Our interaction with the management of Jagran Prakashan (JAGP) at its Analyst meet suggests intent to consolidate/ focus...
Our interaction with the management of Jagran Prakashan (JAGP) at its Analyst meet suggests intent to consolidate/ focus on: (a) Print – scale up inorganic acquisitions (Naiduniya, Midday) by leveraging on its strong franchise, (b) Radio – building next growth engine with phase III expansion and (c) Digital – expand reach with calibrated investments.
While monetizing digital business may take some time, we believe JAGP is well placed to benefit from ad spend revival with macro recovery. Also, its expansion in Radio business will further boost earnings growth in the medium-term. We revise our FY16/17E EPS by 3-5% to factor in operating leverage benefits. The stock trades at PE of 16x FY16E EPS of R 9.7 and 13x FY17E EPS of R12.
JAGP will continue its focus on pushing ad yields further. Management highlighted higher ad yields have been driving ~80% of its ad growth over the last 5 years. It plans to derive further synergies from Midday and Naiduniya; focus to remain on profitable growth.
With phase III expansion, JAGP expects Radio ad share to double to ~8% (of aggregate Media ad spends) over 3-5 years.
Given strong positioning of Radio City in existing/ healthy expansion in phase III cities, JAGP expects it to be the key beneficiary of such shift .