Jagran Prakashan Fundamental Analysis and Future Outlook

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Jagran Prakashan publishes approximately 12 print titles in over five different languages spread across 15 states of India and with over 100+ editions. The Company’s print media brands include Dainik Jagran, mid-day, Nai Dunia, mid-day Gujarati, Inquilab, Sakhi, Punjabi Jagran and Jagran Josh. The Company’s digital media brands include Jagran New Media, Jagran.com, Jagranjosh.com, Jagran Post, Jagran Junction and Jeetle. Radio City 91.1 FM is also a subsidiary of Jagran Prakashan Ltd.

The company’s shares have 52 weeks price band of INR 100-32 and a total market capitalization of INR 11.18 billion which makes it a Small-Cap company. The shares have a P/E ratio of 4.39 and a dividend yield of 8.81%

Now, let’s take a deep dive into the fundamentals of the company.
The company will be evaluated on 10 categories and each would be given a rating out of 5 stars. From this, we will arrive at a combined stock rating for the company. As the ratings are based on long term past performance, they are relevant for at least 3 years in the future until FY 2022. The categories are as follows.

  1. Economic Moat
  2. Business Model and Management
  3. Growth Ratios
  4. Profitability Ratios
  5. Cash Flow Ratios
  6. Liquidity and Solvency Ratios
  7. Efficiency Ratios
  8. Valuation Ratios
  9. ROE (Du Pont Analysis)
  10. Future Prospects

(All units are INR Millions except ratios and per share data)

You can get the complete excel model used for this analysis from below:

1.Economic Moat (★ ★ ★ ☆)

The company operates in the print media and broadcasting industry where market dominance comes from the workforce, distribution, customer base and reach. Jagran Prakashan has established leadership in print, radio, digital and out of home advertising business. Dainik Jagran is India’s #1 Daily news read with 70.4 million readers out of which 20.3 million are paper readers. It is also India’s No. 1 newspaper in the premium NCCS A segment. Mid-day is a compact newspaper of Mumbai with over 14.3 Lacs reader base. Nai Dunia and Nav Dunia Rank are among the top 10 Hindi newspapers in India and Mid-day Gujarati is Mumbai’s No. 2 Gujarati newspaper.

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Other than this the company also has a good hold in the Radio FM business with Radio City and reaches to 39 most important towns of India dominating the most important advertiser markets. Jagran New Media (JNM), the online arm of the company, offers Web, Text/ Voice-based value-added services and products. The JNM internet portfolio has 9 websites across genres like news, education, blogging, health, classifieds, youth and videos. This overall gives a good economic moat to the company. Therefore this category gets 4 stars in Jagran Prakashan fundamental analysis.

2. Business Model and Management (★ ★ ★ )

The business model of the company is such that it operates across 6 major verticals including Print, Radio, Digital, Activation, OOH and Social Initiatives. In print, the company has 10+ titles across 13+ states in 5+ different languages and a total readership of 88+ million. Jagran Prakashan is the largest print media group of the country. In the radio business, Radio City is India’s first and leading FM brand. It has been synonymous with the category since its inception in 2001. In Digital, the company has diverse genres of Hindi News and Education. Jagran New Media has over 85 million+ visitors and is one of the top digital media platforms in the country.

In the Activation segment, Jagran Solutions offers bespoke Below Line Marketing (BTL) solutions or experiential marketing solutions. They use an integrated approach, involving the following: on-ground, events, digital, public relation, print, radio, mobile, outdoor, consumer-generated media, and word-of-mouth, among others. In OOH, Jagran Engage provides Out of- Home marketing services across India and with Social Initiative Pehel, the company is committed to combating some of the pressing social challenges through need-based interventions. This overall shows a well-diversified business model for the company.

Dr Mahendra Mohan Gupta is the Chairman and Managing Director of the Company and also holds the position of Editorial Director of Dainik Jagran. He has been associated with Jagran Prakashan Limited since its inception. Overall the management has been stable but has not been able to create shareholder’s wealth. Therefore this category gets 4 stars in Jagran Prakashan fundamental analysis.

Jagran Prakashan Fundamental Analysis and Future Outlook

3. Growth Ratios (★ ★ ★ ☆)

The revenue has shown a growth of 10.76% CAGR over the last 10 years. The operating income and net income has also grown at 5.53% and 4.6% CAGR respectively. This shows declining efficiency and profitability for the company. The working capital is also positive and has shown a linear growth. Capital expenditure has increased over the years which indicates good upcoming expansion in the near future. Therefore this category gets 4 stars in Jagran Prakashan fundamental analysis.

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Jagran Prakashan Fundamental Analysis and Future Outlook

4. Profitability Ratios (★ ★ ★ ☆ ☆)

The gross margin has been stable over the years even with increasing costs and competition. The other margins along with return on assets have been declining slightly. Overall the company has seen reduced profitability over the years which is not likely to improve in the future. Therefore this category gets 3 stars in Jagran Prakashan fundamental analysis.

Jagran Prakashan Fundamental Analysis and Future Outlook

5. Cash Flow Ratios (★ ★ ★ ☆ ☆)

The net income margin has seen a decline over the years and the Cap-Ex as a percentage of sales has declined considerably. The free cash flow as a percentage of net income has been positive and stable over the years. The free and operating cash flow growth has been declining but this is the nature of the business. Overall the company has shown a moderate cash flow position. Therefore this category gets 3 stars in Jagran Prakashan fundamental analysis.

6.Liquidity and Solvency Ratios (★ ★ ★ ☆)

The company does have any long term debt in its capital structure therefore the financial leverage and debt to equity ratio is high. The profitability margins have also been declining over the years but this is not a significant concern to the solvency of the company. The current and quick ratio has increased over the years and is way above the minimum threshold which shows a good liquidity position. Therefore this category gets 4 stars in Jagran Prakashan fundamental analysis.

Jagran Prakashan Fundamental Analysis and Future Outlook

7. Efficiency Ratios (★ ★ ☆ ☆)

The table in the excel model is colour formatted so the worst performance over the period is highlighted in red colour and the best performance is highlighted by green.

Overall the business efficiency has seen some changes over the years. The payables period has decreased from 105 to 61 days along with the receivables days from 4.7 days to 3.7 days. The cash conversion cycle has also seen a significant increase over the recent years and this is not a good indicator for the cashflow and working capital of the company. Therefore this category gets 2 stars in Jagran Prakashan fundamental analysis.

Jagran Prakashan Fundamental Analysis and Future Outlook

8. Valuation Ratios (★ ★ ★ ☆ ☆)

The shares have been trading at lower multiples due to the expected market size shrinkage as the new generation moves away from traditional mediums and regional entertainmentThe company is adapting to the new ways in the industry but any successful increase in valuation multiples is not expected in the near future. Therefore this category gets 3 stars in Jagran Prakashan fundamental analysis.

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9. ROE 5 way Du Pont Analysis (★ ★ ★ ☆ ☆)

The leverage ratio along with asset turnover has almost remained flat over the years. The interest burden ratio has remained at near 100% due to low interest-bearing debt in the capital structure of the company. The operating margin has seen a slight decline and the tax efficiency has been stable. Overall the Return on Equity has declined a little due to lower profitability. Therefore this category gets 3 stars in Jagran Prakashan fundamental analysis.

10. Future Prospects (★ ★ ☆ ☆)

Some insights for the coming years from the analysis, management discussions and con calls are as follows.

  • The company has subscribed on rights basis 40,00,000 equity shares in its immaterial wholly-owned subsidiary, Mid-day Infomedia, of Rs 10 each at a premium of Rs 10 per share, for cash. Post the allotment of shares as above, Mid-day Infomedia shall continue to be a wholly-owned subsidiary of the Company. Read more here.
  • Google in collaboration with Jagran Prakashan Limited has launched the ‘Make Small Strong’ initiative in India to help the small and local businesses. Under this initiative, Google and Jagran Prakashan Limited will highlight those ‘local heroes’ who play a crucial role in our daily lives but have been severely impacted because of the coronavirus crisis. The new content is getting strong traction in the market.
  • There can be a strong movement towards another form of news sources like papers and FM due to the declining quality of journalism of the TV news channels. The company is well placed to take the advantage of the situation

Overall the company has seen declining financial conditions and have not seen any strong indicators of recovery. The shares have already hit bottom and any good growth prospect is not on the horizon. Therefore this category gets 2 stars in Jagran Prakashan fundamental analysis.

The overall rating is arrived by taking the average of the above 10 categories ratings and rounded up if it is above 0.5 and rounded down if it is below 0.5.

Overall Fundamental Rating:

JAGRAN PRAKASHAN SHARES (3.2/5)

Therefore it is a 3-star stock

★ ★ ★

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Jagran Prakashan Shares
Economic Moat ★ ★ ★ ★ ☆
Business & Management ★ ★ ★ ★ ☆
Growth Ratios ★ ★ ★ ★ ☆
Profitability Ratios ★ ★ ★ ☆ ☆
Cash Flow Ratios ★ ★ ★ ☆ ☆
Liquidity & Solvency ★ ★ ★ ★ ☆
Efficiency Ratios ★ ★ ☆ ☆ ☆
Valuation Ratios ★ ★ ★ ☆ ☆
ROE (Du Pont Analysis) ★ ★ ★ ☆ ☆
Future Prospects ★ ★ ☆ ☆ ☆
Overall Fundamental Rating ★ ★
Jagran Prakashan Fundamental Analysis

You can read more about the company on its website!
Investor Presentation.
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Read Our Research Methodology below: Fundamental Analysis Guide

(Note: All the research done by me is only for educational purposes and should not be seen as Investment recommendations. I am a Research analyst and not a SEBI registered Investment Advisor. My research completely reflects my personal opinions and not of my employers. Kindly do your own due diligence before Investing)



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