Jagran Prakashan - Business Standardbsmedia.business-standard.com/_media/bs/data/market...31 May 2016 2 Jagran Prakashan Valuation and view JAGP, a leader in the regional print segment,

Page 1

31 May 2016 4QFY16 Results Update | Sector: Media

Jagran Prakashan

Jay Gandhi ([email protected]); +91 22 3089 6693

BSE SENSEX S&P CNX CMP: INR169 TP: INR195 (+15%) Buy 26,668 8,160 Bloomberg JAGP IN Equity Shares (m) 311.3 M.Cap. (INR b) / (USD b) 52.6/0.8

52-Week Range (INR) 180 / 110 1, 6, 12 Rel. Per (%) 2/7/49 12M Avg Val (INR m) 22 Free float (%) 39.3

Financials & Valuation (INR b) Y/E MAR 2016 2017E 2018E

Net Sales 21.1 23.2 25.6 EBITDA 6.0 6.4 7.0 Adj. NP 3.4 3.6 3.9 Adj. EPS (INR) 10.5 11.0 12.2 Adj.EPSGr.(%) 44.6 5.3 10.3 BV/Sh (INR) 49.3 55.7 63.7 RoE (%) 24.7 21.1 20.4 RoCE (%) 24.8 16.6 16.4 P/E (x) 16.1 15.3 13.9 P/BV (x) 3.4 3.0 2.6

Estimate change

TP change

Rating change

Print ad/circulation revenue/EBITDA for 4QFY16 surpasses estimates EBITDA (ex-Radio) and adjusted PAT ahead of estimates: Jagran Prakashan’s

(JAGP) EBITDA for 4QFY16 grew by 28% YoY to INR1.36b (vs. our estimate of INR1.32b), while EBITDA (ex-Radio) grew by 11% YoY to INR1.16b (7% higher than our estimate of INR1.08b), as both Print advertising and circulation surpassed our estimates by 3.6%/3%, respectively even as opex at INR3.94b was largely in line with our estimate of INR3.9b. Adjusted PAT grew by 58% YoY to INR 0.8b (26% higher than our estimate of INR0.64b), due to a further boost from lower-than-expected depreciation and interest outgo.

Ad growth (ex-radio) up 13% YoY; circulation growth up 8% YoY: Ad revenue (ex-Radio) grew by 13% by YoY to INR3.32b (3.6% higher than our estimate of INR3.21b). Print ad growth in 4QFY16 was driven by 1) Yield improvement 2) Better inventory utilization 3) More ad space sold. As a result, JAGP’s ad market share increased to 7.5% in FY16 (from 7.1% in FY15). The key performing categories in 4QFY16 were auto, white goods and retail. Management expects a Print ad growth of ~11-12% in FY17. Circulation revenue grew by 8% YoY to INR1.06b (vs. our est. of INR1.03b), led by yield as well as number of copies sold. Consolidated revenue grew by 25% YoY to INR5.29b (vs. our est. of INR5.22b).

Radio City ad revenue grows by 18% YoY and contributes ~15% to bottom line:Radio City’s ad revenue grew by 18% YoY to INR0.59b (vs. our estimate of INR0.64b) and now contributes 15% of adjusted PAT. Management has guided for a 15% YoY growth in radio, considering new stations to be launched in FY17.

Margins remain flat YoY and in line with estimate: Consolidated EBITDA margin increased by 60bp YoY to 25.6% (in line with our estimate) as opex escalation mirrored revenue growth. Raw material costs grew by 9% YoY to INR1.57b (29.7% of revenue). Employee/SG&A expenses grew by 20/46% YoY, led by radio-related expenses, coupled with increased publicity expense and sales incentives.

Valuation and view: We are maintaining our EPS estimates for FY17/FY18 and expect proforma EPS CAGR of 10% over FY16-18, driven by CAGR of 10% each in ad/circulation revenue. The stock trades at a P/E of 15.3x FY17E/13.9x FY18E. Maintain Buy with a target price of INR195 (unchanged), based on 16x FY18E EPS (~8% discount vs. 10-year average P/E).

Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Page 2

31 May 2016 2

Jagran Prakashan

Valuation and view JAGP, a leader in the regional print segment, publishes (incl Nai Duniya) the top

3 newspapers in all large Hindi markets, except Rajasthan. Acquisition of RadioCity makes it a significant scale player in the radio business as well.

'Dainik Jagran' (DJ) is the highest-read daily in India with pan-India Hindireadership share of ~21%. However its readership is relatively concentrated,with Bihar and UP accounting for ~65%, though they constitute only ~40% ofHindi market readership.

JAGP has preferred the inorganic route for growth over the last few years as themanagement likely perceives this as relatively ‘low-risk’. By going for theacquisition strategy, JAGP has been able to avoid large losses inherent in anysignificant green-field expansion. While ‘Nai Duniya’ acquisition added a newmarket (MP and Chhattisgarh) to existing regional footprint, business models ofthe other two acquisitions (Mid-Day and Radio City) are largely metro-focused.

Expected cumulative radio investment of ~INR7b (towards Radio Cityacquisition, migration fee, and likely acquisition of promoter group radiobusiness) compares with current invested capital (ex-cash) of ~INR10.5b, makingradio a very significant bet in the overall scheme of things for JAGP. We believethat radio segment growth and integration of Radio City would be importantfactors driving stock valuations going forward.

We expect advertising growth to accelerate and model 11%/9% each inFY17E/18E vs 8% growth in FY16.

Raw material prices have bottomed out. We expect newsprint cost/ton to growby 2-3% going forward. We model 10% CAGR in newsprint costs (pricing andvolume together) during FY16-18E.

We maintain our earnings estimates for FY17/FY18 and expect pro forma EPSCAGR of 10% over FY16-18, driven by 10% each ad/circulation revenue CAGR.The stock trades at P/E of 15.3x FY17E/13.9x FY18E. Maintain Buy with a pricetarget of INR195 (unchanged), based on 16x FY18E EPS (~8% discount v/s 10-yraverage P/E).

Exhibit 1: JAGP: PE band chart

Source: Company, MOSL

Exhibit 2: JAGP: Relative PE vs Sensex

Source: Company, MOSL

15.2

51.6

18.5

8.2 4

18

32

46

60

May

-06

Aug-

07

Nov

-08

Feb-

10

May

-11

Aug-

12

Nov

-13

Feb-

15

May

-16

PE (x) Peak(x) Avg(x) Min(x)

-5.0

9.4

-100

-50

0

50

100

150

May

-06

Aug-

07

Nov

-08

Feb-

10

May

-11

Aug-

12

Nov

-13

Feb-

15

May

-16

Jagran Prakashan PE Relative to Sensex PE (%)

Page 3

31 May 2016 3

Jagran Prakashan

Exhibit 3: Standalone ad/circulation revenue (including Nai Duniya from 4QFY13)

Exhibit 4: Standalone YoY ad growth (%)

Exhibit 5: Standalone EBITDA (incl Nai Duniya from 4QFY13)

Source: Company, MOSL

Exhibit 6: RM/Sales (Consolidated from 1QFY14)

Source: Company, MOSL

1,89

8

1,93

5

1,94

5

1,88

7

2,04

3

2,11

9

2,23

5

2,10

3

2,20

7

2,19

6

2,39

3

2,27

6

2,68

5

2,63

0

3,00

0

2,64

7

2,88

0

2,86

6

3,14

1

2,73

0

3,12

2

3,12

7

3,47

4

3,10

8

553

548

570

559

582

612

623

628

641

666

699

761

795

826

861

860

896

908

942

922

945

998

959

999

1QFY

11

2QFY

11

3QFY

11

4QFY

11

1QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

2QFY

13

3QFY

13

4QFY

13

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

Advertising revenue (INR m) Circulation revenue (INR m)

18 13

31

20

8 10 15

11 8

4 7

0

12 1115 16

7 9 5 3

8 9 11 14

1QFY

11

2QFY

11

3QFY

11

4QFY

11

1QFY

12

2QFY

12

3QFY

12

4QFY

12

1QFY

13

2QFY

13

3QFY

13

4QFY

13

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

705

832

653

633

902

908

897

714

820

791

851

659

788

782

911

540

1,01

3 91

1 1,

090

797

1,05

9 1,

033

1,26

1 1,

034

1,23

9 1,

248

1,40

9 1,

125

30 3429 27

33 33 3125 27 26 26

21 25 24 26

16

26 24 2520

26 25 29 26 28 29 29

25

1QFY

102Q

FY10

3QFY

104Q

FY10

1QFY

112Q

FY11

3QFY

114Q

FY11

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

3QFY

164Q

FY16

EBITDA (INR m) EBITDA margin (%)

701

684

674

678

756

801

863

911

989

1,07

5 1,

135

1,08

2 1,

135

1,10

9 1,

179

1,24

0 1,

416

1,47

3 1,

627

1,57

1 1,

627

1,60

3 1,

585

1,44

3 1,

558

1,54

5 1,

611

1,57

2

30 28 30 29 28 29 30 32 32 35 35 35 36 34 34 36 34 36 36 37 37 37 34 34 32 31 28 30

1QFY

102Q

FY10

3QFY

104Q

FY10

1QFY

112Q

FY11

3QFY

114Q

FY11

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

3QFY

164Q

FY16

RM cost (INR m) RM cost (% of rev)

Page 4

31 May 2016 4

Jagran Prakashan

Exhibit 7: Consolidated quarterly performance 4QFY15 3QFY16 4QFY16 YoY (%) QoQ (%) 4QFY16E v/s est (%)

Advertising revenue (excl. Radio City) 2,929 3,669 3,322 13.4 -9.4 3,205 3.6 Circulation revenue 980 1,020 1,062 8.3 4.1 1,031 2.9 Others 331 1,074 911 174.9 -15.2 985 -7.6Revenue 4,240 5,764 5,295 24.9 -8.1 5,222 1.4 Total operating cost 3,179 4,043 3,937 23.8 -2.6 3,897 1.0 EBITDA 1,061 1,721 1,358 28.0 -21.1 1,325 2.4 EBITDA margin (%) 25.0 29.9 25.6 62bps -422bps 25.4 26bps Depreciation 287 284 242 -15.5 -14.6 309 -21.6EBIT 774 1,437 1,115 44.0 -22.4 1,016 9.7 Interest 133 172 143 7.1 -17.0 239 -40.1Other Income 129 64 148 14.8 131.2 156 -5.4Exceptional costs -803 0 0 0 PBT 1,572 1,329 1,120 -28.8 -15.7 934 19.9 Tax 263 396 319 21.2 -19.6 299 6.7 Tax rate (%) 17 30 28 1172bps -137bps 32 -353bpsReported PAT 1,310 933 801 -38.8 -14.1 635 26.1 Exceptional/prior period items -803 0 0 NA NA 0 Adjusted PAT 507 933 801 58.2 -14.1 635 26.1 Operating expenses (INR m)

4QFY15 3QFY16 4QFY16 YoY (%) QoQ (%) 4QFY16E v/s est (%) Raw material 1,440 1,611 1,572 9.2 -2.4 1,500 4.8 Employee 687 839 823 19.8 -1.8 825 -0.3Others 1,052 1,593 1,542 46.6 -3.2 1,572 -1.9Total 3,179 4,043 3,937 23.8 -2.6 3,897 1.0 Opex (% of revenue) Raw material 34.0 27.9 29.7 -427bps 175bps 28.7 97bps Employee 16.2 14.5 15.5 -66bps 100bps 15.8 -26bpsOthers 24.8 27.6 29.1 431bps 148bps 30.1 -97bps

Source: Company, MOSL

Earnings Call Highlights Print ad growth in 4Q was a function 1. yield improvement 2) better inventory

utilization 3) More ad space sold. The effect of which took JAGP’s ad marketshare to 7.5% in FY16 (from 7.1% in FY15).

Key performing categories in 2Q were auto, white goods and retail.Management expects Print ad growth of ~11-12% in FY17 and radio to grow at15% YoY.

All new radio stations are expected to operationalize by December 2015. Digital ad revenue grew 61% YoY to ~INR215m in FY16.

Page 5

31 May 2016 5

Jagran Prakashan

Exhibit 8: Summary of estimate change (INR b) FY16 FY17E FY18E

Revenue Old 20.9 23.0 25.2 Actual/New 21.1 23.2 25.6 Change (%) 1.0 1.2 1.6 EBITDA Old 5.8 6.5 7.1 Actual/New 6.0 6.4 7.0 Change (%) 2.8 -1.1 -1.3EBITDA margin (%) Old 27.9 28.3 28.1 Actual/New 28.4 27.6 27.3 Change (bp) 50 -66 -83Adj. PAT Old 3.1 3.5 3.9 Actual/New 3.4 3.6 3.9 Change (%) 9.7 2.4 2.2 Adj. EPS (INR) Old 9.7 11.0 12.2 Actual/New 10.5 11.0 12.2 Change (%) 8.5 0.2 0.0

Source: Company, MOSL

Exhibit 9: Key assumptions & other data FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E

Group ad revenue (INR b) 6.4 8.5 9.4 10.5 11.9 12.5 13.5 15.0 16.5 YoY (%) 16 34 10 12 13 5 8 11 9 -Standalone (exc. Nai Duniya) 6.4 7.7 8.5 8.9 10.0 10.6 11.4 12.7 13.9

YoY (%) 16 20 11 4 13 6 8 12 9 -Mid-Day + Inquilab 0.8 0.9 0.9 0.9 0.9 0.9 1.0 1.1 1.1

YoY (%) 4 2 -2 5 0 11 4 5 -Nai Duniya 0.8 0.9 1.0 1.1 1.2 1.4

YoY (%) 13 16 5 13 13 13 -Radio 1.9 2.3 2.7

YoY (%) -7 18 20 Group circulation revenue (INR b) 2.1 2.4 2.7 3.2 3.6 3.9 4.1 4.5 4.9 YoY (%) 9 12 11 20 12 9 5 10 10 -Standalone (exc. Nai Duniya) 2.1 2.2 2.4 2.7 3.1 3.3 3.5 3.9 4.3

YoY (%) 10 4 10 11 13 9 5 11 11 -Mid-Day + Inquilab 0.1 0.2 0.2 0.2 0.2 0.2 0.3 0.2 0.2

YoY (%) 4 28 9 5 9 4 -3 -2-Nai Duniya 0.3 0.3 0.3 0.3 0.3 0.3

YoY (%) 25 10 10 10 0 0 Dainik Jagran av circulation/day (m) 2.7 3.0 3.2 3.5 3.6 3.8 3.9 4.1 4.4 YoY (%) -2 11 8 7 4 6 3 5 5 Newsprint price (USD/ton) 505 573 652 610 586 557 504 515 527 YoY (%) -20 13 14 -6 -4 -5 -9 2 2 RM cost/Revenue (%) 29 29 34 32 32 31 26 26 26

Source: Company, MOSL

Page 6

31 May 2016 6

Jagran Prakashan

Story in charts

Exhibit 10: Hindi dailies: Brand wise readership (m)

Source: IRS 2012

Exhibit 11: Dainik Jagran: State wise readership mix (%)

Source: IRS 2012

Exhibit 12: Print advertising revenue growth

Source: Company, MOSL

Exhibit 13: Print Circulation revenue growth

Source: Company, MOSL

Exhibit 14: Radio business revenue and EBITDA estimates

Source: Company, MOSL

Exhibit 15: Radio Business: Expected PAT impact

Source: Company, MOSL

16.4 14.4

12.2 8.8 8.6

3.3 2.6 2.6

1.6 1.3

Dainik JagranDainik Bhaskar

HindustanRajasthan Patrika group

Amar Ujala groupPunjab Kesari

Navbharat TimesPrabhat Khabar

Nai DuniaHari Bhoomi

Uttar Pradesh, 50

Bihar, 16

MP (incl Nai Duniya), 8

Haryana, 6

Jharkhand, 5

Uttarakhand, 4

Punjab (incl.

Chandigarh), 4

Delhi, 4

Others, 3

3.9 5.0 5.5 6.4 8.5 9.4 9.7 10.9 11.5 12.4 13.8 15.1

26

28

11

16 17

10

4

12

5 8

11 9

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

E

FY18

E

Ad revenue (INRb) YoY Ex-acquisition (%)

1.7 1.8 2.0 2.1 2.4 2.7 3.2 3.6 3.9 4.1 4.5 4.9

5

8

8

9

4

11 12 12

9

5

10 10

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

E

FY18

E

Circulation revenue (INRb) YoY Ex-acquisition (%)

1.3 1.5 1.6

2.1 1.9 2.3

2.7

0.2 0.3 0.4 0.6 0.7 0.7

0.9

FY12 FY13 FY14 FY15 FY16 FY17E FY18E

Radio revenue (INR b) Radio EBITDA (INR b)

-0.02

-0.17

-0.06

FY16 FY17E FY18E

Page 7

31 May 2016 7

Jagran Prakashan

Story in charts

Exhibit 16: Revenue mix

Source: Company, MOSL

Exhibit 17: EBITDA and EBITDA margin

Source: Company, MOSL

Exhibit 18: Newsprint cost(INR b)

Source: Company, MOSL

Exhibit 19: Newsprint cost as % of revenue

Source: Company, MOSL

Exhibit 20: Adjusted PAT growth

Source: Company, MOSL

Exhibit 21: Dividend per share and pay-out

Source: Company, MOSL

65 67 67 68 70 69 69 70 70 65 65 64

28 24 24 23 20 20 21 21 22 20 19 19 9 10

7 9 9 10 11 11 10 9 8 7 6 6

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

E

FY18

E

Advertising revenue Circulation revenue Radio Others

1.2 1.6 1.6 2.8 3.6 3.2 3.0 3.8 4.5 5.9 6.4 7.0

20.0 21.819.0

30.0 29.2 23.4

19.4 22.5

25.5 28.0 27.6 27.3

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

E

FY18

E

EBITDA (INRb) EBITDA margin (%)

2.2 2.5 2.9 2.5 3.2

4.2 5.0

5.6 5.8 5.8 6.4

7.2

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

E

FY18

E

36.5 33.4 35.2

26.2 26.2 30.9 32.8 33.0 32.6

27.6 27.7 28.0

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

E

FY18

E

0.7 1.0 0.9 1.8 2.2 1.8 1.5 2.0 2.3 3.3 3.6 3.9

112

33

-7

92

24

-18 -17

37 13

44

9 10

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

E

FY18

E

Adj. PAT (INR b) YoY (%)

1.5 2.0 2.0 3.5 3.5 3.5 2.0 4.0 3.5 3.5 3.5 3.5

70 72 77 70

59 73

50

72 57

40 37 34

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

E

FY18

E

Dividend per share Pay-out (%)

Page 8

31 May 2016 8

Jagran Prakashan

Financials and valuations

Income Statement (Consolidated) (INR Million) Y/E March 2011 2012 2013 2014 2015 2016 2017E 2018E Net Sales 12,211 13,557 15,256 17,027 17,698 21,065 23,249 25,590 YoY (%) 29.6 11.0 12.5 11.6 3.9 19.0 10.4 10.1 EBITDA 3,568 3,168 2,964 3,826 4,505 5,974 6,420 6,978 EBITDA margin (%) 29.2 23.4 19.4 22.5 25.5 28.4 27.6 27.3 Depreciation 575 709 755 789 1,035 1,044 1,145 1,301 Interest 91 158 307 345 369 523 301 302 Other Income 256 255 206 117 279 345 303 404 PBT 3,158 2,556 2,107 2,810 3,380 4,752 5,277 5,778 Tax 976 773 632 795 1,102 1,390 1,704 1,866 Tax rate (%) 30.9 30.2 30.0 28.3 32.6 29.3 32.3 32.3 Adjusted PAT 2,183 1,783 1,475 2,015 2,278 3,362 3,572 3,912 Change (%) 24.1 -18.3 -17.3 36.6 13.0 47.6 6.3 9.5 Extra-ordinary items -105 0 1,087 248 803 1,164 0 0 Reported PAT 2,078 1,783 2,562 2,263 3,081 4,525 3,572 3,912 Balance Sheet Y/E March 2011 2012 2013 2014 2015 2016 2017E 2018E Share Capital 633 633 633 623 635 654 654 654 Share Premium 3,590 3,590 3,590 3,125 3,057 3,057 3,057 3,057 Reserves 2,799 3,296 5,101 5,869 7,650 12,102 14,346 16,929 Net Worth 7,022 7,519 9,324 9,616 11,342 15,813 18,057 20,640 Loans 1,924 6,434 4,623 4,658 5,479 5,120 5,120 5,120 Deffered Tax Liability 617 720 711 854 725 726 726 726 Minority interest 0 80 11 9 10 0 0 0 Capital Employed 9,564 14,752 14,669 15,137 17,556 21,658 23,902 26,486 Gross Fixed Assets 7,723 9,280 10,277 11,232 11,789 15,399 17,329 19,852 Less: Depreciation 2,570 3,279 4,034 4,823 5,858 6,902 8,048 9,349 Net Fixed Assets 5,153 6,001 6,242 6,409 5,931 8,496 9,281 10,503 Capital WIP 316 316 316 316 200 200 200 200 Goodwill 0 2,993 2,510 2,323 2,323 5,980 5,980 5,980 Investments 2,018 2,524 2,224 3,320 3,573 3,068 3,068 3,068 Curr. Assets 4,979 6,744 6,726 6,888 10,525 7,942 9,818 11,627 Inventory 639 775 833 999 929 669 732 802 Debtors 2,310 2,889 3,190 3,426 3,636 4,977 4,777 5,258 Cash & Bank Balance 362 995 523 325 4,931 493 2,320 3,376 Loans & Advances 1,415 1,891 1,479 1,465 899 1,525 1,683 1,853 Other current assets 252 194 702 673 131 278 306 337 Current Liab. & Prov. 2,902 3,825 3,350 4,119 4,995 4,028 4,446 4,894 Creditors 1,545 2,433 2,481 2,879 3,500 3,834 4,231 4,657 Provisions & other liabilities 1,357 1,392 868 1,240 1,495 195 215 236 Net Current Assets 2,077 2,919 3,377 2,769 5,530 3,913 5,373 6,734 Application of Funds 9,564 14,752 14,669 15,137 17,556 21,659 23,902 26,486

Page 9

31 May 2016 9

Jagran Prakashan

Financials and valuations

Ratios Y/E March 2011 2012 2013 2014 2015 2016 2017E 2018E Basic (INR) Adjusted EPS 6.9 5.6 4.7 6.4 7.2 10.5 11.0 12.1 Growth (%) 18.2 -18.3 -17.3 37.7 12.8 44.6 5.1 9.5 Cash EPS 8.7 7.9 7.1 8.9 10.5 13.7 14.5 16.1 Book Value 22.2 24.0 29.5 30.7 36.1 49.3 55.7 63.6 DPS 3.5 3.5 2.0 4.0 3.5 3.5 3.5 3.5 Payout (incl. Div. Tax.) (%) 59 73 50 72 57 40 37 34 Valuation P/E 24.5 30.0 36.2 26.3 23.3 16.1 15.3 14.0 Cash P/E 19.4 21.4 24.0 18.9 16.0 12.3 11.6 10.5 EV/EBITDA 14.9 18.0 18.9 14.3 11.9 9.5 8.5 7.7 EV/Sales 4.3 4.2 3.7 3.2 3.0 2.7 2.4 2.1 Price/Book Value 7.6 7.0 5.7 5.5 4.7 3.4 3.0 2.7 Dividend Yield (%) 2.1 2.1 1.2 2.3 2.1 2.1 2.1 2.1 Profitability Ratios (%) RoE 33.2 24.4 17.4 21.3 21.7 24.7 21.1 20.2 RoCE 24.4 15.5 18.7 16.7 20.3 24.8 16.5 16.3 RoIC 32.4 18.6 15.3 19.2 24.9 27.8 19.5 19.9 Turnover Ratios Debtors (Days) 69 78 76 73 75 86 75 75 Inventory (Days) 19 21 20 21 19 12 11 11 Creditors. (Days) 65 85 74 80 97 93 92 91 Asset Turnover (x) 1.9 1.5 1.3 1.5 1.7 1.6 1.3 1.3 Leverage Ratio Debt/Equity (x) 0.3 0.8 0.5 0.5 0.5 0.3 0.3 0.2 Cash Flow Statement (INR Million) Y/E March 2011 2012 2013 2014 2015 2016 2017E 2018E Op.Profit/(Loss) bef Tax 3,463 3,168 4,050 3,826 4,505 5,974 6,420 6,978 Other Income 256 255 206 117 279 345 303 404 Interest Paid -91 -158 -307 -345 -369 -523 -301 -302 Direct Taxes Paid -938 -671 -641 -795 -1,102 -1,390 -1,704 -1,866 (Inc)/Dec in Wkg. Cap. -255 -209 -329 372 1,846 -2,822 367 -304 CF from Op.Activity 2,435 2,386 2,980 3,176 5,158 1,584 5,085 4,909 (inc)/Dec in FA + CWIP -2,103 -4,550 -997 -768 -441 -7,267 -1,930 -2,524 (Pur)/Sale of Investments -352 -506 300 -1,096 -253 504 0 0 CF from Inv.Activity -2,455 -5,056 -697 -1,864 -694 -6,763 -1,930 -2,524 Inc/(Dec) in Debt 711 4,510 -1,811 35 821 -359 0 0 Dividends Paid -1,295 -1,295 -740 -1,457 -1,299 -1,329 -1,329 -1,329 Other Financing Activities 84 89 -204 -2 1 -10 0 0 CF from Fin.Activity -470 3,304 -2,755 -1,899 -533 -1,679 -1,329 -1,329 Inc/(Dec) in Cash -490 633 -473 -588 3,932 -6,858 1,827 1,057 Add: Opening Balance 852 362 995 523 325 4,931 493 2,320 Closing Balance 362 996 523 325 4,931 493 2,320 3,376

Page 10

31 May 2016 10

Jagran Prakashan

Corporate profile: Jagran Prakashan

Exhibit 23: Shareholding pattern (%) Mar-16 Dec-15 Mar-15

Promoter 60.8 60.8 60.8

DII 12.6 12.6 12.2

FII 15.7 15.5 16.2

Others 11.0 11.2 10.8

Note: FII Includes depository receipts

Exhibit 24: Top holders Holder Name % Holding

Ntasian Discovery Master Fund 4.5 Franklin Templeton Investment Funds 4.4 HDFC Trustee Co Ltd- Hdfc Multiple Yield Fund- Plan

4.4

ICICI Prudential Life Insurance Company Limited 4.0 Reliance Capital Trustee Co. Ltd A/C Reliance Equity

3.5

Franklin India Monthly Income Plan 2.4

Exhibit 25: Top management Name Designation

Mahendra Mohan Gupta Chairman & Managing Director

Devendra Mohan Gupta Director

Shailendra Mohan Gupta Director

Sanjay Gupta Whole Time Director & CEO

Dhirendra Mohan Gupta Whole-time Director

Exhibit 26: Directors Name Name

Mahendra Mohan Gupta Rajendra Kumar Jhunjhunwala*

Devendra Mohan Gupta Jayant Davar*

Shailendra Mohan Gupta Ravi Sardana*

Anuj Puri* Anita Nayyar*

Amit Dixit* Sanjay Gupta

Vijay Tandon* Dhirendra Mohan Gupta

Dilip Cherian* Sunil Gupta

Akhilesh K Gupta* Shailesh Gupta

Bharatji Agrawal* Satish Chandra Mishra

Shashidhar Narain Sinha*

*Independent

Exhibit 27: Auditors

Name Type

Price Waterhouse Statutory

Adesh Tandon & Associates Secretarial Audit

Ernst & Young LLP Internal

Exhibit 28: MOSL forecast v/s consensus EPS

(INR) MOSL

forecast Consensus

forecast Variation

(%)

FY17 11.0 11.7 -6.4

FY18 12.1 13.6 -10.7

Company description Jagran Prakashan Ltd (JPL) is a leading media and communications group with its main interests across Newspaper, Outdoor, Internet, Magazine, Event Management and Short Code Sevice media, spanning across 11 states. JPL is a leading newspaper publisher. It's flagship brand Dainik Jagran has been the largest read and circulated newspaper in India. JPL has 3 newspaper titles - Dainik Jagran, I next and City Plus. Dainik Jagran is a Hindi newspaper printed out of 31 locations across 11 states, I next is a bilingual compact morning newspaper targeted at 18-35 yrs, SEC AB1 in key metros, while City Plus is a weekly English tabloid circulated in Gurgaon, Faridabad, Ghaziabad, Noida and Delhi.

Exhibit 22: Sensex rebased

Page 11

JAGRAN PRAKASHAN

OTHER COMPANIES

SECTOR UPDATES

Jagran Prakashan GALLERY

Page 12

31 May 2016 12

Jagran Prakashan

Disclosures This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report and may be distributed by it and/or its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.

MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors on investments in such business . The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting information. Our research professionals are paid on twin parameters of performance & profitability of MOSt. MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest. MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.

Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.

This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents.

Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report

MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.

Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412

Pending Regulatory inspections against Motilal Oswal Securities Limited: SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and adjudge violation of SEBI Regulations; MOSL replied to the Show Cause Notice whereby SEBI granted us an opportunity of Inspection of Documents. Since all the documents requested by us were not covered we have requested to SEBI vide our letter dated June 23, 2015 to provide pending list of documents for inspection.

List of associate companies of Motilal Oswal Securities Limited -Click here to access detailed report Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues Disclosure of Interest Statement JAGRAN PRAKASHAN Analyst ownership of the stock No Served as an officer, director or employee No A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes

Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons.

This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.

In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited: Varun Kumar Kadambari Balachandran [email protected] [email protected] Contact : (+65) 68189232 (+65) 68189233 / 65249115 Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931

Motilal Oswal Securities Ltd

Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025 Phone: +91 22 3982 5500 E-mail: [email protected]