Jagran Prakashan’s (JPL) Q1FY11 revenues, at INR 2,698 mn, rose 16.4% Y-o-Y, in line with our estimate of INR 2,650 mn. Advertisement revenues jumped 17.9% Y-o-Y (in spite of a higher base due to election related ads last year same time) and 20.4% Q-o-Q, to INR 1,898 mn. Ad revenue growth has come on the back of increase in ad space, better yields, and higher billing rates for I-Next and City Plus. Education, real estate, retail sectors and local ads continue to show good traction in ad revenues. Circulation revenues grew a mere 1.5% Y-o-Y, to INR 553 mn, as a result of the company taking cover price cut in the Jharkhand market. The outdoor, event management and digital revenues for the quarter stood at INR 248 mn, recording a strong 51% Y-o-Y growth.
JPL’s net profit grew 12.3% Y-o-Y, to INR 556 mn, ahead of our expectation of INR 500 mn. Net profit margin for the quarter stood at 20.6% against 21.4% in Q1FY10. The dip in margin was the result of sharp dip in other income over last year, which included certain one-off items.
JPL offers an exciting play on Hindi regional print media and will be a key beneficiary of the increase in advertisement spends. Uptrend in newsprint prices continues and will have to be monitored. The company’s outdoor and event management segments are expected to contribute more significantly, going ahead. The stock is currently trading at P/E of 17.4x FY11E and 14.6x FY12E
