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Multi Baggers

Ventura Securities

5.30 AM Jan 1st 1970

JagranPrakashan

BSE ID : 532705     NSE ID : JAGRAN

RECOMMENDED PRICE 127.35

PEAK FROM RECO 213.00 67.26%

CURRENT PRICE 98.25 Resource id #18

Jagran Prakashan Ltd is one of the leading print media companies in India. Dainik Jagran, its flagship daily Hindi publication, is the most widely read newspaper in India. At the CMP of Rs 127.35, we initiate coverage on JPL as a BUY with a price objective of Rs 201.

Jagran Prakashan

Jagran Prakashan Ltd. (JPL), a leading print media company, is well poised to benefit from the anticipated economic recovery. JPL's flagship newspaper, 'Dainik Jagran', is the most widely read newspaper in India, across all languages. We are positive on the company's prospects given that:

JPL enjoys a leadership position in the large but relatively untapped markets of Uttar Pradesh and Bihar, which constitute nearly 70 percent of the total revenues. The per capita income in JPL's key markets is amongst the lowest in India, which has a lot of potential to increase in tandem with the economic growth anticipated in the overall economy. We expect JPL to post a 3 year revenue CAGR of 8 percent to `2,142 crore in FY17. The EBITDA margin is expected to improve from 21.5 percent in FY14 to 25.7 percent in FY17.

JPL's acquisition of Radio City (owned by Music Broadcast Pvt Ltd - MBPL) gives the company access to high growthhigh margin radio business. This segment is expected to see significant growth traction as Phase III auctions are likely to commence in April 2015, after much delay. Radio City enjoys a high listenership in key metro regions and has an EBITDA margin of 30 percent+. The acquisition is expected to deliver rich rewards for JPL in the long run. We expect MBPL's revenues to grow at a healthy 10 year CAGR of 9 percent and EBITDA margin to normalize to ~25-26 percent by FY25.

We initiate coverage on JPL as a BUY with a Price Objective of Rs 201, representing a potential upside of 58 percent over a period of 24 months. At the CMP of Rs 127.35, the stock is trading at 13.2x its forward earnings for FY17E. We have valued JPL (excluding radio) by assigning a PE of 15x to FY17E EPS of `9.6 to arrive at the target price of Rs 144. We have used the DCF method to value MBPL and arrive at a target of Rs 57 per share net of JPL's acquisition amount.

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Disclosures & Disclaimer: Ventura Securities Limited (VSL) is a SEBI registered intermediary offering broking, depository and portfolio management services to clients. VSL is member of BSE, NSE and MCX-SX. VSL is a depository participant of NSDL. VSL states that no disciplinary action whatsoever has been taken by SEBI against it in last five years except administrative warning issued in connection with technical and venial lapses observed while inspection of books of accounts and records. Ventura Commodities Limited, Ventura Guaranty Limited, Ventura Insurance Brokers Limited and Ventura Allied Services Private Limited are associates of VSL. Research Analyst (RA) involved in the preparation of this research report and VSL disclose that neither RA nor VSL nor its associates (i) have any financial interest in the company which is the subject matter of this research report (ii) holds ownership of one percent or more in the securities of subject company (iii) have any material conflict of interest at the time of publication of this research report (iv) have received any compensation from the subject company in the past twelve months (v) have managed or co-managed public offering of securities for the subject company in past twelve months (vi) have received any compensation for investment banking merchant banking or brokerage services from the subject company in the past twelve months (vii) have received any compensation for product or services from the subject company in the past twelve months (viii) have received any compensation or other benefits from the subject company or third party in connection with the research report. 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