Interesting results of yesterday!! New acquisitions are expected to significantly contribute in the coming qtrs. Brainhunter, MFX, and other new acquisitions done over the past couple of quarters – it is becoming more of growth story now than ever before.
R
Samir
Hiteshbhai,
PRINT – Value is migrating from Print based news to app based news over smartphones.
If you know, Gujarat has only 2 major newspapers, Gujarat Samchar and Sandesh. Some market share is with Loksatta. Few years back both these papers had to start giving freebies to the customers to keep monthly subscription going. Freebies included household items.
Even Buffett sold Washington Post to Amazon.
So will PRINT be around for next 25 years ?? Maybe Yes.
Will it be profitable and high ROC generator ?? No
RADIO – Radio business is good ad revenue generaring, but it is not scalable. Most people listen to radio for music. Music consumption is migrating to smartphones via apps like Saavn or many consumers download pirated versions.
So will RADIO be around for next 25 years ?? Maybe Yes.
Will it be profitable and high ROC generator ?? No
This is my opinion and I reserve the right to be wrong
JAGRAN PRAKASHAN
BACKGROUND
Started in 1942, as a newspaper company, the company is now focussed on print, digital and radio business. It also has a presence in the out of home advertisement segment.
Dainik Jagran is its flagship brand which is India’s largest read daily newspaper by circulation. Other newspapers include Mid-day, Nai Duniya, Inquilab etc.
Company recently acquired Radio city radio stations across India.
Company has leading well visited 11 portals which cover a wide range of genres like news, education, blogging, gaming, classifieds and music.
The company launched its IPO in 2005 and made its debut on the bourses in Feb 2006.
PRODUCTS/SEGMENTS
Company is a dominant player in the Hindi newspaper segment. Dainik Jagran established in 1942 is its flagship newspaper which is the largest read daily newspaper in India.
Advertisement constitutes 70% of company’s revenues, while circulation revenues account for 20% while other segments including out of home advertising and radio account for the rest of 10% revenues.
Jagran has presence across 19 states and has 11 print publications across five languages. Daily circulation is 5 million plus and it has over 350 editions and sub editions.
RADIO
The company recently acquired the radio business of Radio City and currently has 39 radio stations. 31 stations are under Radio City brand name. 8 stations are under Radio Mantra and 21 stations under Planet radiocity.com
Focus of the company remains on print, radio and digital.
DIGITAL
Company’s portals include jagran.com which is no 1 Hindi news portal and jagranjosh.com which company claims to be no 1 education portal.
OUT OF HOME
This division provides out of home advertisement options including billboards, signages etc.
BULLISH VIEWPOINTS
Dominant player in a sticky business and has been the most read national newspaper since 2003.
Having attained a dominant position in the newspaper segment, company now has set its sights on the radio and digital business as the next growth drivers.
Topline has grown from 1221 crores in 2011 to 1770 crores in 2015 with net profit growth from 208 to 308 crores in the same period. Sales and operating profits have been consistently growing year on year during this period.
Hindi print market has been showing consistent growth since 2011 of around 9% CAGR and is slated to keep growing consistently.
Company is improving its presence in the sunrise sectors of radio and digital.
BEARISH VIEWPOINTS
Newspaper business is being viewed as a business which could undergo disruptive changes due to internet penetration and the English newspaper segment is already a prey to this phenomenon.
Hindi newspaper segment has shown resilience among such disruptive chanes.
Sudden spike in newsprint prices might impact the company’s profitability.
Radio and digital are competitive sectors with other aggressive players in the fray.
The advertisement revenues of the newspaper business are linked to the state of the economy and hence any drop in the economic activity might impact advertisement revenues.
BARRIERS TO ENTRY
With Jagran being a dominant player in the Hindi newspaper segment, its very difficult for new entrants to make significant headway. The existing players like Dainik Bhaskar could gradually erode company’s competitve advantage. However going by the growth shown by the company and proactive measures taken by the management, company is likely to maintain its leadership position.
INTERESTING VIEWPOINTS
Majority of revenues and profits come from the newspaper segment and from Dainik Jagran. The other publications like Nai Duniya and Mid Day etc which were bleeding have turned profitable since past two quarters.
Management comes across as very competent and transparent after going through the Annual Reports, quarterly presentations, concall transcripts and history of dividends.
Company has been generating consistent cash flows and has been liberal in its dividend payouts.
Its dividend payout has been close to 50% in the recent history.
High promoter holding. No pledging.
Company has a healthy balance sheet and has robust return ratios.
VALUATIONS
Company posted EPS of 7.3 per share and paid a dividend of Rs 3.5 in FY 15. For the half year ended, company has posted EPS of 4.8 (not annualised) and slated to post EPS in excess of 9 per share. There is a high probability of dividend of close to Rs 4.5 per share which amounts to a dividend yield of 3% plus based on current price of Rs 140.
For those interested in studying the company in details, the company provides almost all information in its AR, quarterly presentations and concalls which are all available on the company website.
Disc: Invested and occupies more than 10% of my portfolio.
This is not a recommendation and anyone investing should do their own due diligence and then take any investment decision.
Not buying enough and selling too soon.
I found many gems including Britannia, Aurobindo, NBCC, Swaraj Engines, VST etc.
Not allocating enough % of the portfolio is a big mistake and selling too soon is even bigger.
Vision to see, courage to buy and patience to hold. – Tom Phelps
Hi Vivek: couple of questions:
At what price is your entry in Vidhi? Is it a small holding or you have added to your positions?
Satin credit care….52 week low is 296…..is that your purchase price?
Do you think Premco is overvalued ( inspite of good results today)?
I am curious because you seem to have a knack for picking stocks based on non numerical factors like management, sector, fund fancy and it has worked well.
thanks
Samir Ji,
Jk bank NPA is high and will remain high till the bank sells bad assest to ARC and write off some. They have taken a stance not to grow the loan book too much. I think its a good decesion. Management has recognized the problems and is willing to clean up the mess first and then only go for real growth.
EROS – Buffet always says be fearful when others are greedy and be greedy when others are fearful. Underlying business is not in any danger and atleast Box Office #s are real. Maybe the books might be a bit forged.
What is your estimate of Raymonds intrinsic value ?
I am ready to buy it big if the M Cap comes close to 1800-2000 CR
On what basis were you expecting it to be same 
?
I am not sure about the private letter signed by the promoters with Multiples PE firm . At the outset I feel its not a great thing from a Corporate Governance view point. If members can throw some light will be great.
I compared last five year margin with Amara Raja.
Motherson sumi:
9.30 5.49 5.83 7.88 7.49
Amara Raja:
14.62 14.36 13.84 16.19 16.66
Could someone help me in understanding why there is a huge difference ?
Lets assume the company has done accounting mispracticed.
Lets for a minute think rationally. This year we had Bajrangi Bhaijaan accounting for 500 CR + business. Last year we had PK.
As per capita incomes rise from $1500 to about $2500, entertainement spends do increase. Look at indonesia and phillipines. India is not unique. Indians love entertainment. We love bollywood, cricket and weddings.
2011 Disney offered $454 Million for 49.56 % stake in UTV. So value the company at about $ 900 Million.
2011 the highest grossing movie was Ra One and Don 2 about 200+ CR each.
The absolute size of the market is going to grow exponentially with higher spendings.
Eros has some sort of a business model which allows it to be market leader in distribution and co-production.
Creating a brand name in entertainment world is not easy otherwise Ambanis, Birlas and Tatas would be the market leaders.
Yes the company is not a FCF generatring. Distribution companies have to advance acquire content and keep their content library fresh everytime to attract the viewers. Sometime down the line we will see EROS FCF generating but it might take some time.
With todays closing price you are getting the market leader in india movie industry for less than $500 Million.
Be fearfull when other are greedy and be greedy when others are fearfull!!!
Disclosure – Invested