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Jagran Prakashan 3QFY2012 performance highlights and results update

Contributed by Angel Broking

For 3QFY2012, Jagran Prakashan (JPL) reported a healthy performance on the revenue front. The company reported top-line growth of 13.7% yoy/6.5% qoq to Rs.317cr. The company’s earnings declined on a yoy basis by ~21.5% as well as sequentially by ~10% and came in at Rs.41cr. The decline in earnings was due to a 496bp yoy contraction in operating margin on account of high raw-material prices because of increased circulation and forex losses. We maintain our Buy recommendation on the stock.

Key highlights of the quarter: During the quarter, ad revenue grew by ~15% yoy. Circulation growth stood at ~9% yoy. Non-publishing business revenue, which comprises event, outdoor and digital businesses grew by 15% yoy each. The company also reported forex loss of Rs.8.7cr on account of foreign exchange fluctuations.

Outlook and valuation: Post 3QFY2012, we have maintained our earnings estimate. We expect JPL to post a 9% CAGR in its top line over FY2011-13E, driven by a ~10% CAGR in ad revenue and a ~3% CAGR in circulation revenue. In terms of earnings, we expect JPL to report a CAGR of 7% over FY2011-13E (impacted by margin pressure). We believe underperformance of the stock provides a good entry point. Hence, we maintain our Buy view with a revised target price of Rs.137.