For 4QFY2012, Jagran Prakashan (JPL) reported a healthy performance on the revenue front compared to its peers. The company reported top-line growth of 10.1% yoy to Rs.303cr. However, the company’s bottom line remained flat on a yoy basis at Rs.43cr due to a 395bp yoy contraction in operating margin. The contraction in OPM was on account of high raw-material prices because of increased circulation and forex losses. We maintain our Buy view on the stock.

Key highlights of the quarter: The company continued to register robust growth in national advertisement even as its peers struggled due to the economic slowdown. Consequently, ad revenue posted healthy 11.1% yoy growth in the quarter to ~Rs.210cr. Circulation growth stood at 12.4% yoy to ~Rs.63cr. But non-publishing business revenue, which comprises event, outdoor and digital businesses, declined by 3.3% yoy to Rs.31cr during the quarter.

Outlook and valuation: At the CMP, JPL is trading at 11.4x FY2014E consolidated EPS of Rs.7.8. We maintain our Buy view on the stock with a revised target price of Rs.125, based on 16x FY2014E EPS, valuing it at 10% premium to our Sensex target valuation multiple. Downside risks to our estimates include 1) any further rise in newsprint prices, 2) competition becoming fierce and 3) higher-thanexpected losses/increase in the turnaround period of Nai Dunia.

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