The Indian media and entertainment industry is slated to grow at a compounded annual growth rate of 12.4 per cent over the next five years to Rs 1,04,080crore. In the print media sector we foresee that the regional media players will experience strong growth dynamics owing to the fact that readership levels among the regional print media remains relatively low compared to the literacy levels.
Among the various stocks in this space, Jagran Prakashan is a potential stock on the back of low print media penetration in the Hindi speaking market. The company is India’s leading media and communications group, with its main interests across Newspapers, Outdoor, Internet, Magazines, Below the Line marketing solutions, and Mobile Value Added Services. In the dynamic world of Indian media, Dainik Jagran is an iconic brand with its reach across more than 55.7 million people. It is the largest read daily of India. The company reported healthy revenue and profitability for Q1FY11. It reported 16.4% yoy top-line growth and 18% yoy growth in ad-revenues. There was also a growth in margins and EBITDA on the back of benign newsprint prices and efficient cost curtailment.
Going ahead, the company’s acquisition of Mid Day’s print business will prove to be earnings accretive. Moreover, private equity firm Blackstone Capital Partners has invested around Rs 225 crore in Jagran Media Network — the company holds a majority stake in Jagran Prakashan. This investment would also augur for the company’s expansion plans of tapping into tier-II and tier-III cities and rural areas. Blackstone would also bring in international practices in the company’s management that would help in improving brand reach and content production and presentation. The company, fundamentally quite strong, is all set to post 15% CAGR in top-line over FY2010-12 and sustained margins.
We recommend Jagran Prakashan as a top pick in the media space and advice a Buy on the stock.
No comments:
Post a Comment