Jagran Prakashan: Waiting for strong ad revenue growth
Jagran Prakashan Ltd’s (JPL) June quarter financial results, while broadly in line with Street estimates, are rather insipid. The publisher of Hindi daily Dainik Jagran, which also has interests in digital, outdoor advertising, FM radio and promotional marketing, reported 5% year-on-year growth in advertising revenue (representing print, radio and digital) in the last quarter on a consolidated basis.
That number is not something to cheer about. Advertising spending from the government sector and real estate sector (owing to implementation of the real estate act) was muted, hurting overall advertising revenue growth.
JPL’s circulation revenues growth remained subdued at 1.5% compared to the same period last year.
The company had to take a cut in cover prices due to increased competition in Uttar Pradesh and Bihar, which affected performance.
Overall, Ebitda margins declined a bit to 27.3%, as employee costs and other expenses increased at a relatively faster pace.
Ebitda is earnings before interest, tax, depreciation and amortization. Consolidated net profit for the June quarter increased 5.5% to Rs88.6 crore at a time when revenue grew 4.7%.
What next? It is encouraging that the company has maintained its Ebitda growth guidance of 15% for financial year 2018. However, considering that Ebitda growth was a far lower 3.5% for the June quarter, growth for the remaining three quarters has to be faster to meet the target. That’s a stretch. Much depends on whether advertising revenue picks up in the second half of this financial year.
The September quarter hasn’t started too well with July being impacted on account of the goods and services tax. It is expected that this year’s second half will benefit from the festival season and the favourable lower base of financial year 2017.
How advertising revenue pans out in the coming days will determine the course of the Jagran Prakashan stock that has underperformed the S&P BSE 500 index substantially so far this calendar year. Currently, one share trades at an inexpensive 12.5 times estimated earnings per share for financial year 2019, based on data from Bloomberg.
Mint’s publisher HT Media Ltd and Jagran Prakashan Ltd compete in some markets.