Share Trading Tips

JAGRAN PRAKASHAN
Reco price: Rs 137
Current market price: Rs 135.60
Target price: Rs 165
Upside: 21.7%
Brokerage: Ambit Capital

Daink Jagran, the flagship brand of Jagran Prakashan (JPL), commands a leadership position in the major market of UP. Its bilingual compact daily, I-Next, is gaining traction among the youth and has generated readership of around 1.9 million. Presence in outdoor media and event management is expected to provide further fillip to the growth prospects. JPL is expected to benefit the most due to the share of ad-spend on an upswing in tier 2 and 3 cities, higher dependence of about 63 per cent on local advertising and rising share of colour ads. As a result, based on the company’s leadership in major Hindi markets and increase in the ad-spend, expect JPL’s ad-revenue to grow at a CAGR of 19.4 per cent over FY09-12.

Higher consumption of domestic newsprint and better management of newsprint cost is expected to improve margins. This coupled with higher revenue growth is expected to result in higher margins. Over FY09-FY12, expect JPL’s earnings to grow at 40 per cent CAGR. The stock has traded in the PE band of 10-40 historically, with an average of 22 times. Based on the company’ growth potential, the brokerage has valued the stock at 20 times its 2011-12 EPS. Maintain buy.

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