Buy Jagran Prakashan; target of Rs 151: HDFC Securities

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HDFC Securities’ research report on Jagran Prakashan

JAGP’s revenue/EBITDA grew by a healthy 8.2/14.6% YoY (DB Corp 3.7/6.3%). PAT increased was restricted to 12.2% due to higher tax. Double digit ad revenue growth in Dainik Jagran was after a hiatus of eleven quarters. Government category contributed 50-55% of the growth led by 25% increase in DAVP rates. Education and auto were other positive contributors. National advertising (40-45% of print ad revenues) was key laggard. With stable govt at the centre and revival in consumption; mgmt estimate national advertising to pick-up from festive season. Operating performance would have been even more healthy but for muted show by other publications (Mid-day, Naidunia etc). Radio, digital, outdoor and event businesses performance too was on track.

Outlook

Jagran Prakashan’s (JAGP) 4QFY19 operating performance was ahead of estimates. This was led by 9% advertising revenue growth in print business (Dainik Jagran 12%), moderate growth in newsprint (NP) prices and other opex YoY. Maintain BUY with TP of Rs 151 (+31%) @ 12x FY21E EPS (a discount of ~25% to 3/5/10 years avg PE).

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