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Jagran Prak.: Subcriptions outgrow ads
Nov 2, 2011

Jagran Prakashan has announced results for second quarter of financial year 2011-2012. The company has reported a 10.3% YoY growth in sales and a 17.5% fall in net profits. Here is our analysis of the results.

Performance summary
  • Top line increased by 10.3% YoY during the quarter. For the 6 months ended September 2011, top line grew by 11.6%.
  • EBITDA margins declined by nearly 6% YoY during the quarter and by 6.6% during the half year period.
  • Net profits fell by 17.5% in this quarter. The same fell by 14% for the 6 month period.

Standalone financial snapshot
(Rs m) 2QFY11 2QFY12 Change 1HFY11 1HFY12 Change
Net sales 2,769 3,054 10.3% 5,467 6,101 11.6%
Expenditure 1,881 2,263 20.3% 3,656 4,483 22.6%
Operating profit (EBDITA) 888 791 -10.9% 1,810 1,617 -10.7%
EBDITA margin (%) 32.1% 25.9% 6.2% 33.1% 26.5% -6.6%
Other income 85 40 -53.5% 121 111 -8.6%
Interest 14 29 103.7% 26 56 113.6%
Depreciation & amortisation 133 160 20.7% 258 310 20.4%
Profit before tax 826 642 -22.3% 1,648 1,362 -17.3%
Profit before tax margin (%) 29.8% 21.0%   30.1% 22.3%  
Tax 271 184 -32.1% 537 407 -24.2%
Profit after tax 555 458 -17.5% 1,111 955 -14.0%
Net profit margin (%) 20.1% 15.0%   20.3% 15.7%  
No. of shares (m)         316.27  
Diluted earnings per share (Rs)*         6.3  
P/E (x)         17.1  
(*trailing twelve month earnings)

What has driven performance in 2QFY12?
  • Jagran Prakashan reported a growth of 10.3% in its revenues for the quarter. This was led by healthy growth in both advertising and circulation (subscription) revenues. Subscription growth (11.6%) topped the growth in the advertisement segment (9.5%). Jagran Prakashan had recently launched "Jagran Punjabi" for which the company had to incur initial launch expenses. This along with the forex loss of Rs 0.13 bn affected the earnings.

  • The other businesses like outdoor and events grew at a decent pace. Event and outdoor revenues were up by 8.8% and digital revenue up by 7.8%. However, these businesses have not grown at the extra ordinary rates observed in Q1FY12.

  • Higher newsprint costs resulted in raw material cost going up by 34% YoY. Employee costs were contained to 12% of sales. For the half year period, raw material cost was up by 32.5% and employee costs by 9.6%. Operating profits thus fell by 10.9% during the quarter and by 10.7% during the 6 month period.

  • Higher depreciation charges (up by 21%) and interest costs (up by 104%) further added pressure on the bottom line which fell by 17.5% during the quarter. It fell by 14% during the year so far.


Cost break-up
(% of sales) 2QFY11 2QFY12 Change 1HFY11 1HFY12 Change
Raw materials consumed 801 1,075 34.2% 1,558 2,065 32.5%
% sales 28.9% 35.2%   28.5% 33.8%  
Staff cost 354 376 6.2% 701 768 9.6%
% sales 12.8% 12.3%   12.8% 12.6%  
Other expenses 726 812 11.9% 1,398 1,651 18.1%
% sales 26.2% 26.6%   25.6% 27.1%  
Total expenditure 1,881 2,263   3,656 4,483  

What to expect?
At Rs 108, the stock is trading at 15 times our expected FY14 earnings. The Indian economy is showing signs of slowdown in growth. Macro economic conditions have not been favourable for the media companies in particular. This is because their advertisement revenues have suffered. With newsprint prices expected to come down in the future, the print media companies are set to benefit. We maintain our negative view on the stock.At Rs 108, the stock is trading at 15 times our expected FY14 earnings. The Indian economy is showing signs of slowdown in growth. Macro economic conditions have not been favourable for the media companies in particular. This is because their advertisement revenues have suffered. With newsprint prices expected to come down in the future, the print media companies are set to benefit. We maintain our negative view on the stock.

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Feb 20, 2018 11:23 AM

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