3QFY2012 Result Update | Media February 2, 2012

Jagran Prakashan
Performance Highlights
(` cr) Revenue EBITDA OPM (%) PAT
Source: Company, Angel Research

BUY
CMP Target Price
3QFY11 279 82 29.6 53 % yoy 13.7 (5.3) (494bp) (21.5) 2QFY12 305 79 26 46 %qoq 3.8 (1.2) (125bp) (9.8)

`98 `137
12 Months

3QFY12 317 78 24.6 41

Investment Period

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 `317cr. The companys earnings declined on a yoy basis by ~21.5% as well as sequentially by ~10% and came in at `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 `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 `137.

Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others Abs. (%) Sensex JAGP

MEDIA 3,098 0.7 132/90 15,984 2 17,301 5,236 JAGP.BO JAGP@IN

59.5 15.9 11.5 13.2

3m 1yr 3yr (1.0) (4.0) 83.6 (10.3) (20.3) 122.6

Key financials (Consolidated)

Y/E March (` cr) Net sales % chg Net profit (Adj.) % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2010 942 14.4 176 92.0 30.0 5.6 17.7 4.8 30.0 30.0 3.5 11.6

FY2011 1,221 29.6 210 19.4 29.2 6.6 14.8 4.4 31.6 33.3 2.7 9.2

FY2012E 1,336 9.4 210 0.2 27.6 6.7 14.8 4.5 30.2 31.8 2.4 8.9

FY2013E 1,447 8.3 241 14.6 28.2 7.6 12.9 4.2 33.8 35.2 2.3 8.0

Sreekanth P.V.S
022 3935 7800 Ext: 6841

sreekanth.s@angelbroking.com

Please refer to important disclosures at the end of this report

Jagran Prakashan | 3QFY2012 Result Update

Exhibit 1: Quarterly performance (Consolidated)

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Staff Costs (% of Sales) Other Expenses (% of Sales) Total Expenditure Operating Profit OPM Interest Depreciation Other Income PBT (excl. Ext Items) Ext Income/(Expense) PBT (incl. Ext Items) (% of Sales) Provision for Taxation (% of PBT) Recurring PAT PATM Reported PAT Equity shares (cr) FDEPS (`)
Source: Company, Angel Research

3QFY12 317 113 35.8 41 12.8 85 26.7 239 78 24.6 4 17 3 60 60 18.9 19 31.2 41 13.0 41 32 1.3

3QFY11 279 86 31.0 36 13.0 74 26.4 196 82 29.6 2 15 13 79 79 28.2 26 33.0 53 18.9 53 30 1.7

% yoy 13.7 31.4 11.9 15.2 21.7 (5.3) 112.3 12.9 (77.8) (23.6) (23.6) (27.9) (21.5) (21.5) (21.5)

2QFY12 305 108 35.2 38 12.3 81 26.6 226 79 25.9 3 16 4 64 64 21.0 18 28.6 46 15.0 46 32 1.4

% qoq 3.8 5.5 8.2 4.4 5.6 (1.2) 55.5 3.1 (28.0) (6.5) (6.5) 1.8 (9.8) (9.8) (9.8)

9MFY2012 920 320 34.8 117 12.8 250 27.2 688 232 25.3 10 48 21 196 196 21.3 59 30.3 137 14.9 137 32 4.3

9MFY2011 821 242 29.5 106 13.0 215 26.3 564 257 31.3 5 40 32 243 243 29.7 80 32.7 164 20.0 164 30 5.2

% chg 12.2 32.1 10.4 16.2 22.0 (9.4) 113.0 17.7 (33.4) (19.4) (19.4) (25.4) (16.5) (16.5) (16.5)

Healthy top line performance compared to other print cos

JPL reported top-line growth of 13.7% yoy/3.8% qoq to `317cr. The company reported healthy ad revenue growth of ~14.9% yoy and 6% qoq. Circulation growth stood at 9% yoy/~2% qoq. Ad revenue came in on account of ads from both national as well as local advertisers. Earnings for the quarter fell by 21.5% yoy. During the quarter, the companys other businesses also performed sluggishly, with revenue growing by 14.1% yoy.

February 2, 2012

Jagran Prakashan | 3QFY2012 Result Update

Exhibit 2: Healthy ad revenue growth across editions...

350 300 250 30.0 25.0 20.0 15.0 10.0 5.0 -

Exhibit 3: Circulation revenue grew on a yoy/qoq basis...

250 200

(` cr)

150 100 50 -

(` cr)

(%)

200

150 100 50 Ad-revenue Circulation revenue Non-publishing business 3Q12

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

Top-line (LHS)

yoy (RHS)

3Q11

4Q11

1Q12

2Q12

Source: Company, Angel Research

Source: Company, Angel Research

Gross margin contracts and drags OPM

At the operating level, JPL delivered a 494bp yoy and 125bp qoq contraction in OPM. The company faces gross margin pressure and witnessed a 482bp yoy gross margin contraction, impacted by increased newsprint cost, which stood at `31/kg. On a yoy basis, other expenses stood high (up 33bp) and staff cost remained flat. The company reported a 21.5% yoy decline in its earnings, aided by a steep decline in its OPM during the quarter.

Exhibit 4: Earnings decline as OPM contracts

60 50 40 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 (20.0) (40.0)

Exhibit 5: OPM and gross margin contract yoy

80 70 60 50 72 70 71 71 71 69 67 67 65

(` cr)

(%)

30 20 10 -

(%)

40 30 20 10 -

34

28

27

32

32

30

25

25

26

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

PAT (LHS)

yoy growth (RHS)

OPM

Gross margins

Source: Company, Angel research

Source: Company, Angel research

February 2, 2012

2Q12

Jagran Prakashan | 3QFY2012 Result Update

Investment rationale
Healthy ad revenue growth on account of higher color inventory, peg a 10% CAGR: For FY2012-13E, we expect ad revenue to grow by 8-12% yoy. We maintain a conservative stance on managements robust guidance of 14-15% yoy growth due to lower national advertisements (management guidance) and low pick-up in advertisements from the education sector (expect pressure to ease in 2HFY2012). Underperformance a good entry point; JPL attractive at 13.8x FY2013E EPS: JPL acquired the print business from Mid-Day Multimedia, whose presence in markets such as Mumbai, Delhi, Bangalore and Pune (recently launched) is likely to fill the gap in JPLs portfolio vs. its peers HT Media (HT and Hindustan) and DB Corp. (Dainik Bhaskar and DNA), which offer both English and Hindi publications to their advertisers. Hence, we believe JPLs combined offerings are going to record a healthy 9% CAGR in revenue over FY2011-13E. With JPLs wider portfolio (including Mid-Day Publications), we believe the company is well poised to benefit from steady growth in print media. The underperformance of the stock and attractive valuations (at the CMP, the stock trades at 12.9x FY2013E EPS) provide a good entry point for investors.

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 `137, based on a P/E multiple of 18x FY2013E (in-line with its historical valuations). Downside risks to our estimates include 1) any further increase in newsprint prices, 2) competition becoming fierce and 3) higher-than-anticipated slowdown in the macroeconomic scenario.

February 2, 2012

Jagran Prakashan | 3QFY2012 Result Update

Exhibit 6: Key assumptions

(` cr) Ad. Revenue Dainik Jagran I-Nxt City plus Circ. Revenue Dainik Jagran I-Nxt Others Revenue from Mid-Day Revenue from others Non-Publishing Others Total YoY growth (%) Advt Revenue Dainik Jagran I-Nxt City plus Circ. Revenue Dainik Jagran I-Nxt Others Revenue from Mid-Day Revenue from others Non-Publishing Others % of Total Advt Revenue Circ. Revenue Revenue from others
Source: Company, Angel research

FY2009 552 526 23 3 195 187 5 4 78 58 19 825

FY2010 638 600 34 4 214 204 6 4 90 73 16 942

FY2011 FY2012E FY2013E 766 712 47 7 221 209 6 6 107 126 102 24 1,221 855 785 61 10 226 212 7 6 120 134 117 18 1,336 921 838 71 12 236 222 8 6 136 155 137 18 1,447

CAGR 9.6 8.5 22.6 28.2 3.3 3.0 12.5 1.9 13.0 10.6 15.6 (13.6) 8.9

10.6 7.8 148.5 90.6 7.9 6.2 219.0 (4.7) 11.3 4.4 39.5

15.7 14.0 49.5 65.9 9.4 9.5 8.0 7.0 15.4 25.6 (15.9)

20.1 18.7 39.3 63.1 3.4 2.2 10.0 60.5 41.3 39.1 51.3

11.6 10.3 27.6 40.3 2.0 1.8 10.0 2.6 12.9 6.3 14.2 (27.1)

7.6 6.7 17.7 17.2 4.5 4.3 15.0 1.2 13.1 15.1 17.0 2.3

66.9 23.7 9.4

67.8 22.7 9.5

62.8 18.1 10.4

64.0 16.9 10.1

63.6 16.3 10.7

February 2, 2012

Jagran Prakashan | 3QFY2012 Result Update

Exhibit 7: Peer valuation

Company DB Corp HT Media
Jagran

Reco Buy Buy

Buy

Mcap (` cr) 3,565 3,136

3,110

CMP (`) 195 133

98

TP (`) 274 170

137

Upside (%) 40.9 27.4

39.3

P/E (x) FY12E 15.0 15.6

14.8

EV/Sales (x) FY12E 8.3 1.4

2.4

RoE (%) FY12E 26.2 14.4

30.2

CAGR Sales 12.6 12.9

8.9

FY13E 12.9 14.1

12.9

FY13E 7.3 1.2

2.3

FY13E 25.4 13.9

33.8

PAT 2.1 7.1

4.7

Source: Company, Angel Research

Exhibit 8: Angel vs. consensus estimates

Top line (` cr) Angel estimates Consensus Diff (%)
Source: Company, Angel Research

FY2012E

FY2013E

EPS (`) Angel estimates Consensus Diff (%)

FY2012E

FY2012E

1,336 1348 (0.9)

1,447 1503 (3.7)

6.7 6.4 3.9

7.6 7.6 0.3

Exhibit 9: Return of JPL vs. Sensex

140% 120% 100% 80% 60% 40% 20% 0%
Feb-11 Feb-11 May-11 Sep-11 Jul-11 Dec-11 Jun-11 Jun-11 Jan-12 Aug-11 Mar-11 Aug-11 Apr-11 Apr-11 Nov-11 Nov-11 Oct-11 Jan-12

Exhibit 10: One-year forward P/E band

Jagran
200 180 160 140 120 100 80 60 40 20 0 10x 15x 20x 25x

Sensex

Share Price (`)

Feb-07

Feb-08

Feb-09

Feb-10

Feb-11

Source: Company, Angel Research

Source: Company, Angel Research

February 2, 2012

Feb-12

Jun-07

Jun-08

Jun-09

Jun-10

Oct-07

Oct-08

Oct-09

Oct-10

Jun-11

Oct-11

Jagran Prakashan | 3QFY2012 Result Update

Profit & Loss Statement (Consolidated)

Y/E March (` cr)
Gross sales Less: Excise duty Net Sales Total operating income % chg Total Expenditure Cost of Materials SG&A Expenses Personnel Others EBITDA % chg (% of Net Sales) Depreciation& Amortization EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Share in profit of Associates Recurring PBT % chg Prior Period & Extra Exp/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earnof asso Less: Minority interest (MI) PAT after MI (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg

FY2008 FY2009 FY2010 FY2011 FY2012E FY2013E

750 750 750 25.3 586 295 92 91 107 164 36.7 21.9 34 130 35.5 17.4 6 22 14.8 146 27 146 48 33 98 98 98 28.7 13.1 3.3 3.1 28.7 823 823 823 9.8 667 341 93 107 126 157 (4.3) 19.0 38 118 (9.1) 14.4 6 23 16.8 135 (7) 135 44 32 92 92 92 (6.6) 11.1 3.0 2.9 (6.6) 942 942 942 14.4 660 296 99 121 144 282 80.1 30.0 51 232 95.6 24.6 7 34 13.2 259 92 259 83 32 176 176 176 92.0 18.7 5.8 5.6 92.0 1,221 1,221 1,221 29.6 864 390 120 173 182 357 26.4 29.2 65 291 25.8 23.9 9 26 8.3 308 19 2 306 98 32 208 208 210 19.5 17.2 6.6 6.6 19.5 1,336 1,336 1,336 9.4 967 440 148 174 206 368 3.2 27.6 69 300 2.9 22.4 11 25 8.0 314 2 314 104 33 210 210 210 0.1 15.8 6.7 6.7 0.1 1,447 1,447 1,447 8.3 1,039 472 149 203 216 408 10.8 28.2 78 330 10.2 22.8 9 24 7.0 345 10 345 104 30 241 241 241 14.6 16.7 7.6 7.6 14.6

February 2, 2012

Jagran Prakashan | 3QFY2012 Result Update

Balance Sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Preference Capital Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Gross Block Less: Acc. Depreciation Net Block Capital Work-in-Progress Goodwill Investments Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Misc Exp Total Assets 392 135 257 48 183 307 37 77 193 124 183 671 480 151 328 71 157 360 83 87 190 162 198 753 564 194 369 25 167 417 85 98 235 186 231 792 730 258 472 74 202 498 36 167 295 290 208 956 763 326 437 38 202 521 43 142 336 271 250 926 867 404 462 43 202 537 16 155 366 297 240 948 60 479 539 79 53 671 60 500 560 141 52 753 60 552 612 121 58 792 63 639 702 192 62 956 63 629 692 172 62 926 63 670 734 152 62 948 FY2008 FY2009 FY2010E FY2011 FY2012E FY2013E

February 2, 2012

Jagran Prakashan | 3QFY2012 Result Update

Cash Flow Statement (Consolidated)

Y/E March (` cr) Profit before tax Depreciation Change in Working Capital Interest / Dividend (Net) Direct taxes paid Others Cash Flow from Operations (Inc.)/ Dec. in Fixed Assets (Inc.)/ Dec. in Investments Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Interest / Dividend (Net) Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2008 FY2009 FY2010E 146 34 (33) (6) 48 6 98 (68) (39) (106) (28) 35 (6) (56) (65) 101 37 135 38 (7) (2) 44 16 136 (111) 27 (84) 62 70 (2) (6) 46 37 83 259 51 (12) (9) 83 (21) 185 (38) (10) (48) (20) 123 (9) (135) 2 83 85 FY2011 FY2012E FY2013E 310 65 (31) (1) 98 34 280 (216) (35) (251) 71 155 (9) (75) (47) 85 36 314 69 (46) 3 104 (29) 206 3 3 (20) 185 (2) (203) 7 36 43 345 78 (23) 2 104 0 299 (108) (108) (20) 200 (3) (217) (27) 43 16

February 2, 2012

Jagran Prakashan | 3QFY2012 Result Update

Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value DuPont analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post-tax) Leverage (x) Operating ROE Returns (%) RoCE Angel RoIC (Pre-tax) RoE Turnover ratios (x) Asset Turnover Inventory / Sales (days) Receivables (days) Payables (days) Net Working capital (days) Solvency ratios (x) Net Debt to equity Net Debt to EBITDA Interest Coverage (0.3) (0.9) 21.7 (0.2) (0.6) 20.1 -0.2 -0.5 35.3 -0.1 -0.1 32.1 -0.1 -0.2 28.0 -0.1 -0.2 34.9 1.9 17 77 41 71 1.7 14 70 39 51 1.7 21 70 50 57 1.7 23 69 46 51 1.8 24 68 50 56 1.7 26 66 50 57 19.6 30.2 18.7 16.6 24.5 16.7 30.0 43.9 30.0 33.3 46.3 31.6 31.8 42.8 30.2 35.2 46.8 33.8 17.4 0.7 1.7 20.4 0.0 (0.3) 14.9 14.4 0.7 1.7 16.6 0.0 (0.2) 13.0 24.6 0.7 1.8 29.8 0.0 -0.2 24.0 23.9 0.7 1.9 31.6 0.0 -0.1 27.2 22.4 0.7 1.9 28.7 0.0 -0.1 26.3 22.8 0.7 2.1 32.7 0.0 -0.1 29.6 3.3 3.1 4.4 2.0 17.9 3.0 2.9 4.3 2.0 18.6 5.8 5.6 7.5 3.5 20.3 6.6 6.6 8.6 4.2 22.2 6.7 6.7 8.8 5.0 21.9 7.6 7.6 10.1 5.4 23.2 31.7 22.5 5.5 2.0 4.2 19.2 4.7 33.9 22.8 5.3 2.0 3.8 20.2 4.2 17.7 13.1 4.8 3.6 3.5 11.6 4.0 14.8 11.4 4.4 4.3 2.7 9.2 3.4 14.8 11.1 4.5 5.1 2.4 8.9 3.5 12.9 9.7 4.2 5.5 2.3 8.0 3.4 FY2008 FY2009 FY2010E FY2011 FY2012E FY2013E

February 2, 2012

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Jagran Prakashan | 3QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock'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 fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Jagran No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

February 2, 2012

11