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1. StocksInsights Hidden Treasure December 2015
pick –
Jagran Prakashan Ltd(JPL)
-A Play on the Regional Print Media Space

2. Content Index
•JPL Limited – Investment Snapshot :- Slide #3
• Media Industry – An Overview:- Slide #5
• Investment Arguments :- Slide #19
•P&L - Slide #31
• Concerns & Reasoning :- Slide #33

3. Jagran Prakashan Ltd - Investment Snapshot
(as on Dec 30, 2015)
Recommendation :- BUY
Maximum Portfolio Allocation :- 3%
Investment Phases & Buying Strategy
1st Phase (Now) of Accumulation :- 50%
Current Accumulation Range :- 155-165Rs
JPL is our typical Multibagger stock, but a Stock which is a Good
Investment under current Market conditions. It has a presence in
a space which offers enormous potential and is also trading at
reasonable valuations which will deliver superior returns in the
long run.
Core Investment Thesis :
The company is in print media space and has a strong brand
which has been its strength. The company has good reach in the
Hindi heartland and has been growing its readership base. The
company is also likely to benefit from strong AD revenues going
forward which makes it an attractive bet.
Current Market Price – Rs.158.00
Current Dividend Yield – 2.20%
Bloomberg / Reuters Code –JAGP. IN/
JAGP.NS
BSE / NSE Code – 532705/JAGRAN
Market Cap (In Rs. Cr) - 5190
Equity Share Capital [Cr]– 63.45
Face Value – Rs.2
52 Week High / Low – Rs. 164/
Rs.107.25
Promoter’s Holding – 60.76%
FII - 14.95%
Mutual Funds - 12.70%
Other Holdings - 11.59%

4. Key Investment Highlights
1.) Presence in a growing sector:- Company is in a space which is a growing sector which presents growth
opportunities.
2)Good Brand Recall: Company has a good brand recall and has built good reputation. This has helped the company
to increase subscription revenues which has enhanced revenues and profitability.
3.) Strong consumption theme :- The stock is a proxy play on the consumption theme and rural demand which offers
structural long term demand.
4.) Strong return on Incremental Investments:- The company has strong return on incremental investments with
ROE of 27% across cycles.
5) Under Penetrated Industry:- The print industry remains highly under-penetrated with rural reach as low as 21%
which provides significant growth potential.
6.) Strong & Healthy Balance sheet :- Company has a very strong balance sheet with low Debt-Equity of about 0.3x
that throws light on the quality of the business.
7.) Presence in growing Markets :- Company is currently present in major hindi speaking states that are growth
engines of the economy whose GDP growth is above national average.
8) Margin Accretive:- The company’s margins are likely to improve going forward as low news print cost will enhance
the margins of the company.
9.) Management/ Corporate Governance :- The company has a good management and adhere to strong corporate
governance norms. The company is run professionally by a team of professionals who have a strong understanding of
the business and have a strong vision about its business.
10.) Compelling Valuations :- In spite of so many advantages, the company is quoting at very attractive Valuations.
The company is quoting at 11.13x its FY15 consolidated EPS which is reasonable for the Quality of this stock which has
strong market share in key growth states which provides revenue visibility.

5. Industry Opportunity & Potential
- An Overview

6. Media & Entertainment Industry

7. Strong Demand and policy Support

8. Media & Entertainment Industry
•The vernacular market continues to enjoy the highest total readership which is followed by Hindi and
English.
• English continues to garner the largest share of revenues i.e around 41% on account of better coverage of
SEC A and SEC B homes which correspond to consumers with high purchasing power and are concentrated
in urban areas.
•The top six metros constitute around 31% of the total goods and services consumed in India ,however 62%
of the media spends still go these six cities.
•Further the readership and circulation have a strong correlation with literacy levels which improved from
65% in 2001to about 75% at present.

9. Segments of the Indian Entertainment Industry
•The entertainment industry continues to be dominated by the television segment, accounting for 45 per
cent of market share in terms of revenues, which is expected to grow further to 50 per cent by 2018.
•Television, print and films together account for 86 per cent of market share in 2013.
•The dominance of television in the Indian Entertainment Industry is expected to continue as it is likely
to witness an increase in its share of revenues from 45% in 2013 to about 50% in 2018.
•Print media would be the second largest sector and Out of Home (OOH), Music and Gaming is expected to
contribute 2.0 per cent each to the entire industry by 2018.
its existing customers

10. Print Media Market Overview
•.The entire media sector is
estimated to be about Rs.834 Bn
and is expected to grow to about
Rs.1400 Bn by 2017.
•The print media industry size is
pegged at about Rs.224 Bn in 2012
and is projected to grow to about
340 Bn in 2017.
projects.
•Within the print media market
Newspaper revenues account for
95% while the rest 5% is accounted
by the magazine segment .
•While the advertising revenues are
expected to grow by a CAGR of
about 10% the circulation revenues
are expected to grow by a CAGR of
about 4.5%.
•The total industry is expected to
grow by a CAGR of about 8% given
the GDP growth likely to be about
6% in the coming years.

11. Print Media 2014
•The print Media advertising grew by 8.5% in 2014 to reach Rs. 176 billion from `Rs.163 billion in the
previous year.
•Print contributed 43% to the total advertising revenue for the industry in 2014, retaining its No.1 position
among various media segments.
•Circulation revenue grew by 7.9% to reach ` 87 billion in 2014. Growth in circulation mainly came from Tier
II and Tier III cities with regional language newspapers outperforming the National English dailies.
•Hindi and vernacular markets accounted for nearly 64% of the total print revenue in 2014. Contribution
from the regional advertisement also increased in the overall print advertising pie this year.

12. Television to be the fastest growing segment
•With a growth rate of 15.8* per cent in 2011, Indian television industry stood second when compared with
BRIC and other major developed economies.
•In 2013, the television industry in India derived the major share of its revenue from advertising segment (33
per cent) and the rest from subscription (67 per cent).
•Nonetheless, the share of subscription in the overall revenue of the TV segment is expected to increase to
71 per cent by 2018.
• A vibrant economy and higher disposable income would lead to higher advertising spend by companies
which will have the highest positive impact on the television segment.

13. Regional Entertainment Industry
•Regional Entertainment channels comprising mostly of regional GECs (General Entertainment Channels),
regional movies and regional music.
•It accounted for 23 per cent of the total television viewership share in 2013.
•In print media, the rise in literacy rates, significant population growth, the rise in incomes in smaller towns
and the entry of big players in regional markets is likely to drive future expansion of circulation and
readership across India .
•Viewership in South India is dominant for regional entertainment. It is comparatively less for Oriya, Gujarati
and Bhojpuri, which is equivalent to only 1 per cent each.

14. Industry Advertising Revenues
•Total spending on advertising across all media stood at USD17 billion in 2014.
•Print is the second largest contributor, accounting for 26 per cent of the advertising share.
•Advertising revenue is expected to touch USD11.3 billion by 2018 at a CAGR of 13.9 per cent.
• The AD revenues have been growing in the region of 5.5% to 6.2% and this is likely to increase to about
11.3% in FY2018.

15. Digitalization
•With the advent of the internet age, newspaper readership growth in metro cities has stagnated in the past
few years.
•Most office goers prefer surfing for news on the internet, other factors such as long travel times and
alternative recreation forms such as malls, theaters, etc have contributed to a slowdown in newspaper
consumption in the metro regions. On the other hand, regional newspapers have a lot of room to grow given
that they are still largely under-penetrated.
•while internet connections are rapidly increasing pan-India, the quality of the connectivity in the non-metro
cities acts as a major hindrance to surfing for news online. However we do not foresee that digitalization will
impact newspaper readership in the non-metro cities in the next few years.

16. Porters Five Forces

17. Rising Pricing Power
•With competition easing regional print companies have rationalized circulation strategies and raised
realizations on sale of newspapers.
•Circulation revenues are now set to contribute higher for print media companies on account of increase in
prices.
•The regional print media is in a sweet spot as there is scope for further increase in prices due to customer
stickiness and raising regional prosperity.
• However the print media is likely to increase prices on a judicial basis considering their long term business
interest and actions of competitors.

18. High Potential Hindi Market
• Hindi speaking states offer immense potential due to lower readership among literates which shows the
levels of under penetration in these markets.
•In terms of AD revenue UP is the largest market constituting 31% of Hindi market followed by Rajasthan at
about 19% while Chandigarh, Punjab, Haryana, Himachal Pradesh account for about 15%.Madya Pradesh
accounts for about 31%.
•Intense competition has resulted in top 2 player being dominant in the market. In states like Rajasthan and
Bihar the top 2 players control 85-90% of readership while it is about 65% for Haryana and Chhattisgarh.

19. JPL – Investment Arguments

20. Company Snapshot
•JPL is one of the leading print media companies in India. Dainik Jagran, its flagship daily Hindi publication, is
the most widely read newspaper in India across all languages.
• JPL, in addition to Dainik Jagran, has 11 publications across five languages, 121 editions and is distributed in
15 states.
•JPL also has a significant digital presence, with the prominent websites being jagran.com and
jagranjosh.com. All the Jagran sites combined have clocked 30 million unique users.
• JPL has acquired a 100% stake in Music Broadcast Pvt Ltd. (MBPL), which operates the leading FM station
brand ‘Radio City’ (91.1FM). MBPL has 20 stations under the ‘Radio City’ brand and 14 internet radio stations
under the brand PlanetRadiocity.com .

21. Market Leader
•JPL derives ~75% of its revenues through Dainik Jagran, of which advertising revenues accounted for 76% of
revenues, while circulation revenues accounting for the rest.
• Dainik Jagran is the highest read publication in India with a weekly readership of 16.4 mn followed by
Dainik Bhaskar with a weekly readership of 14.4 mn .
• Dainik Jagran has a strong foothold in UP, the most populous state in India, which accounts for ~50% of its
total revenues.
• JPL also has a dominant presence in Bihar and Jharkhand, which forms ~15% of the total revenues. Apart
from these three states, Dainik Jagran has a strong presence in the northern belt viz. Delhi, J&K, HP, Punjab,
Chandigarh, Haryana, J&K and Uttaranchal and the central region states of MP and Chhattisgarh.

22. Growing Presence

23. Competitive Position

24. JPL vs DBCORP

25. Presence in high per capita states
•The per capita income in JPL’s key markets is amongst the lowest in India; on the upside, it has a lot of
potential to increase in tandem with the economic growth anticipated in the overall economy.
•According to the management, a per capita income of Rs.1.2L and beyond triggers growth for newspaper
consumption in a region.
•The penetration of internet in the Hindi belt has been in the range of abut 10-18% which will also increase
demand for newspapers given growing income levels.

26. Print Revenues
•From 1942, when the first edition of Dainik Jagran was launched in Jhansi, JPL now has a presence in 15
states, with 12 publications and 121 editions across 5 languages.
•JPL’s print media revenues have grown at a 3 year CAGR of 12.2% as compared to the industry average of
8% .
•Dainik Jagran’s revenues in the past three years have remained flat owing to a subdued economy and
moderation in ad rates in FY12-13. Going forward, with the pick-up in economic growth and higher ad
spending, JPL’s revenues are expected to grow at a CAGR of 15%.

27. Mid-Day Acquisition
•JPL acquired Mid-Day from Mid-Day Multimedia now known as Next Media Works in a cashless transaction
in 2010.
•
•JPL’s Mid-Day’s English edition is Mumbai based and also has a Gujarati publication and an Urdu publication
viz. Inquilab.
• The Mid-Day acquisition has helped the company diversify into English dailies and tap the youth readership
in metro cities. Further, it also gives JPL access to Mid-Day’s advertiser’s base which it can leverage for its
flagship publication. According to IRS Mid-Day is the 7th highest read English publication in India .

28. Digitalization
•JPL also has a significant digital presence, with the prominent websites being jagran.com and
jagranjosh.com.
•JPL’s Jagran sites combined have clocked 30 million unique users as per Q3FY15 Result presentation by the
company.
• The JPL management expects a 30-40% CAGR in this segment over the next few years given the room to
increase advertising revenues with higher viewership.

29. Print Radio & Digital

30. Robust Growth

31. P&L

32. Balance Sheet

33. Concerns & Reasoning
1.) Steep rise in newsprint cost :
Newsprint forms the major raw material for the print media sector and forms a significant portion of their
expenses. JPL imports ~20% of its newsprint requirements, thereby exposing itself to the risk of currency
fluctuations.Any significant increase in the price of newsprint could adversely affect the margins of the
companies in the print media.
2.) Dependence on AD Revenues :
Ad-spend by advertisers and ability to attract new advertisers is influenced largely by the circulation and
readership, the geographical reach, readership demographics of newspapers and the preference of
advertisers for one media over another. Further intense competition from new entrants may depress AD
revenues which may affect the financial results of the company.
3.) Decrease in circulation :
Circulation of newspapers and magazines among the readers is an important source of revenue for the
Company since it derive significant revenues from subscriptions. In addition, circulation and readership
significantly influence ad-spend by advertisers and the advertising rates in the newspapers. Circulation and
readership is dependant on the quality and reach of the publications and the loyalty of existing readers. A
decline in circulation will adversely impact the financial results of the company.

34. THANK YOU