MOSL: JAGRAN PRAKASHAN (Neutral)-Lower opex supports EBITDA; ad outlook remains weak
Jagran Prakashan: Lower opex supports EBITDA; ad outlook remains weak
(JAGP IN, Mkt Cap USD0.3b, CMP INR68, TP INR76, 12% Upside, Neutral)
- Revenue declined 9% YoY in 3QFY20 due to a drop in ad spends amidst a weak consumer economy, which has hit the entire media industry. However, falling RM costs supported profitability during the quarter.
- As sentiment is likely to remain weak over the short term, we have largely maintained our estimates with a marginal cut of 2%/4% in our revenue assumption for FY20/21. Maintain Neutral.
EBITDA beat driven by lower opex
- revenue declined 10% YoY to INR5.5b (in-line) in 3QFY20 due to a drop in ad spends by advertisers, particularly in the automobile, FMCG and government categories.
- However, EBITDA was up 11% YoY (14% beat) to INR1.4b, with the margin expanding 380bp YoY to 26.6%, primarily due to (a) a decline in newsprint prices, which led to lower RM prices (-26% YoY) and (b) reduced SG&A costs (-12% YoY). Opex was down 16% YoY (7% below our estimate).
- Higher-than-expected other income of INR103m was partly offset by increased income tax expense of INR306m.
- PAT increased 23% YoY to INR820m (18% beat).
Jagran Prakashan Limited is a media and communications company with interests in print, digital, radio, out-of-home (OOH) and activation. The Company is engaged in the business of printing and publication of newspapers and periodicals, business of radio broadcast and all other related activities through its radio channels operating under brand name Radio City 91.1 frequency modulation (FM) in India. It is also engaged in the business of providing event management services and outdoor activities. The Company publishes approximately 12 print titles in over five different languages spread across 15 states with over 100 editions. The Company's print media brands include Dainik Jagran, inext, 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. The Company's social initiative brand include Jagran Pehel.
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