Jagran Prakashan Ltd being a leading Hindi publisher in the country having dominant position in largest Hindi advertising market (UP), its entry into English segment by acquiring profitable venture (Mid-day) is commendable. We believe synergies at cost and advertising rates would offset competition in markets like UP from HMVL and Bihar & Jharkhand from DBCORP, in turn will drive its long term profitability. Holding company with net cash of Rs 275 crore and Rs 175 crore in Jagran Prakashan Ltd itself would invite them to explore newer markets through inorganic or organic growth and further penetrate their current markets. So, we maintain our “Buy” rating on the stock of Jagran Prakashan Ltd with 18-months target price to Rs 153, representing upside potential of 25%. At the CMP of Rs 138, stock of Jagran Prakashan Ltd is trading at FY11E and FY12E EV/EBITDA of 13.9x and 12.3x for EBITDA of Rs303.3 crore and Rs343.4 crore respectively. Taking into account the current EV/EBITDA of 15.0x, we assign a multiple of 15.5x to Jagran Prakashan Ltd which provides a target price of Rs 177 with 27% upside potential
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