.4%
Net profit margin (%) 15.3% 21.4%  
No. of shares (m)   301.2  
Diluted earnings per share (Rs)*   3.6  
Price to earnings ratio (x)*   25.7  
*On trailing 12 months earnings

What has driven performance in 1QFY10?
  • Jagran Prakashan clocked advertisement revenues of Rs 1.6 bn in 1QFY10, up by 14.9% from Rs 1.4 bn in 1QFY09. It also received circulation revenues of Rs 545 m in 1QFY10, up by 14.1% from Rs 478 m in the corresponding period last year. Sales of Dainik Jagran, the company’s flagship Hindi newspaper was higher by 3.5% during the quarter, in terms of number of copies sold per day.

  • On the cost front, Jagran Prakahan benifited from lower newsprint prices and better cost control. This is reflected in lower cost of raw materials, which declined by 4% YoY in 1QFY10 on an absolute basis and by 5% as a percentage of sales.

    Cost break-up
    (Rs m) 1QFY09 1QFY10 Change
    Raw materials 731 701 -4.0%
    % sales 35.4% 30.2%  
    Staff cost 255 289 13.6%
    % sales 12.3% 12.5%  
    Other expenditure 583 623 6.8%
    % sales 28.2% 26.9%  
    Total cost 1,568 1,614 2.9%
    % sales 76.0% 69.6%  

  • Other income, which includes revenues from outdoor advertising, event management activity and short code services, increases by 149% YoY during 1QFY10.

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 started kicking in and are likely to continue in the forthcoming quarters. At the current share price of Rs 94, the company is trading at 25.7 times it trailing 12 months earnings and 15.4 times our estimated FY11 earnings. We shall soon update our view on the stock.

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Feb 19, 2019 (Close)


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