2026-03-23 03:35:36
Latest Post
Kiaasa Retail Ltd opens 4 retail outlets
NIS Facility Management Services Ltd receives order worth Rs. 56.01 lakhs
IndiQube Signs 1140 Seats Workspace Leasing Deal with Major GCC Client in Pune
Thomas Cook India Ltd announces the demerger of its Resorts and Resort Management business into Sterling Holiday Resorts Ltd
Vikram Solar appoints Sameer Nagpal as CEO to Lead Next Phase of Strategic Growth
Research
Media and Entertainment - Advantage: Regional print - Anand Rathi
Posted On : 2013-07-02 22:15:37( TIMEZONE : IST )
Attractive structural growth opportunity. Changing demographic dynamics has ensured a surge in purchasing power in tier II and tier III cities. This, along with high resilience of the agrarian economy has spawned a buoyant market for the regional print media. The medium's widespread appeal, high penetration, niche/localized positioning and contained impact from rising internet penetration, has enabled regional players to increase their share in advertisers' total newspaper ad spend from 50% in 2007 to 60% in 2012. We believe it is set to reach 70% by 2017. Low capex intensity and high degree of market concentration (top two players account for 76% readership in Hindi print) would ensure that growth translates into strong investor returns.
Multiple growth drivers in medium term. Election-related advertising is expected to spurt in FY14 and FY15, with the onset of election season from 3QFY14, comprising key state elections (MP, Chhattisgarh, Delhi, Rajasthan, Harayana, Maharashtra) and general elections. This, apart from cyclical recovery in ad spending, is expected to drive 12-13% ad revenue growth in FY14 for companies covered by us (versus 4-7% in FY13). Waning competition and stable newsprint prices are other medium-term growth drivers. We expect our coverage companies to record 22% CAGR in earnings over FY13-15.
DB Corp. and Jagran Prakashan strong bets. They offer quality exposure to structural and cyclical growth factors, owing to their ring fenced position in regional print (combined 20% share of readership). Also, both enjoy strong brand equity, formidable track record of growth (26% and 12% earnings CAGR over FY07-13, respectively), robust profitability (RoEs consistently around 20%), free cash flows (dividend payouts of over 45%) and low leverage.
Our take. We expect DB Corp. and Jagran Prakashan to deliver 30-35% returns over the next year, driven by resumption in earnings growth and valuation re-rating. They are currently trading at 13-32% below average P/E of the past three years. We initiate coverage on DB Corp. (TP: Rs. 320) and Jagran Prakashan (TP: Rs. 110) with Buy. Risks. Prolonged economic slowdown, rise in newsprint prices.
