Jagran Prakashan

Considering Jagran Prakashan's low debt and good dividend paying record, it looks to be an attractive buy in the media space

JAGRAN Prakashan is a leading newspaper company in North India, having a dominant readership in Uttar Pradesh. The company’s flagship brand, Dainik Jagran, has a readership of 54 million and is one of the most widely read newspapers in India, according to Indian Readership Survey, 2009 Round 2. Dainik Jagran has 37 editions across eleven states.

BUSINESS & INDUSTRY

Besides Dainik Jagran, the company also owns two more brands - Inext and CityPlus. The recently launched Inext is a newspaper targetted at the young and educated Hindi readers who are also conversant with the nitty-gritty of the English language. In contrast, CityPlus is a compact newspaper (weekly), which deals primarily with local news It is circulated across 21 cities. In the December ‘09 quarter, raw materials accounted for 41% of Jagran Prakashan’s total expenditure, suggesting its vulnerability to newsprint prices.

Going forward, the market expects a rise in newsprint prices considering fluctuations in rupee-dollar rates. Some observers expect newsprint costs to rise by 10-15% in FY11 from their current level of around $575 per tonne. Also, due to stiff competition, newspaper companies have resorted to a cut in cover prices. This strategy, though it helps to increase print-runs, it doesn’t translate into higher revenues in the near term. In the December ‘09 quarter itself, Jagran Prakashan’s circulation revenues were Rs 54 crore and the management admitted that had it not resorted to discounting, its revenues would have been higher by 4%.

INVESTMENT RATIONALE:

In recent quarters, regional language newspapers have demonstrated an edge over their English peers in terms of revenues. And Jagran Prakashan, having a dominant readership in North India is likely to continue to do well. In fact, in the December ‘09 quarter, when advertising picked up, the company reported a 10% y-o-y increase in advertising revenues, one of the highest among listed companies. For instance, HT Media’s advertising revenues declined on a year-on-year basis in the last quarter. Jagran achieved this by focussing on local revenues which now account for 63% of its ad revenue, up from 45% three years ago. And local advertising would continue to drive the company’s revenues.

As regards newsprint prices, for Jagran Prakashan, 80% of its newsprint is indigenous, while 20% of newsprint is imported. At present, average newsprint price is in the range of $550/tonne for FY10. However, considering that the bulk of its newsprint comes from the domestic market, it doesn’t have the extent of dependence which its peers have on dollar fluctuations.

VALUATION:

The company’s stock is trading at a P/E multiple of 22.66 times. This is better than that of its immediate peers, HT Media and DB Corp, whose stocks are trading at a P/E of 32.21 and 76 times respectively. Also the fact that the company has low debt and good dividend paying record, makes it a compelling buy in the media space. Investors can consider accumulating the stock at the current level to gain in the long term.

Bonanza views on Jagran Prakashan, NHPC

Bonanza on Jagran Prakashan - Target Rs 120-122

Bonanza research is bullish on Jagran Prakashan and has recommended buy rating on the stock with a target of Rs 120-122, in its research report.

“Jagran Prakashan, JPL is among the largest print media houses in India. Its flagship brand Dainik Jagran is the largest circulation newspaper in India. The scrip is at discount to the recently concluded IPO of peer DB Corp. It is likely to show an EPS of Rs 7 per share in FY10. At CMP, it trades at 17 PE on FY10 estimates. Investors may BUY in Rs 120-122 range for a target of Rs 140 i.e. 20 PE on FY10 estimates,” says Bonanza research report.

Bonanza on NHPC - Target Rs 38

Bonanza research has recommended buy rating on NHPC with a medium term target of Rs 38, in its research report.

“NHPC is India’s largest Hydro Power Company. It is adding capacities at regular intervals. If Govt allows it to sell power on merchant basis, its earnings can grow substantially. In the present scenario, we expect NHPC to report a consolidated EPS of Rs 1.2/Share. Its Consolidated Cash EPS is likely to be Rs 2/Share. At CMP, it trades at PE of 17.8 and Cash PE of 14. The scrip had fallen sharply from its issue price of Rs 36. Share may face stiff resistance at Rs.36. The scrip is expected to appreciate steadily over a period. Long term investors may buy around current levels, for a mid term target of Rs 38,” says Bonanza research report.

Stock views on NHPC, Jagran Prakashan, Reliance Infrastructure

IndiaInfoline on Reliance Infra - Target Rs 1160

IndiaInfoline has recommended buy rating on Reliance Infrastructure with a target of Rs 1160, in its research report.

Reliance Infra is trading 28% lower than its 52-week high of Rs1,404 in October 2009, but higher than its low of Rs45 in March 2009. A detailed study of Reliance Infra shows a distinctive pattern emerging which signals a temporary bottom. The stock has broken out (as seen in the daily chart) from the overall base-like pattern carved during the past five-weeks. In fact, the last couple of trading weeks represents a high level bullish congestion area between Rs 1,092-1,056. We believe that the current bullish consolidation is likely to lead to a potential upside, once the 50-DMA is broken. We recommend traders to buy the stock in the range of Rs 1,095-1,110 for a target of Rs 1,160. We advise traders to maintain a stop loss of Rs 1,080," says IndiaInfoline research report.


Bonanza on Jagran Prakashan - Target Rs 140

Bonanza research is bullish Jagran Prakashan and has recommended buy rating on the stock with a target of Rs 140, in its research report.

"Jagran Prakashan is among the largest print media houses in India. Its flagship brand Dainik Jagran is the largest circulation newspaper in India. The scrip is at discount to the recently concluded IPO of peer DB Corp. It is likely to show an EPS of Rs.7/Share in FY10. At CMP Rs.126/Share, it trades at 17 PE on FY10 estimates. Investors may BUY in Rs.120-122 range for a target of Rs 140 i.e. 20 PE on FY10 estimates."


Bonanza research on NHPC - Target Rs 38.

“NHPC is India’s largest Hydro Power Company. It is adding capacities at regular intervals. If Government allows it to sell power on merchant basis, its earnings can grow substantially. In the present scenario, we expect NHPC to report a consolidated EPS of Rs 1.2 per share. Its consolidated Cash EPS is likely to be Rs 2 per share. At CMP, it trades at PE of 17.8 and Cash PE of 14. The scrip had fallen sharply from its issue price of Rs 36. Share may face stiff resistance at Rs 36. The scrip is expected to appreciate steadily over a period. Long term investors may buy around current levels, for a mid term target of Rs 38.”

Stock views on Everest Industries, Jagran Prakashan, Jubilant Organosys

Sunidhi Securities on Everest Inds - Target Rs 125

Sunidhi Securities & Finance has recommended a buy rating on Everest Industries, with price target of Rs 125, in its report dated.


"Everest Industries’s service & production capability, initiatives towards further expand the product range and the market, offer of more choices and solutions to its customers coupled with the sturdy growth rate in demand give strong revenue visibility in the coming years. At the CMP of Rs 90, the share is trading at a P/E of 4 on FY10E and 3.5 on FY11E. We recommend 'BUY' with a target of Rs 125 in the medium term," says Sunidhi Securities & Finance's report.


Angel Broking on Jagran Prakashan - Target Rs 89

Angel Broking has upgraded its buy rating on Jagran Prakashan, with price target of Rs 89, in its report dated.

"We re-iterate Jagran as our top pick in the print media space and remain positive on its future outlook owing to its dominant position in the Hindi Belt (has recently launched a National daily in Delhi), increasing colour ad inventory, ability to attract high amount of local advertising and better traction in new initiatives (I-Next, City Plus, Yahoo Portal, OOH and Event Management). Moreover, we estimate the company’s 1QFY2010 results to reflect additional growth due to the Election spend. At Rs 78, the stock is trading at 15.7x FY2011E Earnings of Rs 4.9. We upgrade the stock to a Buy with a revised Target Price of Rs 89 (Rs 80)," says Angel Broking's report.

Karvy Stock Broking on Jubilant Organosys - Target Rs 215

Karvy Stock Broking has recommended a buy rating on Jubilant Organosys, with price target of Rs 215, in its report .

"The company will incur a capex of Rs 2.5 billion in FY 2010E and Rs 2 billion in FY 2011E. Investment of Rs 1 billion would be in APIs and Rs 1.6 billion in proprietary products and exclusive synthesis. We maintain our FY 2010E estimates as the guidance is in line with our forecast. We introduce FY 2011E estimates and roll over our price target to FY 2011E. The stock is currently quoting at PE of 7.8x FY 2010E and 6.2x FY 2011E and EV/EBDITA of 7.4x FY 2010E and 6.3x FY 2011E. This is mainly on account of the high leverage in the company's books. We rate the stock as a 'BUY' with a price target of Rs 215 based on 8x FY 2011E," says Karvy Stock Broking's report.

Stock Views on Pantaloon Retail, Everest Kanto, Jagran Prakashan, HT Media

Angel Broking on Pantaloon Retail - Target of Rs 284


Angel Broking has recommended a buy rating on Pantaloon Retail with a target price of Rs 284 in its December 1, 2008 research report. "Indian Retail Industry is a derivative of the growing economy, changing demographics and preferences of the Indian consumers. According to industry and our estimates, Nominal GDP growth of 12% over CY2008-CY2010E coupled with estimated growth of 7% in the Real private final consumer expenditure (PFCE) of Indian consumers will drive growth of the Total Indian Retail industry to reach US USD 640 billion by CY2010E. We estimate Organised Retail in India to grow at a CAGR of 35% over CY2008-10E to USD 46 billion. Few key drivers of growth of Organised Retail in India are increase in disposable income, growing aspiring middle class segment, increase in investments in Retail, Tier-II and III cities which would drive long-term growth of Organised Retail. Key challenges facing Organised Retail in India are acceptance of Organised Retail by the Traditional retailers (which is leading to tougher regulatory measures by the government), supply chain inefficiencies, high real estate costs and high execution risks in terms of store rollouts."


"Pantaloon Retail (PRIL) is our top pick in the sector as we believe that the company has competitive advantages over its peers in terms of its presence across consumption and price points of Indian consumers, has pan-India presence and lower execution risks. At Rs 210, the stock is trading at 14.2x FY2010E Earnings and 1.8x FY2010E P/BV. We Initiate Coverage on PRIL with a Buy recommendation and SOTP target price of Rs 284," says Angel's research report.


SKP Securities on Everest Kanto - Target of Rs 229


SKP Securities has recommended a buy rating on Everest Kanto Cylinder (EKC) with a target of Rs 229 in its December 1, 2008 research report. "EKC has planned a capacity expansion of 2,05,000 cylinders including the capacity for 5000 jumbo cylinders, industrial cylinders at Gandhidham with an estimated capital expenditure of Rs 650 million. EKC has made an aggressive capital expenditure plan in China, through EKC Industries (Tianjin) Co. Ltd, the company’s wholly owned subsidiary in China."


"At the current market price of Rs 140, the stock is trading at a P/E of 15.05x and 12.32x of FY09E and FY10E earnings of Rs 13.37 and Rs 16.34 respectively. We recommend BUY rating on the stock with a target price of Rs 229/- (63% upside) in 18 months implying a P/E multiple of 14x of FY10E earnings," says SKP Securities' research report.



Angel Broking on Jagran Prakashan - Target of Rs 70


Angel Broking has maintained its buy rating on Jagran Prakashan with a target price of Rs 70 in its November 28, 2008 research report. "Amid mounting problems for India’s print industry, a silver lining is starting to appear in the form of some easing in newsprint prices. Until now, newsprint prices, one of the largest cost factors for print media, had been rising since mid-2007 contributing to weakening profitability at most of India’s print media firms. Newsprint buyers at media houses say the situation is starting to become more favourable and they hope to drive down prices by USD 100-200 (Rs 4,990-9,980) per tonne when fresh contracts are signed in January."


"Currently, newsprint is available in the spot market at much lower prices than the listed price and buyers are taking that as a cue for lower prices in January. The average official price for imported newsprint in India for the current quarter is USD 960 per tonne. The cost of newsprint generally accounts for 55-65% of the total cost of a newspaper’s operation and a big surge, from USD 560 per tonne in early 2007 to USD 960, had sharply eaten into profitability of publishers, most of who resorted to reducing pages, copies printed or switching to inferior, domestic newsprint. Adding to their woes, an unexpectedly unfavourable exchange rate also dealt a blow as one dollar that could be bought for Rs 40.30 in March, now costs about Rs50, effectively raising the price of newsprint by another 20%. We believe this is a positive development for Print Media companies and maintain Buy on Jagran Prakashan with a target price of Rs 70," says Angel's research report.


Angel Broking on HT Media - Target of Rs 99


Angel Broking has maintained its buy rating on HT Media with a target price of Rs 99 in its November 28, 2008 research report. "Amid mounting problems for India’s print industry, a silver lining is starting to appear in the form of some easing in newsprint prices. Until now, newsprint prices, one of the largest cost factors for print media, had been rising since mid-2007 contributing to weakening profitability at most of India’s print media firms. Newsprint buyers at media houses say the situation is starting to become more favourable and they hope to drive down prices by USD 100-200 (Rs 4,990-9,980) per tonne when fresh contracts are signed in January."


"Currently, newsprint is available in the spot market at much lower prices than the listed price and buyers are taking that as a cue for lower prices in January. The average official price for imported newsprint in India for the current quarter is USD 960 per tonne. The cost of newsprint generally accounts for 55-65% of the total cost of a newspaper’s operation and a big surge, from USD 560 per tonne in early 2007 to USD 960, had sharply eaten into profitability of publishers, most of who resorted to reducing pages, copies printed or switching to inferior, domestic newsprint. Adding to their woes, an unexpectedly unfavourable exchange rate also dealt a blow as one dollar that could be bought for Rs 40.30 in March, now costs about Rs 50, effectively raising the price of newsprint by another 20%. We believe this is a positive development for Print Media companies and maintain Buy on HT Media with a target price of Rs 99," says Angel's research report.

KRChoksey Views on Jagran Prakashan, GSPL, Sejal Architectural

Jagran Prakashan - Target of Rs 70

KRChoksey Research has recommended a buy rating on Jagran Prakashan with a target price of Rs 70 in its November 11, 2008 research report. "On Y-o-Y basis, advertising revenue had shown a growth of 23.2% to Rs 143.7 crore and subscription revenue of 2.0% to Rs 47.2. We recommend a BUY with a target price of Rs 70 representing an upside potential of 36% from current levels," says KRChoksey's research report.

Sejal Architectural - Target of Rs 105

KRChoksey Research has maintained its buy rating on Sejal Architectural Glass with a revised target price of Rs 105 in its November 4, 2008 research report. "The company has surged from a loss making company in Q1FY09 to a profit of Rs 2.2 crore in Q2FY09. The net profit margin of the company stood at 15.7% for Q2FY09. We maintain our BUY recommendation on the stock, although we have revised the target price downwards from Rs 124 to Rs 105, due to macro-level headwinds faced by the construction industry. At the target price, the stock would be valued at 15.5x FY10E EPS of Rs 6.8," says KRChoksey's research report.
GSPL - Target of Rs 36

KRChoksey Research has maintained its buy rating on Gujarat State Petronet (GSPL) with a target price of Rs 36 in its November 4, 2008 research report. "GSPL reported net sales of Rs 118.5 crore, up 24.4% y-o-y; volume was below our expectation and declined to 14.9 mmscmd. We maintain a BUY on the stock with target price of Rs 36, giving an upside potential of 21%. At the target price the stock would be valued at 5.0x its FY10E CEPS of Rs 7.1, and 1.5x P/BV, " says KRChoksey's research report.