>JAGRAN PRAKASHAN (KR CHOKSEY)

INVESTMENT RATIONALE

Jagran Prakashan Limited is a leading media house of India which publishes Dainik Jagran, India's largest read daily with a total readership of 56.6 million readers per day (IRS 2008 R1). It was also voted the most credible and trusted newspaper in India, according to a survey by Globscan, conducted in 10 of the world's leading countries, including the US, UK, Germany and Russia. JP has not only consolidated in its home market but expanded aggressively, launching 17 new editions in last five years. Led by quality content JP has expanded circulations at 14% CAGR in last five years and ad-revenue has grown faster at 26% CAGR accounting for 65% share. The Indian newspaper industry can be broadly categorized as (1) Hindi, (2) English and (3) the other Indian languages. The Hindi language newspapers comprise 44.6% of the total newspapers while the English ones make 7.4% of the same. The other languages comprise the remaining 48% of the newspapers.

Key Developments
Directorate of Advertising and Visual Publicity (DAVP)
The Directorate of Advertising and Visual Publicity (DAVP) has increased the advertisement rates by 24% across the board with effect from September 1, 2008. For the company DAVP contributes 10-15% of the advertising revenues. Expected to receive waiver for custom duty

The concessions include full exemption in customs duty on newsprint as well as on uncoated paper used for printing of newspapers, commonly known as 'glazed newsprint', and also full exemption in customs duty on light weight coated paper used for printing magazines.

The newspaper and magazine publishing sector had sought relief from the Information & Broadcasting Ministry in the wake of the sharp rise in international prices of newsprint and light weight coated paper (used for publishing magazines), which had resulted in a significant increase in publishing costs. Falling advertising revenues due to the recent economic slowdown have also affected this sector.

Valuations
As the CMP of Rs 77.3, Company is trading at a 27.3x TTM EPS of 2.83. The stock is trading at higher PE than its peer group, but it deserve the premium valuation as being the market leader in North India and IRS 2008 reaffirmed 10th time in a row No.1 status of Dainik Jagran in the country across all languages with a total readership of 56.6 million.. We believe that stock is reasonably valued and can be accumulated at these prices. We recommend “BUY” on the stock with an target price of Rs 92 , with represent an upside potential of 19%.

To see full report: JAGRAN PRAKASHAN