Media jefferies

Mkt. Cap Price Cons. Current EPS Estimates Previous Est.
Company Name Ticker (MM) Rating Price Target Next FY 2014 2015 2016 2015 2016
D.B. Corp DBCL IN INR73.3BN BUY INR400.15 INR460.00▲ INR18.80 INR16.70 INR19.00 INR24.70 INR18.20 INR23.00
Dish TV India DITV IN INR73.1BN UNPF INR68.65 INR49.00 INR(0.01) INR(1.45) INR(0.42) INR0.30 INR(0.42) INR0.30
Jagran Prakashan JAGP IN INR43.8BN BUY INR138.45 INR160.00▲ INR8.10 INR7.27 INR8.18 INR10.44 INR9.00 INR11.54
Zee Entertainment Z IN INR344.3BN HOLD INR360.90 INR340.00▲ INR9.30 INR9.30 INR9.90 INR11.90 INR9.40 INR11.10
INDUSTRY NOTE
Target | Estimate Change
India | Media | Media & Entertainment 13 January 2015
Media & Entertainment
2015: On a Cyclical Uptrend
EQUITYRESEARCHINDIA
Piyush Nahar *
Equity Analyst
+91 22 4224 6113 pnahar@jefferies.com
* Jefferies India Private Limited
Key Takeaway
Media sector would likely see a cyclical recovery in 2015 driven by economic
growth. We expect advertising growth to improve and subscription growth to
remain strong. Further, commodity prices deflation should benefit print sector.
Print is our preferred pick in 2015, while we maintain our cautious view on Dish
TV. Zee could remain range-bound, in our view, given elevated valuations and
muted near-term results.
Broadcasting - early signs of per subscriber model, benefits to be slow: The past
couple of quarters have seen signs of shift to per subscriber contract with cable and DTH
players. However, the benefits of this have been limited, as significant hikes in subscription
revenues need consumer pack prices to increase. Further, the per subscriber contracts lead
to loss of viewership for many secondary channels of broadcasters, impacting ad revenues.
While the recent trends are positive, we believe benefits would accrue only over the medium
term. Advertising growth for the sector should see an improvement in 2015, led by a
recovery in the economy. However, Zee's growth would likely be lower than recent growth
given lack of market share gains going forward.
Print - in a sweet spot: Print sector would be in a sweet spot in 2015, in our view, led
by twin benefits of better advertising growth and lower commodity prices (newsprint). Post
two years of weakness in advertising growth (8% pa), we expect growth to improve going
forward, led by an improvement in economic growth. Historically, advertising growth for
print has been closely linked to GDP growth. Further, newsprint prices are on a downtrend,
declining c5% and could see further downside. This would significantly benefit margins for
the print players. We expect print to report c17-20% EPS growth over the next three years.
DTH - to see a cyclical rebound but with rising competition: We have maintained
our negative view on the DTH industry for the past two years. Our view has been that
digitization is a negative for the DTH industry and this played out in Phase I and II for
the sector. The weak economic environment further impacted subscriber addition and
price hikes. Going forward, while we expect subscriber addition to see some cyclical
improvement, additions would remain well below previous peaks. Further, while improving
economic conditions should allow DTH to take further price hikes, this is already in
the numbers. We are factoring c5% pa price hikes for Dish TV. However, the cyclical
improvement in additions and price hike would likely come with increased competition,
especially on STB subsidy, which would impact the profitability and capex for the players.
Radio - phase III auctions the key trigger. Radio has seen strong growth in the past
few years and we expect this trend to continue. The key trigger would be Phase III auction,
which would likely see new players entering the sector. The key beneficiary would likely be
JAGP and DBCL.
Prefer DBCL, Underperform on DITV, Z to remain range-bound: We prefer print
players DBCL and JAGP for 2015 and maintain our cautious view on DITV. Zee has rerated
sharply to 32x FY16 PE, on expectations of increased subscription revenues. However, we
believe that significant benefits would take time to accrue and the stock could remain range-
bound. We maintain Hold on Z IN with a revised PT of Rs340 (from Rs295). We also revise
our PTs for DBCL and JAGP to Rs460 (from Rs410) and Rs160 (from Rs140 ), respectively.
Jefferies does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that Jefferies may have a
conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment
decision. Please see analyst certifications, important disclosure information, and information regarding the status of non-US analysts on pages 19 to 23
of this report.

Zee (Z IN): Valuations an overhang
Zee has seen a sharp re-rating-led rally over the past three months, driven by
an expectation of shift towards per subscriber booking in subscription
revenues. We believe that expectation of significant subscription revenue
growth acceleration is premature, as seen in the Zee-Hathway deal which has
returned to negotiated deal. We expect subscription growth to see steady
growth of 16-17% pa in the near term. With the stock now trading at 32x
FY16 PE, we believe that the valuation overhang, lack of near-term triggers
and weak results would keep the share price range-bound. Maintain Hold
with revised TP of Rs 340 (from Rs295).
Advertising growth to see a slowdown: While we expect the sector advertising
growth to accelerate, Zee’s advertising growth would likely remain below recent levels.
This is because Zee has been gaining market share in the past couple of years and the
benefits of this are now behind us. Going, forward we expect advertising growth to
moderate to industry levels of 17% vs recent growth of 20%+.
Exhibit 1: Advertising growth to remain below recent peaks
Source: Company Data, Jefferies estimates
Exhibit 2: Subscription growth to remain strong
Subscription growth to remain strong: Unlike advertising, we expect subscription
growth for the company to remain strong going forward. Both Zee and Star have recently
experimented with per subscriber contracts with cable operators. However, the feedback
has been that while they gained incremental revenues, Zee has reverted to a negotiated
deal. This could be due to per subscriber deal leading to loss of subscribers in the second-
tier channels of the broadcaster. In addition to subscription revenues, this would have also
impacted advertising revenues. Zee management has maintained that they are receiving
close to their fair share of revenues in the digitized market. Thus, for subscription growth
to increase significantly from current levels, it would have to be led by consumer package
price hikes. We believe that this would gain pace going forward and have increased our
subscription revenue growth forecast to 16% pa, from 12%.
Digitization benefits to be limited: With Phase III and IV digitization deadline pushed
to Dec 2015 and Dec 2016, respectively, the benefits of digitization would accrue only
from FY17. We believe that Phase III would see partial digitization, while we do not expect
any significant digitization in Phase IV.
Sports business losses to remain stable: Sports business losses would likely remain
stable in 2015 given lack of significant India cricket event and better advertising and
subscription revenues.
Strong 20% EPS growth but valuations an overhang: We expect Zee to report
20% EPS CAGR over FY15-17E, led by better top-line growth and increase in margins.
(10)
(5)
0
5
10
15
20
25
30
FY12 FY13 FY14 FY15E FY16E FY17E
Advertising Growth (%)
(10)
(5)
0
5
10
15
20
25
Subscription revenue growth (%)
Media
13 January 2015
page 2 of 23 , Equity Analyst, +91 22 4224 6113, pnahar@jefferies.comPiyush Nahar
Please see important disclosure information on pages 19 - 23 of this report.

However, 2H15 growth would be muted, led by slower advertising growth and higher
costs led by launch of new channels. With the stock having re-rated 25% over the past
three months and now trading nearly 2 st. dev. above historical averages, we see limited
upside from current levels. We have revised our EPS by 5-6% as we factor in the increased
subscription revenue growth and lower sports losses. We have revised DCF-based PT to
Rs340 (from Rs 295), as we factor in higher EPS and roll forward our DCF to Mar-16. Risks:
1) weak economic recovery, 2) increased competition, 3) delay in subscription price hikes.
Exhibit 3: Expect margins to improve from FY16
Source: Jefferies estimates, company data
Exhibit 4: Valuations now at historical peaks and
significantly above average
Source: Factset, Jefferies estimates
Exhibit 5: Changes in estimates
(Rs mn) Old New % change
FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E
Sales 46,022 53,456 61,681 45,834 53,548 62,275 (0.4) 0.2 1.0
EBITDA 12,621 14,799 17,457 13,293 15,732 18,470 5.3 6.3 5.8
OP margin 27.4 27.7 28.3 29.0 29.4 29.7 158 169 136
Net profit 9,015 10,764 12,805 9,459 11,432 13,563 4.9 6.2 5.9
NP margin 19.6 20.1 20.8 20.6 21.3 21.8 105 121 102
EPS 9.4 11.2 13.3 9.9 11.9 14.1 4.9 6.2 5.9
EPS growth (%) 1.1 19.4 19.0 6.0 20.9 18.6
DPS 2.0 2.3 2.6 2.0 2.3 2.6
ROE 16.7 17.4 17.9 17.4 18.2 18.5 68 75 58
22
23
24
25
26
27
28
29
30
FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Operating Margin (%)
0
5
10
15
20
25
30
35
40
45
Jan-06 Jan-08 Jan-10 Jan-12 Jan-14
12M Fwd PE Avg.
+1 st. dev. -1 st. dev.
Media
13 January 2015

Exhibit 6: Profit and loss statement
Rs mn 2013 2014 2015E 2016E 2017E
Net Sales 36,995 44,217 45,834 53,548 62,275
Change (%) 21.7 19.5 3.7 16.8 16.3
Operational Cost 17,401 20,688 18,938 22,322 26,179
Employee Cost 3,491 3,905 4,374 4,899 5,487
Administrative and Other
Expenses
2,514 2,992 3,830 4,289 4,804
SDA Expenses 4,047 4,589 5,398 6,307 7,335
EBITDA 9,541 12,043 13,293 15,732 18,470
% of net sales 25.8 27.2 29.0 29.4 29.7
Depreciation 399 501 641 701 764
Interest 86 158 166 165 164
Other Income 1,461 1,807 1,813 2,425 2,976
EO Income / (Exp) 0 0 0 0 0
PBT 10,518 13,191 14,300 17,290 20,518
Tax 3,337 4,291 4,862 5,879 6,976
Rate (%) 31.7 34.0 34.0 34.0 34.0
PAT 7,182 8,900 9,438 11,411 13,542
Adjusted PAT 7,196 8,921 9,459 11,432 13,563
change (%) 22.2 24.0 6.0 20.9 18.6
Exhibit 7: Balance sheet
Rs mn 2013 2014 2015E 2016E 2017E
Share Capital 954 21,130 21,130 21,130 21,130
Reserves 38,194 26,308 33,247 41,800 52,123
Net Worth 39,148 47,438 54,377 62,930 73,253
Deferred Tax -288 -298 -298 -298 -298
Loans 28 29 29 29 29
Capital Employed 38,888 47,170 54,109 62,661 72,984
Gross Fixed Assets 12,306 13,546 14,546 15,546 16,546
Less: Depreciation 2,400 2,813 3,454 4,155 4,919
Net Fixed Assets 9,906 10,733 11,092 11,391 11,627
Capital WIP 455 997 997 997 997
Investments 7,916 8,290 8,290 8,290 8,290
Current Assets 31,994 39,999 46,989 56,645 68,263
Inventory 8,745 11,736 10,378 12,259 14,408
Debtors 9,890 10,281 10,657 12,451 14,480
Cash & Bank Balance 5,316 5,644 13,616 19,597 27,037
Loans & Advances 7,378 11,095 11,095 11,095 11,095
Other Current Assets 664 1,243 1,243 1,243 1,243
Current Liabilities 11,382 12,850 13,261 14,663 16,194
Creditors 5,234 5,085 5,833 6,814 7,925
Other Liabilities 3,546 4,119 4,119 4,119 4,119
Provisions 2,602 3,646 3,309 3,730 4,150
Net Current Assets 20,612 27,149 33,728 41,982 52,069
Appl. Of fund 38,889 47,169 54,108 62,660 72,983
Media
13 January 2015

Exhibit 8: Cash flow
(Rs mn) 2013 2014 2015E 2016E 2017E
PAT 7,196 8,921 9,459 11,432 13,563
Depreciation 399 501 641 701 764
Interest Exp 86 158 166 165 164
Other Income -1,461 -1,807 -1,813 -2,425 -2,976
Profit on Sale of Fixed Assets 23 23 0 0 0
Increase/ decrease in Wkg Capital -1,923 -6,219 1,393 -2,273 -2,647
CF from Op Activities 4,319 1,578 9,845 7,601 8,868
Change in Fixed Assets -1,106 -1,328 -1,000 -1,000 -1,000
CWIP -254 -542 0 0 0
Change in Investments 83 -374 0 0 0
Other Income 1,461 1,807 1,813 2,425 2,976
Profit on Sale of Fixed Assets -23 -23 0 0 0
CF from Investing Activities 161 -460 813 1,425 1,976
Issue of shares 15 0 -19 -19 -19
Changes in debt 7 1 0 0 0
Interest Exp -86 -158 -166 -165 -164
Dividend paid -1,871 -2,348 -2,501 -2,861 -3,221
Others -513 1,717 0 0 0
CF from Financing Activities -2,447 -788 -2,686 -3,045 -3,404
Net change in Cash 2,032 330 7,972 5,981 7,440
Exhibit 9: Key ratios
2013 2014 2015E 2016E 2017E
Basic (Rs)
EPS 7.5 9.3 9.9 11.9 14.1
BPS 41.0 49.4 56.6 65.6 76.3
DPS 2.0 2.0 2.0 2.3 2.6
Payout (%) 26.0 21.5 20.3 19.3 18.4
Valuation (X)
P/E 48.4 39.3 37.0 30.6 25.8
P/B 8.9 7.4 6.4 5.6 4.8
EV/EBITDA 33.6 26.6 24.1 20.4 17.3
EV/Sales 8.7 7.2 7.0 6.0 5.1
Dividend Yield (%) 0.6 0.6 0.6 0.7 0.8
Profit Ratios (%)
RoE 18.4 18.8 17.4 18.2 18.5
RoCE 23.5 20.9 25.0 27.5 30.0
Turnover Ratios
Debtor Days 98 85 85 85 85
Inventory Days 229 251 251 251 251
Creditor Days 255 226 230 230 230
Net Debt to Equity -0.3 -0.3 -0.4 -0.4 -0.5
Media
13 January 2015

Print – In a sweet spot
Print sector would be in a sweet spot in 2015, in our view, led by the twin
benefits of better advertising growth and lower commodity prices
(newsprint). Following two years of weakness in advertising growth (8% pa),
we expect growth to improve going forward, led by improvement in
economic growth. Historically, advertising growth for print has been closely
linked to GDP growth. Further, newsprint prices are on a downtrend and
have declined c5%, and could see further downside given the rout in
commodity prices. This would significantly benefit margins of print players.
We expect print to report c17-20% EPS growth over the next three years.
Advertising growth to accelerate. We expect advertising growth for print sector to
increase from current 8% levels to 15% levels over the next two years. Print sector
advertising growth is historically well correlated with GDP growth and with improving
economic growth, we expect advertising growth to also improve for the sector.
Newsprint prices to see reduction: Newsprint prices declined c3% in 1HFY15 and
management guided for another 3-5% decline. Given the recent fall in commodity prices,
we believe that there could be further decline in prices from the guided levels. We are
factoring only 3% decline over FY14-16E and 3% inflation in FY17. Any additional decline
would be a positive for the companies, with every 1% decline adding 30bps to margins.
DBCL: Expect 24% EPS CAGR over FY15-17E: We expect DBCL to report 24% EPS
CAGR over FY15-17, led by 14% top-line growth and 270bps margin improvement,
driven by operating leverage. The stock is trading at 17x FY16 PE vs. 32x for Zee with
better earnings growth and 3% dividend yield. We retain our Buy rating with a revised PT
of Rs 460 (from Rs410) as we roll forward our DCF to Mar 16. We have increased our EPS
forecast by 4-8% as we factor in lower commodity prices and better top-line growth.
Risks: 1) delay in economic recovery, 2) commodity prices and 3) increased competition.
Exhibit 10: DBCL – changes in estimates
(Rs mn) Old New % change
FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E
Sales 20,297 23,431 26,696 20,330 23,255 26,571 0.2 (0.7) (0.5)
EBITDA 5,634 6,851 7,769 5,852 7,319 8,381 3.9 6.8 7.9
OP margin 27.8 29.2 29.1 28.8 31.5 31.5 103 223 244
Net profit 3,333 4,210 4,903 3,477 4,523 5,321 4.3 7.4 8.5
NP margin 16.4 18.0 18.4 17.1 19.4 20.0 68 148 166
EPS 18.2 23.0 26.8 19.0 24.7 29.0 4.3 7.4 8.5
EPS growth (%) 8.7 26.3 16.5 13.4 30.1 17.7
DPS 8.0 10.1 11.8 8.3 10.9 12.8
ROE 27.3 30.3 30.7 28.4 32.2 32.7 110 193 201
JAGP: Expect 25% EPS CAGR over FY15-17E: We expect JAGP to report 25% EPS
CAGR over FY15-17E, led by top-line growth of 20% and margin improvement of 220bps.
The stock is trading at 13.0x FY16 PE. Given the strong earnings growth and dividend
yield of 4%, we retain our positive view on the stock with revised TP of Rs 160 (from
Rs140) as we roll forward our DCF to Mar-16. We have lowered our EPS forecast by 9%,
led by lower top-line growth assumptions. Risks: 1) delay in economic recovery, 2)
commodity prices and 3) increased competition.
Media
13 January 2015

Exhibit 11: JAGP – changes in estimates
(Rs mn) Old New %
change
FY15E FY16E FY15E FY16E FY17E FY15E FY16E
Sales 19,422 22,190 17,971 22,637 25,753 (7.5) 2.0
EBITDA 4,662 5,810 4,455 6,103 6,856 (4.4) 5.0
OP margin 24.0 26.2 24.8 27.0 26.6 78 78
Net profit 2,801 3,592 2,546 3,249 4,008 (9.1) (9.5)
NP margin 14.4 16.2 14.2 14.4 15.6 (26) (183)
EPS 9.0 11.5 8.2 10.4 12.9 (9.1) (9.5)
EPS growth 23.9 26.3 12.6 27.6 23.3
DPS 4.8 6.1 4.5 5.8 7.1
ROE 27.7 34.7 25.4 29.7 33.1 (229) (504)
Media
13 January 2015

DB Corp (DBCL IN)
Exhibit 12: Profit and Loss Statement
Rs mn 2013 2014 2015E 2016E 2017E
Net Sales 15,923 18,598 20,330 23,255 26,571
Change (%) 9.7 16.8 9.3 14.4 14.3
Raw Material 5,446 6,323 6,576 7,089 8,220
Employee Cost 2,795 3,025 3,403 3,880 4,462
Other Direct Expenses 1,850 1,937 2,037 2,152 2,264
SDA Expenses 2,072 2,309 2,462 2,816 3,244
EBITDA 3,760 5,003 5,852 7,319 8,381
% of net sales 23.6 26.9 28.8 31.5 31.5
Depreciation 581 642 820 855 896
Interest 80 75 61 50 82
Other Income 213 239 313 460 684
PBT 3,313 4,524 5,284 6,873 8,087
Tax 1,132 1,606 1,807 2,351 2,766
Rate (%) 34.2 35.5 34.2 34.2 34.2
PAT 2,181 3,066 3,477 4,523 5,321
Adjusted PAT 2,181 2,917 3,477 4,523 5,321
change (%) 7.9 33.8 19.2 30.1 17.7
Exhibit 13: Balance Sheet
Rs mn 2013 2014 2015E 2016E 2017E
Share Capital 1,844 1,835 1,835 1,835 1,835
Reserves 8,457 9,633 11,198 13,233 15,627
Net Worth 10,302 11,467 13,033 15,068 17,463
Deferred Tax 834 885 885 885 885
Loans 1,593 1,506 1,113 1,631 2,238
Net Fixed Assets 8,313 8,504 8,105 7,850 7,554
Capital WIP 70 22 0 0 0
Investments 807 724 724 724 724
Current Assets 7,136 8,446 10,759 13,723 17,297
Inventory 1,299 1,732 1,441 1,554 1,802
Debtors 3,083 3,280 3,899 4,460 5,096
Loans & Advances 1,477 2,300 2,300 2,300 2,300
Other Current Assets 0 0 0 0 0
Creditors 976 1,126 1,847 2,003 2,280
Provisions 946 1,050 1,050 1,050 1,050
Appl. Of funds 12,729 13,858 15,030 17,583 20,585
Media
13 January 2015

(in Rs mn) 2013 2014 2015E 2016E 2017E
PAT 2,181 3,066 3,477 4,522 5,321
Depreciation 581 642 820 855 896
Interest Exp 76 75 61 50 82
Other Income -213 -239 -313 -460 -684
Change in Wkg Capital 23 -1,150 393 -518 -607
Change in Fixed Assets -1,044 -798 -400 -600 -600
CWIP 0 0 0 0 0
Change in Investments -347 83 0 0 0
Other 213 239 313 460 684
Cash Flow from Investing
Activities
-1,178 -476 -87 -140 84
Issue of shares 12 12 0 0 0
Changes in debt -836 -87 -393 518 607
Interest Exp -76 -75 -61 -50 -82
Dividend paid -1,177 -1,552 -1,912 -2,487 -2,927
Others 1 -361 0 0 0
Cash Flow from Financing
Activities
-2,077 -2,063 -2,366 -2,019 -2,402
Net change in Cash -607 -144 1,985 2,290 2,691
Exhibit 15: Key Ratios
Key Ratios 2013 2014 2015E 2016E 2017E
Basic (Rs)
EPS 11.9 16.7 19.0 24.7 29.0
BPS 56.1 62.6 71.1 82.2 95.3
DPS 5.5 7.3 8.3 10.9 12.8
Payout (%) 46.2 43.3 44.0 44.0 44.0
Valuation (X)
P/E 33.2 23.6 20.8 16.0 13.6
P/B 7.0 6.3 5.6 4.8 4.1
EV/EBITDA 17.8 13.4 11.1 8.6 7.3
EV/Sales 4.2 3.6 3.2 2.7 2.3
Dividend Yield (%) 1.4 1.8 2.1 2.7 3.2
Profit Ratios (%)
RoE 22.3 28.2 28.4 32.2 32.7
RoCE 17.3 23.1 24.1 27.7 27.9
Turnover Ratios
Debtor Days 70 64 70 70 70
Inventory Days 80 100 80 80 80
Creditor Days 42 43 66 66 66
Asset turnover 1.0 1.1 1.0 1.0 1.0
Media
13 January 2015

Jagran Prakashan (JAGP IN)
Exhibit 16: Profit and Loss Statement
Rs mn 2013 2014 2015E 2016E 2017E
Net Sales 15,255 17,027 17,971 22,637 25,753
Change (%) 12.5 11.6 5.5 26.0 13.8
Raw Material 5,437 6,088 6,484 6,932 8,003
Employee Cost 2,274 2,396 2,587 2,924 3,304
Other Direct Expenses 2,017 2,118 1,876 2,112 2,380
SDA Expenses 2,670 2,763 2,569 4,567 5,210
EBITDA 2,857 3,664 4,455 6,103 6,856
% of net sales 18.7 21.5 24.8 27.0 26.6
Depreciation 1,255 789 986 1,242 1,289
Interest 307 345 246 253 0
Other Income 1,285 628 424 47 175
PBT 2,552 3,056 3,647 4,655 5,742
Tax 771 795 1,101 1,406 1,734
Rate (%) 30.2 26.0 30.2 30.2 30.2
EO Income / (Exp) 738 -101 0 0 0
PAT 2,551 2,262 2,546 3,249 4,008
Adjusted PAT 1,805 2,336 2,546 3,249 4,008
change (%) 1.2 29.4 9.0 27.6 23.3
Exhibit 17: Balance Sheet Statement
Rs mn 2013 2014 2015E 2016E 2017E
Share Capital 633 623 623 623 623
Reserves 8,691 8,994 9,809 10,848 12,131
Net Worth 9,324 9,616 10,431 11,471 12,753
Minority Interest 11 9 9 9 9
Deferred Tax 701 851 851 851 851
Loans 4,840 4,897 4,423 4,602 4,632
Net Fixed Assets 7,758 7,911 8,712 8,248 7,737
Capital WIP 1,311 1,137 0 0 0
Investments 2,224 3,320 3,320 3,320 3,320
Current Assets 6,716 6,885 8,137 10,610 13,180
Inventory 833 999 1,081 1,155 1,334
Debtors 3,190 3,426 3,447 4,341 4,939
Cash & Bank Balance 523 325 1,475 2,979 4,773
Loans & Advances 1,479 1,465 1,465 1,465 1,465
Creditors 1,125 1,275 1,270 1,582 1,813
Other Liabiliteis 1,139 1,365 1,365 1,365 1,365
Provisions 868 1,240 1,821 2,299 2,815
Appl. Of fund 14,876 15,372 15,713 16,932 18,244
Media
13 January 2015

(Rs mn) 2013 2014 2015E 2016E 2017E
PAT 2,551 2,262 2,546 3,249 4,008
Depreciation 1,255 789 986 1,242 1,289
Interest Exp 307 345 246 253 0
Other Income -1,285 -628 -424 -47 -175
Change in Wkg Capital -1,065 525 474 -179 -30
Change in Fixed Assets -362 -942 -1,787 -778 -778
CWIP -499 174 1,137 0 0
Change in Investments 258 -1,096 0 0 0
Other 1,285 628 424 47 175
CF from Investing Activities 682 -1,237 -226 -731 -603
Issue of shares 31 -475 0 0 0
Changes in debt -1,836 56 -474 179 30
Interest and other finance charges paid -307 -345 -246 -253 0
Dividend paid -743 -1,712 -1,731 -2,210 -2,725
Others 250 270 0 0 0
CF from Financing Activities -2,605 -2,206 -2,452 -2,283 -2,695
Net change in Cash -160 -149 1,150 1,504 1,793
2013 2014 2015E 2016E 2017E
Basic (Rs)
EPS 5.71 7.27 8.18 10.44 12.88
BPS 29.5 30.9 33.5 36.9 41.0
DPS 2.0 4.5 4.5 5.8 7.1
Payout (%) 35.5 61.5 55.2 55.2 55.2
Valuation (X)
P/E 23.7 18.6 16.5 12.9 10.5
P/B 4.6 4.4 4.0 3.7 3.3
EV/EBITDA 16.0 12.2 9.3 6.6 5.6
EV/Sales 3.0 2.6 2.3 1.8 1.5
Dividend Yield (%) 1.5 3.3 3.3 4.3 5.3
Profit Ratios (%)
RoE 30.3 23.9 25.4 29.7 33.1
RoCE 17.1 15.0 16.4 19.9 22.8
Turnover Ratios
Debtor Days 76 73 70 70 70
Inventory Days 56 60 61 61 61
Asset turnover 1.7 1.9 2.1 2.7 3.3
Media
13 January 2015

Dish TV (DITV IN) – To see a cyclical
rebound but with rising competition
We have maintained a negative view on the DTH industry over the past two years. Our
view has been that digitization would be a negative for the DTH industry and this played
out in Phase I and II for the sector. The weak economic environment further impacted
subscriber addition in rural areas and price increases. Going forward, while we expect
subscriber addition to see some cyclical improvement led by economic recovery,
additions would remain well below previous peaks. We do not expect any significant
gains from Ph III and IV digitization. Further, given our strategy view of slower rural
growth, additions would remain a challenge for the sector.
On price hikes, while improving economic conditions should allow DTH to take further
price hikes, this is already in the numbers. We are factoring c5% pa price hikes for Dish TV.
The cyclical improvement in additions and price hike though would come with increased
competition especially on STB subsidy, which would impact the profitability and capex for
the players. We expect EBITDA CAGR of 15% over FY14-17E. The stock is trading at 10.8x
FY16 EV/EBITDA. Given the challenges faced by the industry, we maintain our
Underperform rating and DCF-based PT of Rs49. Risks: 1) better subscriber additions, 2)
faster digitization implementation.
Exhibit 20: Key operational parameters
Net subscriber base 9.6 10.6 11.4 13.0 14.3 15.6
Net subscriber growth (%) 12.9 10.9 7.5 13.2 10.7 8.9
Net Additions (in mn) 1.1 1.0 0.8 1.5 1.4 1.3
Annual Churn (%) 15.1 11.5 7.2 8.4 9.6 9.6
Share of HD subscribers in new
additions (%)
5.0 7.0 11.0 14.0 14.0 15.0
Blended ARPU (in Rs) 151.0 157.1 165.0 173.3 181.8 191.3
SAC (in Rs) 2,130 2,182 1,874 1,924 2,024 2,064
Exhibit 21: Profit and loss
Rs mn 2013 2014 2015E 2016E 2017E
Net Sales 21,668 24,628 27,319 31,354 35,984
Change (%) 10.7 13.7 10.9 14.8 14.8
Raw Material 75 75 49 49 49
Employee Cost 822 891 980 1,117 1,282
Operating Expenses 11,081 13,237 14,142 16,387 18,814
Other Exp 861 1,259 1,097 1,272 1,486
SDA Expenses 3,036 3,321 4,238 4,782 5,438
EBITDA 5,794 5,846 6,813 7,746 8,915
% of net sales 26.7 23.7 24.9 24.7 24.8
Depreciation 6,276 5,973 5,998 6,132 6,223
Interest 1,284 1,327 1,691 1,691 1,691
Other Income 511 660 432 396 311
EO Income / (Exp) 594 -748 0 0 0
PBT -660 -1,542 -445 319 1,312
Tax 0 0 0 0 0
Rate (%) 0.0 0.0 0.0 0.0 0.0
PAT -660 -1,542 -445 319 1,312
Adjusted PAT -1,254 -793 -445 319 1,312
Media
13 January 2015

Exhibit 22: Balance sheet
Rs mn 2013 2014 2015E 2016E 2017E
Share Capital 1,065 1,065 1,065 1,065 1,065
Reserves -2,621 -4,191 -4,633 -4,314 -3,002
Net Worth -1,556 -3,126 -3,568 -3,249 -1,937
Deferred Tax 0 0 0 0 0
Loans 16,330 14,095 14,095 14,095 14,095
Net Fixed Assets 14,340 13,571 13,836 14,706 15,564
Capital WIP 6,535 4,226 4,226 4,226 4,226
Investments 2,782 2,000 2,680 2,680 2,680
Current Assets 7,891 7,905 7,452 8,266 10,272
Inventory 86 75 75 75 75
Debtors 304 415 415 415 415
Loans & Advances 3,803 3,916 3,910 3,910 3,910
Creditors 2,138 1,357 2,014 2,320 2,658
Provisions 6,674 8,503 8,503 8,503 8,503
Net Current Assets -8,883 -8,828 -10,216 -10,766 -10,312
Appl. Of fund 14,774 10,969 10,526 10,846 12,158
(Rs mn) 2013 2014 2015E 2016E 2017E
PAT -660 -1,542 -445 319 1,312
Depreciation 6,276 5,973 5,998 6,132 6,223
Interest Exp 1,284 1,327 1,691 1,691 1,691
Other Income 511 660 432 396 311
Increase/ decrease in Wkg Capital 2,086 -274 941 1,364 1,552
Change in Fixed Assets -6,412 -5,204 -6,264 -7,002 -7,081
CWIP -2,651 2,309 0 0 0
Change in Investments -1,282 782 -680 0 0
Other income 511 660 432 396 311
CF from Investing Activities -9,833 -1,453 -6,512 -6,605 -6,769
Issue of shares 43 0 0 0 0
Changes in debt 2,327 -2,235 0 0 0
Interest Exp -1,284 -1,327 -1,691 -1,691 -1,691
Dividend paid 0 0 0 0 0
Others 0 -34 0 0 0
CF from Financing Activities 1,086 -3,596 -1,691 -1,691 -1,691
Net change in Cash -274 -225 -449 814 2,006
Media
13 January 2015

2013 2014 2015E 2016E 2017E
Basic (Rs)
EPS -1.18 -1.45 -0.42 0.30 1.23
BPS -1.5 -2.9 -3.4 -3.1 -1.8
DPS 0.0 0.0 0.0 0.0 0.0
Payout (%) 0.0 0.0 0.0 0.0 0.0
Valuation (X)
P/E -28.2 -23.0 -79.6 110.8 27.0
P/B -22.8 -11.3 -9.9 -10.9 -18.3
EV/EBITDA 12.1 12.0 10.3 9.1 7.9
EV/Sales 3.2 2.8 2.6 2.2 1.9
Dividend Yield (%) 0.0 0.0 0.0 0.0 0.0
Profit Ratios (%)
RoCE -3.3 -1.2 7.7 14.9 22.1
Turnover Ratios
Advances days 128 107 100 100 100
Net Debt 9,903 10,669 11,116 10,302 8,296
Asset turnover 0.7 0.8 1.0 1.1 1.1
Media
13 January 2015

Long Term Financial Model Drivers
LT Earnings CAGR 15%
Advertising growth 15%
Content cost 15%
Other Considerations
Advertising industry is still small
compared with the global industry. There
is much room for acceleration in the
industry. With digitization, broadcaster
revenues should receive additional boost,
helping profitability.
1 Year Forward P/E
0
5
10
15
20
25
30
35
40
45
Jan-06 Jan-08 Jan-10 Jan-12 Jan-14
12M Fwd PE Avg.
Zee is the largest Indian media conglomerate with presence in Hindi, English and regional
space. It has a large bouquet of channels and is one of the top-four most viewed Hindi
GECs.
 Progress in Digitization
 Sports business turning positive
 Recovery in the advertising market for the
industry
Catalysts
Target Investment Thesis
 Beneficiary of digitization
 Advertising growth moderates to 12% in
FY15 and then rises to 17% in FY16&17
 Subscription revenue growth at 16% in
FY16 and FY17
 Sports business losses see some decline
 Content costs increases by 17% in FY16
and FY17
 2017 EPS: Rs14.1; Target Multiple: 24.0x
PE; Target Price: 340
Upside Scenario
 Beneficiary of digitization
FY15 and then rises to 19% in FY16 and17
 Subscription revenue growth at 18% in
FY16 and FY17
 Sports losses sees some decline
 Content costs increases by 16% in FY16 &
FY17
 2017 EPS: Rs15.7; Target Multiple: 26.0x
PE; Target Price: 410
Downside Scenario
 Digitization benefits accrue at slower pace
FY15 and then rises to 15% in FY16&17
 Subscription revenues growth at 14% in
FY16 & FY17
 Content cost growth at 18% in FY16&17
 Sports business losses to increase from
current levels
 2016 EPS: Rs13; Target Multiple: 22x PE;
Target Price: 290
Long Term Analysis
Scenarios
Group P/E
Source: Bloomberg, Jefferies estimates
0
5
10
15
20
25
30
Z IN SUNTV IN TV18
12M FWD PE
Peer Comparison
Zee
Sun TV
TV18
15
17
19
21
23
25
27
29
31
33
5 25 45 65
FY17PE
EPS CAGR (FY14-16E)
Recommendation / Price Target
Ticker Rec. PT
Z IN Hold 340
SUNTV IN NC NA
ZEEN IN NC NA
TV18 IN NC NA
Company Description
THELONGVIEW
Peer Group
Zee Enterprise Ltd.
Hold: INR 340 Price Target
Media
13 January 2015

Organic Revenue Growth 11-20%
Operating Margin Expansion 5.0%
The newspaper industry grows as incomes
and consumption spend increase. With
this, the industry is expected to grow at a
strong 15% rate. Expect Jagran to grow
stronger as its footprint states are seeing
faster growth than the rest of the country,
leading to higher consumption growth
and thus higher ad spend in these
markets.
1 Year Forward P/E
8
13
18
23
28
33
38
JAGP 12M Fwd PE Avg.
Jagran Prakashan is a print media firm. It publishes a Hindi language newspaper called
Dainik Jagran, which is the most widely read daily in India. In addition to Dainik Jagran, it
has other titles which include Nai Dunia, i-next, City plus, Mid Day, Mid Day Gujarati and
Inquilab. It also has a presence in the Out-of-Home and Event Management businesses.
 NaiDunia revenue improvement
 Trend in newsprint prices
 Improvement in ad revenue growth
 Improvement at Mid Day
Catalysts
 Advertising growth of 15% in FY16 & FY17
 Newsprint price decline 2% in FY16
 Circulation growth remains at 7%
 NaiDunia breakeven’s at EBITDA level in
FY16
 Radio business margins remains at current
levels
 Consol margins expand by 510bps over
FY14-17E
 2017 EPS: 12.9; Target Multiple: 12.4x;
Target Price 160
Upside Scenario
 Advertising growth better than industry at
17% in FY16 and FY17
 Newsprint price decline c4% in FY16
 Circulation growth remains at 7%
 NaiDunia turn profitable in FY16
 Radio business margins improve 100bps
from current levels
 Consol margins expand by 650bps over
FY14-17E
 2017 EPS: 14.00; Target Multiple: 14x;
Target Price: 196
Downside Scenario
 Advertising growth of just 12% in FY16 &
FY17
 NaiDunia losses remain at current levels
 Newsprint price remain stable in FY16
 Circulation growth slows to 5%
 Consol margins improve by 230bps over
FY14-17E
 2015 EPS: 10.7; Target Multiple: 12x
Target Price: 128
Long Term Analysis
Scenarios
Group P/Es
0
2
4
6
8
10
12
14
16
18
20
DBCL JAGP HTML
FY16 PE
Earnings Growth vs P/E
DBCL
JAGP
HTML
10
12
14
16
18
20
22
8 13 18 23
FY13-16EPSCAGR(%)
FY16 PE
Ticker Rec. PT
JAGP Buy 160
DBCL Buy 460
Company Description
THELONGVIEW
Peer Group
[Jagran Prakashan Ltd]
Buy: INR 160 Price Target
Media
13 January 2015

Organic Revenue Growth 13-15%
Operating Margin Expansion 400bps
Newspaper industry grows as the income
and consumption spend increases. With
this the industry is expected to grow at a
strong 15% rate. Aggressive expansion in
new regions will add to growth in
medium term. DB will see better growth
due to its diverse portfolio and new
expansions
1 Year Forward P/E
12
13
14
15
16
17
18
19
20
21
22
Jan-10 Jul-11 Jan-13 Jul-14
DBCL 12M Fwd PE Avg.
D.B. Corp is a regional print media firm. It publishes daily newspapers in three languages
in 13 states. Its main newspaper Dainik Bhaskar is the second most read daily in India and
is a Hindi language newspaper. The firm also has a presence in radio and internet
businesses.
 Improvement in margins
 Readership gain in Maharashtra and Bihar
 Recovery in economy
Catalysts
 Losses from new editions to reduce as
advertising growth recovers
 Advertising growth rebounds to 15% in
FY16 & FY17
 Circulation revenue growth sustains at
11% levels
 Newsprint prices decline 2% for FY16
 Margin expansion of 450bps over FY14-17
 2017EPS: Rs29.0; Target Multiple: 15.8x;
Target Price: 460
Upside Scenario
 Losses from new editions to reduce as
advertising growth recovers
 Advertising growth rebounds to 17% in
FY16 & FY17
 Circulation revenues growth sustains at
13% levels
 Newsprint prices decline 4% for FY16
 Margin expansion of 480bps over FY14-17
 2017EPS: Rs30.1; Target Multiple: 16.5x;
Target Price: 496

Downside Scenario
 Losses from new editions continue for
some times
 Advertising growth remains low at 12%
for FY16 & FY17
 Circulation growth slows due to increased
competition to 7% in FY16 & 17
 Newsprint prices remain flat in FY16
 Margins remain flat over FY14-17
 2017 EPS: Rs23.4; Target Multiple: 15.0x;
Target Price: 350
Long Term Analysis
Scenarios
Group P/Es
0
2
4
6
8
10
12
14
16
18
20
DBCL JAGP HTML
FY16 PE
Earnings Growth vs P/E
DBCL
JAGP
HTML
10
12
14
16
18
20
22
8 13 18 23
FY13-16EPSCAGR(%)
FY16 PE
Ticker Rec. PT
DBCL Buy 460
JAGP Buy 160
Company Description
THELONGVIEW
Peer Group
[DB Corp Ltd]
Buy: INR 460 Price Target
Media
13 January 2015

Subscriber addition 7-9%
ARPU growth 4-5%
DTH industry has grown in the past, as it
had better quality than cable. Post
digitization, the growth will come from
rural India. This contributes around 70%
of the current subscriber base. Going
forward, additions will be determined by
consumption spend increase in rural
India.
1 Year Forward EV/EBITDA
0
5
10
15
20
25
Jul-10 Jul-11 Jul-12 Jul-13 Jul-14
Dish EV/EBITDA
Dish is the largest DTH provider in India. It has a market share of 30% based on gross
subscribers.
 Digitization process progress
 Price hikes/reductions by various DTH and
cable companies
 Growth in additions
Catalysts
 Subscriber addition sees some
improvement, though still low
 Benefits of digitization limited
 DTH captures 20% share in analog
conversion
 Dish share 23.5% in DTH additions
 Churn increases to 10%
 ARPU growth of 5% in FY16 and FY17
 2017 EBITDA: Rs 8915mn; Target Multiple:
7; Target Price: Rs49
Upside Scenario
 Subscriber addition improves to 1.5mn
 Benefit of digitization limited
 DTH captures 30% share in analog
conversion
 Dish share 23.5% in DTH additions
 Churn remains at 9%
 ARPU growth of 6.3% in FY16 and FY17
 2017 EBITDA: Rs 9636mn; Target Multiple:
7.5; Target Price: Rs58
Downside Scenario
 Subscriber addition remains muted
 Digitization sees significant delay
 DTH captures 15% share in digitization
 23% share in DTH additions
 Churn increases to 12%
 ARPU growth of just 3-4% in FY16&FY17
 2016 EBITDA: 7848; Target Multiple: 6.5x
EV/EBITDA; Target Price: Rs34
Long Term Analysis
Scenarios
Group EV/EBITDAs
0
2
4
6
8
10
12
14
HATH IN KD8 GY DITV IN BSY LN DTV US
FY16 EV/EBITDA
Market share of players
30
18
18
15
9
10
Market Share of players (%)
Dish TV Tata Sky Airtel Sun Big TV Videocon
Ticker Rec. PT
DITV Underperform 49
Company Description
THELONGVIEW
Peer Group
[Dish TV Ltd.]
Underperform: INR 49 Price Target
Media
13 January 2015

Company Description
D.B. Corp is a regional print media firm. It publishes daily newspapers in three languages from 13 states. Its main paper Dainik Bhaskar is the
second most read daily in India and is a Hindi language paper. The firm in addition has a presence in the Radio and Internet businesses.
Jagran Prakashan is a print media firm. It publishes a Hindi language newspaper under the title Dainik Jagran. Dainik Jagran is the most read
daily in India. In addition to Dainik Jagran it has other titles which include i-next, City plus, Mid-day, Mid-day Gujarati and Inquilab. It also
has a presence in the Out-of-Home and Event Management business.
Zee produces and develops Hindi films., serials game shows and children’s program. It is one of India’s leading television, media and
entertainment companies. It broadcasts channels in Hindi and regional channels in India and across 167 other countries.
Dish TV offers direct broadcast satellite subscription television service in India. It is the largest Direct to Home player in India with 30% market
share.
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or views expressed in this research report.
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Media
13 January 2015

Risk which may impede the achievement of our Price Target
This report was prepared for general circulation and does not provide investment recommendations specific to individual investors. As such, the
financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions based
upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Past performance of
the financial instruments recommended in this report should not be taken as an indication or guarantee of future results. The price, value of, and
income from, any of the financial instruments mentioned in this report can rise as well as fall and may be affected by changes in economic, financial
and political factors. If a financial instrument is denominated in a currency other than the investor's home currency, a change in exchange rates may
adversely affect the price of, value of, or income derived from the financial instrument described in this report. In addition, investors in securities such
as ADRs, whose values are affected by the currency of the underlying security, effectively assume currency risk.
Other Companies Mentioned in This Report
• D.B. Corp Ltd (DBCL IN: INR400.15, BUY)
• Dish TV India Ltd (DITV IN: INR68.65, UNDERPERFORM)
• Jagran Prakashan Ltd (JAGP IN: INR138.45, BUY)
• Zee Entertainment Enterprises Ltd (Z IN: INR360.90, HOLD)
Media
13 January 2015

Distribution of Ratings
IB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY 1049 52.09% 284 27.07%
HOLD 812 40.32% 144 17.73%
UNDERPERFORM 153 7.60% 6 3.92%
Media
13 January 2015

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