Buy Jagran Prakashan; target of Rs 225: Centrum Research

Centrum Research’s research report on Jagran Prakashan

We maintain BUY on Jagran Prakashan with TP of Rs225 as we value the company based on our conservative adj. OCF based methodology. While the ad growth in Q4FY18 was down 6.2% due to high political advertising in Q4FY17, we expect it to bounce back in FY19. Further we believe the radio business would grow by high teens in FY19 on rate increase and high inventory utilisation. We expect circulation revenue to grow by high single digit on increase in cover price to mitigate the impact of newsprint prices. However we believe FY19E would be impacted by steep increase in newsprint prices and company need to undertake steep cost cutting measure to maintain profitability. Rs3/share dividend coupled with ~Rs3bn buyback similar to FY17 gives us comfort as ~127% of PAT has been distributed to shareholders cumulatively over FY17 & FY18.

Outlook
We value the company on adjusted OCF (AOCF = OCF Interest) to EV yield based on five year average cash flows to arrive at a TP of Rs225. Key downside risks include sustained high newsprint prices and subdued ad growth.

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First Published on Jun 6, 2018 04:33 pm

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