1QFY2014 Result Update | Media August 5, 2013

Jagran Prakashan
Performance Highlights
Quarterly data (Standalone)
(` cr) Revenue EBITDA OPM (%) PAT
Source: Company, Angel Research

BUY
CMP Target Price
% yoy 21.2 28.6 151bp 6.6 4QFY13 334 45 13.6 39 %qoq 15.1 123.1 1,275bp 54.2

`89 `116
12 Months

1QFY14 385 101 26.3 59

1QFY13 318 79 24.8 56

Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Media 2,946 269 0.5 118/80 25,373 2 19,164 5,678 JAGP.BO JAGP@IN

For 1QFY2014, Jagran Prakashans (JPL) top-line performance was better than our estimates, growing by 21.2% yoy to `385cr (our estimate was of `358cr). The OPM expanded by 151bp yoy to 26.3% while profit came in at `59cr (our estimate of `52cr). However, Nai Dunias financials have been included in 1QFY2014s results. Hence, comparing on like to like (LTL) basis, the top-line grew by 12.5% yoy while net profit grew by 9.0% yoy to `59cr. JPL incurred a mark to market (MTM) forex loss of `13cr in the quarter, which the company expects to reverse in the coming quarters. Ad revenue up 12.8% yoy & circulation revenue up 14.7% yoy on LTL basis: Advertising revenue is up 12.8% yoy to `269cr on LTL basis (standalone advertising revenue up 21.7% yoy), primarily driven by yields. Circulation revenue is up by 14.7% yoy to `80cr on LTL basis (standalone circulation revenue up 24.0% yoy) due to combination of yield and volume growth. Losses in emerging editions weigh on margins: Although JPLs flagship daily Dainik Jagrans margin expanded by 652bp yoy to 36.7%, increase in EBITDA losses of other publications from `6cr in 1QFY2013 to `12cr in 1QFY2014 pulled down consolidated margins to 26.3%. Nai Dunia and Mid-Day publications are in investment phase and hence the losses are expected to continue. The Management expects Mid-Day to break even by the end of FY2014 and Nai Dunia by the end of FY2016. Outlook and valuation: At the current market price, JPL is trading at 11.4x FY2015E consolidated EPS of `7.8. We maintain our Buy view on the stock with a target price of `116, based on 15x FY2015E EPS. Downside risks to our estimates include 1) sharp rise in newsprint prices, 2) higher-than-expected losses on account of increase in turnaround period for Nai Dunia/ Mid-day.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 61.6 12.3 12.8 13.3

Abs. (%) Sensex JAGP

3m (2.1) (3.7)

1yr 11.0

3yr 6.0

(2.8) (26.9)

Key financials (Consolidated)

Y/E March (` cr) Net Sales % chg Net Profit % chg OPM (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x) FY2011 1,221 29.6 210 19.4 29.2 6.6 13.4 4.0 31.6 33.6 2.3 7.9 FY2012 1,356 11.0 178 (15.1) 21.9 5.6 15.7 3.7 24.5 18.6 2.3 10.7
nd

FY2013E 1,526 12.5 255 43.1 19.2 8.1 11.0 3.0 30.3 11.4 2.0 10.5

FY2014E 1,683 10.3 207 (19.0) 22.3 6.5 13.6 2.8 21.3 18.2 1.8 8.1

FY2015E 1,845 9.6 246 18.8 23.7 7.8 11.4 2.5 23.0 20.7 1.6 6.8
Amit Patil 022-39357800 Ext: 6839 amit.patil@angelbroking.com

Source: Company, Angel Research Note: CMP as on 2 August, 2013.

Please refer to important disclosures at the end of this report

Jagran Prakashan | 1QFY2014 Result Update

Exhibit 1: Quarterly performance (Standalone)

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM Interest Depreciation Other Income PBT (excl. Ext Items) Ext Income/(Expense) PBT (incl. Ext Items) (% of Sales) Provision for Taxation (% of PBT) Recurring PAT PATM Reported PAT Equity shares (cr) FDEPS (`)
Source: Company, Angel Research

1QFY14 385 132 34.4 52 13.5 99 25.8 283 101 26.3 7 17 (1) 77 77 20.0 18 23.0 59 15.4 59 32 1.9

1QFY13 318 113 35.7 41 12.9 84 26.5 239 79 24.8 8 15 (1) 56 56 17.6 0 0.0 56 17.6 56 32 1.8

% yoy 21.2 16.7 26.5 17.7 18.7 28.6 (10.2) 12.1 38.4 38.4

4QFY13 334 124 37.1 49 14.7 116 34.6 289 45 13.6 7 19 19 40 (1.73) 38 11.4 (0) (1.1)

% qoq 15.1 6.8 5.6 (14.3) (1.9) 123.1 4.3 (10.7) 93.7 102.5

FY13 1,376 506 36 196 13 414 30 1,115 261 19.0 29 69 57 220 (2) 218 15.8 (0) (0.2)

FY12 1,216 428 34 160 13 343 27 932 284 23.4 15 66 54 258 0 258 21.2 78 30.3 180 14.8 180 32 5.7

% chg 13.2 18.1 22.1 20.5 19.7 (8.2) 97.9 5.8 5.9 (14.8) (15.4) (100.5) 22.5 21.6 21.6

6.6 6.6 6.6

40 12.0 39 32 1.2

47.6 54.2 54.2

220 16.0 218 32 6.9

Top-line performance driven by healthy ad growth

For 1QFY2014, JPLs top-line performance was better than our estimates, growing by 21.2% yoy to `385cr (our estimate of `358cr), driven by a 21.7% yoy growth in advertising revenue to `269cr. However, Nai Dunias financials have been included in 1QFY2014 results. Hence, comparing on like to like (LTL) basis, the top-line grew by 12.5% yoy to `385cr, driven by 12.8% yoy growth in advertising revenue to `269cr. Strong advertising growth was mainly driven by increase in ad yield with good performance from all sectors except BFSI (excluding banks) and entertainment sector. Nai Dunia reported a robust growth, with advertising revenue growing by 27% yoy. However, Mid-Days advertising revenues suffered due to closing down of retail markets for 7 to 8 days in Mumbai.

August 5, 2013

Jagran Prakashan | 1QFY2014 Result Update

Exhibit 2: Double-digit top-line growth...

450 400 350 300
( ` cr)

Exhibit 3: ...driven by 21.7% yoy ad revenue growth

21 25 20 15
(%) ( ` cr)

300 250 200 150 100 50 221220 239 228

269

12

10

14

10

10

250 200 150

298 305 317 303 318 322 342 334

10
385

100 50 -

5 -

76 79 64 67 70 26 29 33 31 28

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

Ad-revenue 1Q13 2Q13 Circulation revenue Non-publishing business 3Q13 4Q13 1Q14

Top-line (LHS)

yoy (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Robust growth in circulation revenue

Circulation revenue grew by 14.7% yoy to `80cr on LTL basis (standalone circulation revenue up 24.0% yoy) due to combination of yield and volume growth. The Management indicated at an increase in circulation yield for Dianik Jagran and Inext and volume growth for Nai Dunia and Mid-Day Gujrati.

Exhibit 4: Gross margin and OPM expansion...

80 70 60 50
(%)

Exhibit 5: ...led to 6.6% yoy growth in net profit

80
66

67

65

64

64

64

66

66

63

70 60 50
( ` cr)

52 12 (18) (22) 2

60 7

(11)

40 30 20 10 -

25

26

25

19

25

24

25 14

26

40 30 20
50 46 41 43 56 69 66

39

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

OPM

Gross margins

PAT (LHS)

yoy growth (RHS)

Source: Company, Angel research

Source: Company, Angel research

Losses in emerging editions weigh on margins

Although JPLs flagship daily Dainik Jagrans margin expanded by 652bp yoy to 36.7%, increase in EBITDA losses in other publications from `6cr in 1QFY2013 to `12cr in 1QFY2014 and MTM forex loss of `13cr in the quarter pulled down consolidated margins to 26.3% (however, margin has expanded by 151bp yoy). The Management expects to reverse the MTM forex loss in the coming quarters. Nai Dunia and Mid-Day publications are in investment phase and hence the losses are expected to continue. The Management expects Mid-Day to break even by the end of FY2014 and Nai Dunia by end of FY2016.

August 5, 2013

1Q14

59

10

(%)

(6)

70 60 50 40 30 20 10 (10) (20) (30)

Jagran Prakashan | 1QFY2014 Result Update

Investment rationale
Healthy ad revenue growth: JPLs ad revenue grew by ~12.6% yoy to `939cr in FY2013. Unlike its peers, JPL continues to post good growth in national advertising revenue due to innovative terms of offerings and presentation of advertisements. For FY2014, we expect ad revenue to grow by 10-12% yoy driven by increase in ad yields. Recent acquisitions to fuel growth: JPL acquired the print business from Mid-Day Multimedia, which has presence in markets such as Mumbai, Delhi, Bangalore and Pune. It also acquired Suvi Info Management, the publisher of Nai Dunia, which is present in markets such as Madhya Pradesh and Chhattisgarh. These acquisitions are likely to fill the gap in JPLs portfolio vs its peers HT Media (HT and Hindustan) and DB Corp (Dainik Bhaskar and DNA), which offer English and Hindi publications to their advertisers. With JPLs wider portfolio, we believe the company is well poised to benefit from the steady growth in the print media space.

Outlook and valuation

At the current market price, JPL is trading at 11.4x FY2015E consolidated EPS of `7.8. We maintain our Buy view on the stock with a target price of `116, based on 15x FY2015E EPS. Downside risks to our estimates include 1) sharp rise in newsprint prices, 2) higher-than-expected losses on account of increase in turnaround period for Nai Dunia/ Mid-day.

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Jagran Prakashan | 1QFY2014 Result Update

Exhibit 6: Peer valuation

Company HT Media JPL DB Corp. Reco Buy Buy Buy Mcap (` cr) 2276 2807 4452 CMP (`) 97 89 243 TP (`) 117 116 302 Upside (%) 21 31 24 P/E (x) FY14E 11.7 13.6 16.7 FY15E 10.5 11.4 14.1 EV/Sales (x) FY14E 0.7 1.7 2.4 FY15E 0.5 1.5 2.1 RoE (%) FY14E 11.6 21.3 23.9 FY15E 11.6 23.0 24.2 CAGR Sales 7.8 10.0 11.2 PAT 14.0 20.4

Source: Company, Angel Research

Exhibit 7: Angel vs. consensus estimates

Top line (` cr) Angel estimates Consensus Diff (%)
Source: Company, Angel Research

FY2014E 1,683 1,694 (0.6)

FY2015E 1,845 1,894 (2.6)

EPS (`) Angel estimates Consensus Diff (%)

FY2014E 6.5 6.7 (2.4)

FY2015E 7.8 7.8 (0.4)

Exhibit 8: Return of JPL vs. Sensex

250% 230% 210% 190% 170% 150% 130% 110% 90% 70% 50% 30% 10% -10% Sensex Jagran

Exhibit 9: One-year forward P/E band

180 160
Share Price (`)
9x 12x 15x 18x

140 120 100 80 60 40 20

Jul-10 Nov-10 Sep-10

Sep-12

Sep-10

Sep-11

Jul-10

Jul-11

May-11

Jul-12

May-13

May-12

Jan-11

Jan-12

Mar-11

Mar-12

Jan-13

Nov-10

Nov-11

Nov-12

Mar-13

Jul-13

Jan-11

Jan-12

Mar-11

Mar-12

Jan-13

Mar-13

Jul-11

Jul-12

Nov-11

Nov-12

Sep-11

May-12

Sep-12

Source: Company, Angel Research

Source: Company, Angel Research

Company Background
Dainik Jagran with AIR of ~16.4mn is the most read newspaper in India published by Jagran Prakashan (JPL). The company enjoys a leadership position in Uttar Pradesh, the largest Hindi market for almost a decade now. The company is present in the rapidly growing Hindi markets in Bihar, Delhi, Haryana, Jharkhand, Punjab and Uttar Pradesh. Apart from its commanding position in print media, JPL is also present in the internet, OOH and event management businesses.

August 5, 2013

May-13

May-11

Jul-13

Jagran Prakashan | 1QFY2014 Result Update

Profit & Loss Statement (Consolidated)

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Total operating income % chg Total Expenditure Cost of Materials SG&A Expenses Personnel Others EBITDA % chg (% of Net Sales) Depreciation& Amortization EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Share in profit of Associates Recurring PBT % chg Prior Period & Extra Exp/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earnings. of asso. Less: Minority interest (MI) PAT after MI (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg
previous year numbers

FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E 942 942 942 14.4 660 296 99 121 144 282 80.1 30.0 51 232 95.6 24.6 7 34 13.2 259 92 259 83 32 176 176 176 92.0 18.7 5.8 5.6 92.0 1,221 1,221 1,221 29.6 865 359 134 173 199 356 26.3 29.2 65 291 25.7 23.8 9 26 8.4 308 19 2 306 98 32 208 208 210 19.5 17.2 6.6 6.6 19.4 1,356 1,356 1,356 11.0 1,059 461 164 194 240 296 (16.9) 21.9 71 225 (22.6) 16.6 16 46 18.0 256 (17) 256 77 30 178 178 178 (15.1) 13.2 5.6 5.6 (15.1) 1,526 1,526 1,526 12.5 1,232 544 194 227 267 293 (0.9) 19.2 126 168 (25.5) 11.0 31 119 46.3 256 0 256 0 0 255 255 255 43.0 16.7 8.1 8.1 43.1 1,683 1,683 1,683 10.3 1,308 549 214 251 295 375 27.9 22.3 102 274 63.0 16.3 28 42 14.6 287 12 287 80 28 207 207 207 (19.0) 12.3 6.5 6.5 (19.0) 1,845 1,845 1,845 9.6 1,407 562 249 269 327 438 16.7 23.7 110 327 19.7 17.7 27 51 14.5 351 22 351 105 30 246 246 246 18.8 13.3 7.8 7.8 18.8

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

August 5, 2013

Jagran Prakashan | 1QFY2014 Result Update

Balance Sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Other long term liablities Long term provisions Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Long term loans and adv. Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Other non CA Total Assets
previous year numbers

FY2010 FY2011 60 552 612 121 58 63 639 702 174 62 6 792 564 194 369 25 167 417 85 98 235 186 231 792 944 730 257 473 52 200 134 519 35 55 429 303 217 3 944

FY2012 FY2013E 63 689 752 8 643 70 6 9 1,488 1,217 351 865 66 248 137 666 100 63 504 368 298 11 1,488 63 869 932 1 462 70 13 8 1,487 1,304 477 827 80 222 148 609 52 7 550 314 296 62 1,487

FY2014E 63 946 1,009 429 78 13 8 1,538 1,451 578 872 73 207 165 675 68 7 601 352 323 62 1,538

FY2015E 63 1,061 1,124 414 78 13 8 1,638 1,577 689 888 79 215 165 766 108 16 643 372 394 62 1,638

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

August 5, 2013

Jagran Prakashan | 1QFY2014 Result Update

Cashflow Statement
Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Interest / Dividend (Net) Direct taxes paid Others Cash Flow from Operations (Inc.)/ Dec. in Fixed Assets (Inc.)/ Dec. in Investments Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Interest / Dividend (Net) Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances
previous year numbers

FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E 259 51 (12) (9) 83 (21) 185 (38) (10) (48) (20) 123 (9) (135) 2 83 85 310 65 (37) (3) 98 (1) 238 (181) (29) (210) 53 128 (3) (73) (46) 85 35 256 71 (14) 0 77 (3) 233 (149) (79) (228) 185 129 (3) 59 65 35 100 256 126 (7) 13 0 (97) 289 (101) 26 (76) (181) 67 13 (261) (47) 100 52 287 102 (65) 8 80 59 311 (139) 15 (124) (33) 130 8 (171) 16 52 68 351 110 (31) 7 105 332 (133) (8) (141) (15) 130 7 (152) 40 68 108

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

August 5, 2013

Jagran Prakashan | 1QFY2014 Result Update

Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post-tax) Leverage (x) Operating ROE Returns (%) RoCE Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover Inventory / Sales (days) Receivables (days) Payables (days) Net Working capital (days) Solvency ratios (x) Net Debt to equity Net Debt to EBITDA Interest Coverage
previous year numbers

FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E 16.0 11.8 4.4 3.9 3.0 10.1 3.6 5.8 5.6 7.5 3.5 20.3 24.6 0.7 1.8 29.8 3.4 (0.2) 29.8 30.0 43.9 30.0 1.7 21 70 50 57 (0.2) (0.5) 35.3 13.4 10.3 4.0 3.9 2.3 7.9 3.0 6.6 6.6 8.6 3.5 22.2 23.8 0.7 2.0 32.0 4.2 (0.1) 31.9 33.6 46.8 31.6 1.7 19 69 52 52 (0.1) (0.2) 32.1 15.7 11.3 3.7 3.9 2.3 10.7 2.1 5.6 5.6 7.9 3.5 23.8 16.6 0.7 1.5 17.1 2.7 0.2 17.2 18.6 24.6 24.5 1.1 21 78 64 51 0.4 1.0 14.3 11.0 7.4 3.0 2.1 2.0 10.5 2.1 8.1 8.1 12.0 1.8 29.5 11.0 1.0 1.3 14.3 5.5 0.3 14.4 11.4 14.4 30.3 1.2 21 73 56 56 0.2 0.6 5.5 13.6 9.1 2.8 3.9 1.8 8.1 2.0 6.5 6.5 9.8 3.5 31.9 16.3 0.7 1.4 16.0 4.6 0.2 16.0 18.2 22.3 21.3 1.2 21 73 59 54 0.2 0.4 9.7 11.4 7.9 2.5 3.9 1.6 6.8 1.8 7.8 7.8 11.3 3.5 35.5 17.7 0.7 1.4 17.9 4.5 0.1 17.9 20.7 25.6 23.0 1.2 21 73 58 55 0.1 0.2 12.0

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

August 5, 2013

Jagran Prakashan | 1QFY2014 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Jagran No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

August 5, 2013

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