Jagran Prakashan - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Jagran Prakashan (JPL) reported 12.1% yoy growth in net profit to Rs.56cr mainly on account of tax benefit due to accumulated losses at Nai Dunia. On the operating front, JPL posted a 201bp yoy contraction in its OPM to 23.3% on account of 327bp yoy increase in raw-material cost. However, margins expanded by 388bp qoq on account of cost control measures undertaken by the company.

Key highlights of the quarter: For 1QFY2013, Jagran Prakashan (JPL) reported sluggish 4.4% yoy growth in top-line to Rs.311cr. Advertising revenue posted 8.0% yoy growth in the quarter to ~Rs.221cr aided by growth in national advertisement revenue even as its peers struggled due to the economic slowdown. Circulation growth stood at 10.1% yoy to ~Rs.64cr. However, non-publishing business revenue, which comprises event, outdoor and digital businesses, declined by 28.0% yoy to Rs.24cr during the quarter.

Outlook and valuation: At the CMP, JPL is trading at 12.4x FY2014E consolidated EPS of Rs.7.0. We maintain our Buy view on the stock with a revised target price of Rs.112, based on 16x FY2014E EPS, valuing it at 10% premium to our Sensex target valuation multiple. Downside risks to our estimates include 1) any further rise in newsprint prices, 2) competition becoming fierce and 3) higher-thanexpected losses/increase in the turnaround period for Nai Dunia.

Source : Equity Bulls

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