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Analyst Corner: Print ads revive over 10% for Jagran Prakashan

Axis Capital
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Print ad growth revived to 10%+ in Q4FY19 (vs. 2% decline in 9MFY19) led by strong government spends (accounting for 50% of growth), with auto and education aiding the balance growth. Circulation revenue grew 2% y-o-y/q-o-q on price-led growth (partial pass-through of newsprint prices).

MBL, Jagran Prakashan (JAGP) s subsidiary, has acquired 24% stake (balance stake subject to approvals) in Reliance s BIG FM for Enterprise Value of `10.5 bn (equity value at `3.5 bn, to be paid in 2 tranches).

This increases MBL s presence to 79 radio stations (39 existing and BIG FM s 40 stations retained) across 60+ cities. Management does not see need for any significant incremental investment to scale up this business. Print ad/ circulation revenue grew 1% y-o-y each to `13.7/ 4.3 bn; Ebitda declined 9% to `5.3 bn (margin declined 270 bps to 22.6% on elevated print prices); PAT declined 12% to `2.7 bn. FY19 revenue grew 9% to `3.2 bn on spends from govt. and e-commerce sector.

Ebitda margin grew to 34.9% vs. 32.6% y-o-y on higher utilisation. PAT at `0.6 bn (vs. `0.5 bn y-o-y). Q4 revenue grew 6% y-o-y to `0.8 bn, Ebitda at `0.3 bn (37.8% margin vs. 36% y-o-y) and reported PAT was flat y-o-y at `167 mn.

Print ad revenue to grow at 8%, while radio revenue to grow at 10% on higher utilisation. Consolidated Ebitda to grow at ~20% on benefits from lower newsprint prices (expected to be down 10% in 20). Outdoor revenue grew 14% y-o-y in Q4 (+8% in FY19); Digital revenue declined 10% y-o-y in Q4 (+23% in FY19). Jagran Prakashan Limited publishes approximately 12 print titles in over five different languages spread across 15 states with over 100 editions.

The Company’s print media brands include Dainik Jagran, inext, Mid-Day, Nai Dunia, Mid-Day Gujarati, Inquilab, Sakhi, Punjabi Jagran and Jagran Josh. The Company’s digital media brands include Jagran New Media, Jagran.com, Jagranjosh.com, Jagran Post, Jagran Junction and Jeetle.