Angel Broking puts BUY on Jagran Prakashan

Angel Broking puts BUY on Jagran Prakashan

Amid mounting problems for India’s print industry, a silver lining is starting to appear in the form of some easing in newsprint prices.

Until now, newsprint prices, one of the largest cost factors for print media, had been rising since mid-2007 contributing to weakening profitability at most of India’s print media firms.

Newsprint buyers at media houses say the situation is starting to become more favourable and they hope to drive down prices by $100-200 (Rs4,990-9,980) per tonne when fresh contracts are signed in January.

Currently, newsprint is available in the spot market at much lower prices than the listed price and buyers are taking that as a cue for lower prices in January.

The average official price for imported newsprint in India for the current quarter is $960 per tonne.

The cost of newsprint generally accounts for 55-65% of the total cost of a newspaper’s operation and a big surge, from $560 per tonne in early 2007 to $960, had sharply eaten into profitability of publishers, most of who resorted to reducing pages, copies printed or switching to inferior, domestic newsprint.

Adding to their woes, an unexpectedly unfavourable exchange rate also dealt a blow as one dollar that could be bought for Rs40.30 in March, now costs about Rs50, effectively raising the price of newsprint by another 20%.

We believe this is a positive development for print media companies and maintain BUY on HT Media and Jagran Prakashan with a target price of Rs99 and Rs70, respectively.

Disclaimer: HT Media Limited publishes Hindustan Times, Hindustan, Mint and