JAGP’s 2QFY15 EBITDA grew 16% YoY to INR1.06b (vs est of INR1.04b), supported by high single-digit growth in print advertising/circulation revenue and lower ‘other expenses’.

1. 29 October 2014
2QFY15 Results Update | Sector: Media
Jagran Prakashan
Shobhit Khare (Shobhit.Khare@MotilalOswal.com); +91 22 3982 5428
BSE SENSEX
S&P CNX
CMP: INR127
TP: INR165
Buy
27,098
8,090
Bloomberg
JAGP IN
Equity Shares (m)
326.9
M.Cap. (INR b) / (USD b)
41.6/0.7
52-Week Range (INR)
140/79
1, 6, 12 Rel. Per (%)
1/0/22
Financials & Valuation (INR Million)
Y/E MAR
2015E
2016E
2017E
Net Sales
18.3
20.3
22.2
EBITDA
4.5
5.2
5.7
Net Profit
2.4
3.0
3.4
EPS (INR)
7.7
9.5
11.0
EPS Gr. (%)
20.1
23.2
16.0
BV/Sh(INR)
34.0
38.8
45.1
RoE (%)
23.8
26.1
26.3
RoCE (%)
16.8
18.8
19.6
D.payout(%)
60.7
49.3
42.5
Valuations
P/E (x)
16.5
13.4
11.5
P/BV (x)
3.7
3.3
2.8
EV/EBITDA (x)
9.1
7.7
6.7
D. Yield (%)
3.1
3.1
3.1
 JAGP’s 2QFY15 EBITDA grew 16% YoY to INR1.06b (vs est of INR1.04b), supported by high single-digit growth in print advertising/circulation revenue and lower ‘other expenses’.
 PAT grew 24% YoY to INR566m led by strong operating performance and higher other income, though offset by increased tax rate on a YoY basis. Tax rate increased 720bp YoY to 31% as the base period included tax benefits pertaining to the ‘Nai Duniya’ acquisition.
 Ad revenue increased 8% YoY to INR3.07b (vs est of INR3.07b). Circulation revenue grew 7% YoY to INR965m (vs estimate of INR992m).
 Consolidated revenue grew 5.4% YoY to INR4.36b (vs estimate of INR4.46b). The shortfall was largely on account of lower revenues from non-print segment.
 Consolidated EBITDA margin increased 220bp YoY to 24.4%. RM cost increased ~9% YoY to INR1.6b (36.7% of revenue). We expect newsprint prices to correct going forward.
 Other expenses declined 8% YoY on overall opex control, lower direct expenses in outdoor/event/digital and lower write-off/provision for bad debts.
Valuation and view
 Jagran’s 2QFY15 performance was broadly in line. We continue to expect strong earnings rebound in 2HFY15 led by acceleration in ad growth and decline in newsprint prices vs current levels.
 We are upgrading PAT estimates by 1-3% on higher margin assumptions. We expect proforma EPS CAGR of 19% over FY14-17E driven by 10% ad revenue CAGR and EBITDA margin expansion of ~310 bps.
 The stock trades at P/E of 16.5x FY15E and 13.4x FY16E. Maintain Buy with a price target of INR165 based on 16x average FY16/17 EPS.
Investors are advised to refer through disclosures made at the end of the Research Report.

2. 29 October 2014 2
Jagran Prakashan
Standalone ad/circulation revenue (including Nai Duniya from 4QFY13)
Source: Company, MOSL
Standalone YoY ad growth (%)
Source: Company, MOSL
Standalone EBITDA (incl Nai Duniya from 4QFY13)
Source: Company, MOSL
RM/Sales (Consolidated from 1QFY14)
Source: Company, MOSL
1,8981,9351,9451,8872,0432,1192,2352,1032,2072,1962,3932,2762,6852,6303,0002,6472,8802,8665535485705595826126236286416666997617958268618608969081QFY112QFY113QFY114QFY111QFY122QFY123QFY124QFY121QFY132QFY133QFY134QFY131QFY142QFY143QFY144QFY141QFY152QFY15 Advertising revenue (INR m)Circulation revenue (INR m) 18133120810151184701211151679 1QFY112QFY113QFY114QFY111QFY122QFY123QFY124QFY121QFY132QFY133QFY134QFY131QFY142QFY143QFY144QFY141QFY152QFY157058326536339029088977148207918516597887829115401013911109079710591033 30342927333331252726262125242616262425202625 1QFY102QFY103QFY104QFY101QFY112QFY113QFY114QFY111QFY122QFY123QFY124QFY121QFY132QFY133QFY134QFY131QFY142QFY143QFY144QFY141QFY152QFY15 EBITDA (INR m)EBITDA margin (%) 7016846746787568018639119891,0751,1351,0821,1351,1091,1791,2401,4161,4731,6271,5711,6271,603 30283029282930323235353536343436343636373737 1QFY102QFY103QFY104QFY101QFY112QFY113QFY114QFY111QFY122QFY123QFY124QFY121QFY132QFY133QFY134QFY131QFY142QFY143QFY144QFY141QFY152QFY15 RM cost (INR m)RM cost (% of rev)

3. 29 October 2014 3
Jagran Prakashan
Consolidated quarterly performance
2QFY14
1QFY15
2QFY15
YoY (%)
QoQ (%)
2QFY15E
v/s est (%)
Advertising revenue
2,842
3,089
3,069
8.0
-0.6
3,069
0.0
Circulation revenue
899
957
965
7.3
0.9
992
-2.7
Others
396
357
329
-17.0
-8.1
400
-17.9
Revenue
4,137
4,403
4,363
5.4
-0.9
4,461
-2.2
Total operating cost
3,219
3,333
3,300
2.5
-1.0
3,418
-3.4
EBITDA
918
1,070
1,062
15.7
-0.7
1,044
1.8
EBITDA margin (%)
22.2
24.3
24.4
215bps
4bps
23.4
96bps
Depreciation
190
238
245
29.0
3.1
238
3.1
EBIT
728
832
817
12.2
-1.8
806
1.4
Interest
78
84
73
-6.3
-12.3
84
-12.6
Other Income incl sale of property
-55
69
71
-229.1
3.2
79
-9.8
PBT
595
818
815
37.1
-0.3
801
1.8
Tax
139
267
249
79.7
NA
261
NA
Tax rate (%)
23
33
31
724bps
-209bps
33
-209bps
Reported PAT
456
551
566
24.1
2.8
539
4.9
Operating expenses (INR m)
Raw material
1,473
1,627
1,603
8.8
-1.5
1,578
1.6
Employee
603
648
646
7.3
-0.2
651
-0.7
Others
1,143
1,058
1,051
-8.0
-0.6
1,188
-11.6
Total
3,219
3,333
3,300
2.5
-1.0
3,418
-3.4
Opex (% of revenue)
Raw material
35.6
37.0
36.7
113bps
-21bps
Employee
14.6
14.7
14.8
25bps
10bps
Others
27.6
24.0
24.1
-354bps
7bps
Source: Company, MOSL
Summary of estimate change (INR b)
FY15E
FY16E
FY17E
Revenue
Old
18.52
20.61
22.51
New
18.32
20.34
22.16
Change (%)
-1.1
-1.3
-1.5
EBITDA
Old
4.38
5.06
5.60
New
4.52
5.15
5.66
Change (%)
3.0
1.9
1.1
EBITDA margin (%)
Old
23.7
24.5
24.9
New
24.6
25.3
25.5
Change (bp)
97
80
65
Adj. PAT
Old
2.33
2.89
3.39
New
2.40
2.96
3.43
Change (%)
3.1
2.3
1.2
Adj. EPS (INR)
Old
7.5
9.3
10.9
New
7.7
9.5
11.0
Change (%)
3.1
2.3
1.2
Source: Company, MOSL

4. 29 October 2014 4
Jagran Prakashan
Key assumptions & other data
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Group ad revenue (INR b)
6.4
8.5
9.4
10.5
11.9
13.0
14.5
15.8
YoY (%)
16
34
10
12
13
9
12
9
-Standalone (exc. Nai Duniya)
6.4
7.7
8.5
8.9
10.0
11.0
12.4
13.5
YoY (%)
16
20
11
4
13
10
12
9
-Mid-Day + Inquilab
0.8
0.9
0.9
0.9
0.9
0.9
1.0
1.0
YoY (%)
4
2
-2
5
3
3
3
-Nai Duniya
0.8
0.9
1.0
1.2
1.3
YoY (%)
13
16
11
13
13
Group circulation revenue (INR b)
2.1
2.4
2.7
3.2
3.6
3.9
4.4
4.9
YoY (%)
9
12
11
20
12
9
13
11
-Standalone (exc. Nai Duniya)
2.1
2.2
2.4
2.7
3.1
3.4
3.8
4.3
YoY (%)
10
4
10
11
13
9
13
12
-Mid-Day + Inquilab
0.1
0.2
0.2
0.2
0.2
0.2
0.3
0.3
YoY (%)
4
28
9
5
9
9
8
-Nai Duniya
0.3
0.3
0.3
0.3
0.3
YoY (%)
25
10
10
10
0
Dainik Jagran av circulation/day (m)
2.7
3.0
3.2
3.5
3.6
3.9
4.1
4.3
YoY (%)
-2
11
8
7
4
7
7
5
Newsprint price (USD/ton)
505
573
652
610
586
600
606
611
YoY (%)
-20
13
14
-6
-4
2
1
1
RM cost/Revenue (%)
29
29
34
32
32
33
33
32
Revenue mix (%)
Ad revenue
68
70
69
69
70
71
71
71
Circulation revenue
23
20
20
21
21
21
22
22
Other
10
11
11
10
9
8
7
6
Source: Company, MOSL

5. 29 October 2014 5
Jagran Prakashan
Jagran Prakashan: an investment profile
Company description
Jagran Prakashan Ltd (JPL) is a leading media and communications group with its main interests across Newspaper, Outdoor, Internet, Magazine, Event Management and Short Code Sevice media, spanning across 11 states. JPL is a leading newspaper publisher. It's flagship brand Dainik Jagran has been the largest read and circulated newspaper in India. JPL has 3 newspaper titles - Dainik Jagran, I next and City Plus. Dainik Jagran is a Hindi newspaper printed out of 31 locations across 11 states, I next is a bilingual compact morning newspaper targeted at 18-35 yrs, SEC AB1 in key metros, while City Plus is a weekly English tabloid circulated in Gurgaon, Faridabad, Ghaziabad, Noida and Delhi.
Key investment argument
 Strong presence in tier II/III towns across the Hindi speaking belt
 Footprint expansion led by Mid-Day and 'Nai Duniya' acquisitions
 High dividend pay-out
Key investment risks
 High exposure to the UP print market
 Increased competition in UP and Bihar markets
Recent developments
 Jagran’s board approved a final dividend of INR3/sh.
Valuation and view
 We are upgrading PAT estimates by 1-3% on higher margin assumptions. We expect proforma EPS CAGR of 19% over FY14-17E driven by 10% ad revenue CAGR and EBITDA margin expansion of ~310 bps.
 The stock trades at P/E of 16.5x FY15E and 13.4x FY16E. Maintain Buy with a price target of INR165 based on 16x average FY16/17 EPS.
Comparative valuations
Jagran HT Media DB Corp
P/E (x) FY15E 16.6 13.3 18.3
FY16E 13.5 11.7 15.5
EV/EBITDA (x) FY15E 9.1 5.5 10.3
FY16E 7.7 4.2 8.7
Div. Yield (%) FY15E 3.1 0.3 2.4
FY16E 3.1 0.4 2.9
P/BV (x) FY15E 3.8 1.2 5.0
FY16E 3.3 1.1 4.3
EPS: MOSL forecast v/s consensus (INR)
MOSL Consensus Variation
Forecast Forecast (%)
FY15 7.7 8.1 -5.4
FY16 9.5 9.8 -3.0
Target price and recommendation
Current Target Upside Reco.
Price (INR) Price (INR) (%)
127 165 29.9 Buy
Shareholding pattern (%)
Jun-14 Mar-14 Jun-13
Promoter 62.6 62.6 61.6
DII 9.5 9.1 12.3
FII 15.1 14.0 12.7
Others 12.8 14.4 13.3
Note: FII Includes depository receipts
Stock performance (1-year)
7593111129147Oct-13Jan-14Apr-14Jul-14Oct-14Jagran PrakashanSensex -Rebased

6. 29 October 2014 6
Jagran Prakashan
Financials and valuation
Income Statement (Consolidated)(INR Million) Y/E March20142015E2016E2017ENet Sales 17,02718,32320,33722,163YoY (%)11.67.611.09.0EBITDA3,8264,5165,1535,660EBITDA margin (%)22.524.625.325.5Depreciation789974928925Interest345335326326Other Income117359492684PBT2,8103,5654,3905,092Tax7951,1641,4331,662Tax rate (%)28.332.632.632.6Adjusted PAT2,0152,4012,9573,430 Change (%)36.619.223.216.0Extra-ordinary items248000Reported PAT2,2632,4012,9573,430Balance SheetY/E March20142015E2016E2017EShare Capital623623623623Share Premium3,1253,1253,1253,125Reserves5,8696,8138,31410,287Net Worth9,61610,56112,06114,034Loans4,6584,6584,6584,658Deffered Tax Liability854854854854Minority interest9999Capital Employed 15,13716,08217,58219,555Gross Fixed Assets11,23211,96512,77813,665Less: Depreciation4,8235,7976,7257,651Net Fixed Assets6,4096,1676,0536,014Capital WIP316316316316Goodwill2,3232,3232,3232,323Investments3,3203,3203,3203,320Curr. Assets6,8888,38710,48912,943Inventory9991,0901,1911,281Debtors3,4263,7654,1794,554Cash & Bank Balance3251,2312,5664,326Loans & Advances1,4651,5771,7501,907Other current assets673724803875Current Liab. & Prov.4,1194,4324,9195,361Creditors2,8793,0983,4383,747Provisions & other liabilitie1,2401,3351,4811,614Net Current Assets 2,7693,9555,5707,582Application of Funds15,13716,08217,58219,555E: MOSL EstimatesRatiosY/E March20142015E2016E2017EBasic (INR) Adjusted EPS 6.47.79.511.0Growth (%)37.720.123.216.0Cash EPS 8.910.812.514.0Book Value30.734.038.845.1DPS4.04.04.04.0Payout (incl. Div. Tax.) (%)72614942ValuationP/E 19.816.513.411.5Cash P/E14.211.710.29.1EV/EBITDA10.99.17.76.7EV/Sales2.52.21.91.7Price/Book Value4.13.73.32.8Dividend Yield (%)3.13.13.13.1Profitability Ratios (%) RoE21.323.826.126.3RoCE 16.716.818.819.6Turnover RatiosDebtors (Days)73757575Inventory (Days)21222121Creditors. (Days)80828383Asset Turnover (x)1.51.61.81.9Leverage RatioDebt/Equity (x)0.50.40.40.3Cash Flow Statement(INR Million) Y/E March20142015E2016E2017EOp.Profit/(Loss) bef Tax3,8264,5165,1535,660Other Income117359492684Interest Paid-345-335-326-326Direct Taxes Paid-795-1,164-1,433-1,662(Inc)/Dec in Wkg. Cap.372-280-280-253CF from Op.Activity3,1763,0963,6054,102(inc)/Dec in FA + CWIP-768-733-813-887(Pur)/Sale of Investments-1,096000CF from Inv.Activity-1,864-733-813-887Inc/(Dec) in Debt35000Dividends Paid-1,457-1,457-1,457-1,457Other Financing Activities-2000CF from Fin.Activity-1,899-1,457-1,457-1,457Inc/(Dec) in Cash-5889061,3351,759Add: Opening Balance5233251,2312,566Closing Balance3251,2312,5664,326

7. 29 October 2014 7
Jagran Prakashan
N O T E S

8. 29 October 2014 8
Jagran Prakashan
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Disclosure of Interest Statement JAGRAN PRAKASHAN LTD
 Analyst ownership of the stock No
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