Print Media
Shobhit Khare (Shobhit.Khare@MotilalOswal.com); +91 22 3982 5428

Print Media
Print Media: Making headlines again
Page No.
Summary
..........................................................................................................................
3-5
Story in charts
.................................................................................................................
6-8
Print ad cycle has bottomed after worst show in a decade
.....................................
9-11
Margin pressure to ease
.............................................................................................
12-13
‘It’s the impact that matters’ – print platform delivers
...........................................
14-17
Hindi print - downturn has reduced competitive intensity
....................................
18-24
English print - well-fortified business model but growth drivers lacking
..............
25-28
Dominant v/s investment footprint: DB most dominant, HMVL the least
............
29-31
Newsprint prices stable; no major spikes expected
.................................................
32-33
Earnings more sensitive to ad revenue v/s newsprint price
.........................................
34
Earnings visibility to improve; drive stock performance
.........................................
35-38
Companies
....................................................................................................................
39-85
DB Corp
..................................................................................................
40-52
Jagran Prakashan
..................................................................................
53-63
HT Media
...............................................................................................
64-75
Hindustan Media Ventures
..................................................................
76-85
Prices as on 17 December 2012
Investors are advised to refer through disclosures made at the end of the Research Report.
19 December 2012
2

Update
Print media
Making headlines again
Ad cycle rebound, cost control, rationality in competition to revive earnings
Post two years of muted performance, we believe the tide is turning for Indian print media:
#1 Print ad cycle has bottomed out after worst show in a decade
#2 Expect margin pressure to ease on ad growth rebound, coupled with receding newsprint
cost inflation and commendable cost control
#3 Sector downturn is driving rationality in competition – increase in cover prices, restricted
circulation push, and expansion plans on backburner
#4 Expect our print media universe to clock FY13-15E earnings CAGR of 17% v/s 3% growth
in FY13E and 11% decline in FY12.
VALUATION, VIEW & TOP PICKS: Indian print media accounts for 45% of total ad spend, and
offers an excellent play on economic rebound. Concentrated industry structure ensures that
the upside is enjoyed by the few dominant incumbents. Our top picks are DB Corp (initiating
coverage with a Buy) and Jagran Prakashan (upgrade to Buy) – both have strong balance
sheets, healthy payout ratios (40-70%), and the stocks offer attractive dividend yield of 2-
3.5%. We are Neutral on HT Media given low growth visibility in English print and inferior RoE/
payout. We also initiate coverage on HMVL with a Buy rating.
Print ad cycle has bottomed after worst show in a decade
In 1HFY13, print ad growth was near zero, one of the lowest in the last decade. We
believe ad growth has bottomed out – expect recovery from 2HFY13 with ad growth
improving to 4-5% YoY, and to 11% over FY13-15. Key drivers for improved ad revenue
performance would be: 1) stable GDP growth, 2) expected easing in the interest rates
(positive for print-heavy categories like Autos and Real Estate), and 3) low base effect.
Expect margin pressure to ease
We expect FY13 margin contraction to be restricted to ~100bp on abating newsprint
inflation and commendable cost control across companies. Going forward, we expect
FY13-15 operating costs to grow largely in line with revenue growth (10-11% CAGR),
resulting in stable margins, driving EBITDA CAGR of 13%. Newsprint price inflation
has come off significantly, down from ~15% in FY12 to a more manageable level of
~6% in 1HFY13 with no major spikes expected going forward.
Hindi print: Downturn has reduced competitive heat; high return ratios
maintained even in downcycle
Cyclical ad slowdown is driving rationalization in competitive activity – companies
are controlling their circulation growth and hiking average cover prices. These
initiatives would drive ~12% circulation revenue growth in FY13E, compared to only
~3% advertising revenue growth for our coverage universe. Readership of top 25
Hindi dailies in the country grew by only 2% in CY11 and 1% in 1HCY12 v/s 9% growth
in CY10. We expect regional print companies in our universe – DB Corp, Jagran Prakashan
and HMVL – to maintain 19-21% RoE in FY13 despite the cyclical downturn which
underscores strong pricing power, ability to manage tough environment and limited
capital intensity of the business.
19 December 2012
3

Print Media
Expect FY13-15E earnings CAGR of 17%
We expect our print media universe to deliver earnings CAGR of 17% over FY13-15
v/s 3% growth in FY13E and 11% decline in FY12. This coupled with high operating cash
flow and low capex, we expect dividend payouts to remain at healthy levels. Print
companies earnings are relatively volatile due to 1) ad-heavy revenue (80% of
revenues), 2) higher dependence on non-FMCG cyclical categories, and 3) volatility in
newsprint prices (33% of revenues). HTML has the highest sensitivity to ad revenues
due to higher contribution from English business, with 1% change in ad revenue
impacting earnings by ~5%, compared to 2.5% for DB/Jagran/HMVL. For every 1%
change in newsprint prices, the earnings impact is least for DB Corp (1.6%) followed
by HMVL/Jagran (1.8-1.9%) and HTML (2.4%).
Stock views
DB Corp:
We initiate coverage on DB Corp with a
Buy
rating and a target price of
INR287 (18x FY15 P/E), implying 28% upside. Company has a strong regional
franchise, with leadership position across its footprint and a geographically
diversified revenue/earnings profile. Valuation at ~16x FY14E P/E is attractive
considering expected earnings CAGR of 18% over FY13E-15E along with high return
ratios (20%+ RoE in down-cycle), attractive dividend payout (~40%) and yield (2%).
Jagran Prakashan:
We upgrade Jagran Prakashan from
Neutral
to
Buy
with a target
price of INR136 (18x FY15 P/E), implying 34% upside. Jagran has strong regional
franchise in large states like Uttar Pradesh and Bihar. Valuation at ~16x FY14E P/E is
attractive considering expected earnings CAGR of 16% over FY13E-15E along with
high return ratios (20%+ RoE in down-cycle), attractive dividend payout (~70%)
and yield (3.5%).
HT Media:
We maintain
Neutral
on HT Media with a revised target price of INR111
(13.5x FY15 P/E; ~25% discount v/s target multiple for DB/Jagran), implying 6%
upside. Despite attractive valuation at ~14x FY14E, we remain
Neutral
given low
growth visibility in English print and inferior RoE/ dividend pay-out.
HMVL:
We initiate coverage on HMVL, Hindi print subsidiary of HT Media, with
Buy
rating and a target price of INR200 (~10x one-year forward P/E; 45% discount
v/s target multiple for DB/Jagran), implying 32% upside. Valuation discount is
likely to sustain due to 1) lower scale, 2) concentrated profitability which can be
under competitive threat and 3) lower dividend payout at ~12%. Nevertheless,
strong earnings CAGR of 22% over FY13E-15E should drive stock performance.
FY12
11.6
11.3
7.4
9.4
EV/EBITDA (x)
FY13E FY14E FY15E
10.9
9.1
7.7
10.1
9.0
7.8
7.3
5.5
4.8
6.3
4.3
3.2
FY12
23
25
11
16
RoE (%)
FY13E FY14E FY15E
21
22
22
21
20
22
9
10
9
19
20
19
Comparative valuations: Print
Mcap
(USDm)
DB Corp
742
Jagran
585
HT Media 446
HMVL
202
Rating
CMP Target Upside
P/E (x)
(INR) (INR)
(%) FY12 FY13E FY14E FY15E
Buy
224
287
28 20.3 19.6 16.3 14.1
Buy
101
136
34 17.9 18.0 15.7 13.4
Neutral 104
111
6 14.9 16.5 13.9 12.9
Buy
151
200
32 17.5 12.1
9.5
8.2
Mcap
Revenue Gr. (%)
EBITDA Margin (%)
EPS (INR)
EPS Gr. (%)
(USDm) FY12 FY13E FY14E FY15E FY12 FY13E FY14E FY15E FY12 FY13E FY14E FY15E FY12 FY13E FY14E FY15E
DB Corp
Jagran
HT Media
HMVL
742
585
446
202
16
11
12
15
7
15
3
10
12
10
11
14
11
12
10
11
24.3
23.4
14.2
15.7
23.4
21.6
13.0
19.3
24.3
21.6
14.4
21.4
24.7
21.6
13.5
21.5
11.0
5.6
7.0
8.6
11.4
5.6
6.3
12.4
13.8
6.4
7.5
16.0
15.9
7.5
8.1
18.4
-12
4
20
16
-18
0
15
17
-10
-9
19
8
19
44
28
15
Source: Company, MOSL
4
19 December 2012

Print Media
Other highlights
'It’s the impact that matters' – print platform delivers
With a ‘call-for-action’ positioning, significant reach, high ‘attention span’, localization
benefits and concentrated industry structure in the respective markets, print media
is the largest platform for Indian advertisers accounting for ~45% share of ad spends.
Print companies have high dominance in their respective markets driving pricing
power for the incumbents as they become ‘default choice’ for advertisers. Despite
strong competitive headwinds, the average readership concentration (top 2 players)
in Hindi markets is ~75% (range of 60-95%). In media, it is the impact that matters,
which the print platform undoubtedly delivers…
English print – well-fortified business model but lacks growth drivers
English print is primarily concentrated in six metros – Delhi, Mumbai, Kolkata, Chennai,
Bangalore and Hyderabad – Delhi and Mumbai are the largest English print markets
constituting an estimated 30%+ each of the ad market. English print is more
concentrated compared to regional, with an average 90% of readership with top 2
players. This is led by a well-fortified business model, with advertisements
constituting ~95% of revenues, low cover prices and high cost/copy (higher number
of pages plus better quality newsprint). While English print commands almost 1.5x
premium on ‘cost-per-thousand’ (CPT) compared to regional print, higher maturity
of metro markets and high base imply lower growth. English print also has a higher
risk of potential competition from digital media, especially considering imminent
increase in broadband penetration (currently ~1%), and higher socio-economic strata
of English print readers which makes it more affordable for them to switch to Internet.
Dominance v/s expansion – who’s got the right balance
Print media’s industry structure is that of regional dominance, with incumbents
enjoying strong entry barriers in their respective markets. However, increased
corporatization, capital market listing and increased margins/growth in home markets
motivated many players to pursue geographical expansion. Companies with the right
mix of ‘dominance’ (we use the percentage readership base contribution from markets
where the publication is within top 2) and ‘expansion’ (we use percentage circulation
in markets where publication is not within top 2) would be likely best placed as they
offer ‘incumbent pricing power’ along with ‘growth-beyond-home-market’. DB Corp
has the highest mix of dominant footprint while HMVL has the least.
Newsprint prices stable for now; volatility can impact earnings
Newsprint prices are an important driver for print earnings as they constitute ~40%
of operating costs and ~33% of revenues. Though international prices in USD terms
have been largely stable over past two years, newsprint cost for Indian print companies
were hardening due to an increase in domestic newsprint price and INR depreciation.
During FY13, we expect newsprint price increase to be restricted to ~5%. While print
sector’s earnings remain vulnerable to volatility in newsprint prices, structurally,
prices are unlikely to exhibit significant increase due to declining demand from
developed countries. Long term trend supports this thesis as USD denominated
newsprint price exhibited a CAGR of only ~3% over the past 10 years, compared to
~7% CAGR in the CRB index. We model ~2% CAGR in newsprint prices over FY13E-15E.
19 December 2012
5

Print Media
Story in charts
The Indian print media is making headlines again ...
Print ad cycle has bottomed out ...
... after worst show in a decade
Aggregate EBITDA margin to bottom out as well
Expect gradual decline in newsprint cost as % of revenue
Ad revenue growth to outstrip circulation from FY14
Aggregate readership growth of Top 25 Hindi dailies
impacted by lower push for circulation increase
Print ad cycle has bottomed out
Aggregate ad growth: Expect rebound in FY14 (YoY, %)
Aggregate EBITDA margin to bottom out as well (%)
Expect gradual decline in newsprint cost as % of revenue
Ad revenue growth to outstrip circulation from FY14
Aggregate average issue readership of top 25 Hindi dailies
Source: Company, MOSL
19 December 2012
6

Print Media
Story in charts
The Indian print media is making headlines again ...
Contd.
Expect 13-22% earnings CAGR over FY13E-15E for our
print universe
Jagran has the highest dividend payout ratio in our print
universe
All companies except HT Media enjoy ~20% RoE despite
the down-cycle
HMVL is the best placed in the net debt to equity ratio
Since listing, DB Corp has traded at a one-year median
P/E of 19.5x. We value the company at a P/E of ~18x
FY15E
Since listing, Jagran has traded at a one-year median
P/E of ~18x. We value the company at a P/E of ~18x
FY15E
FY13E-15E EPS CAGR (%)
FY12 Dividend payout (%)
FY13 ROE (%)
FY13 Net debt/equity (x)
DB Corp: P/E band chart
Jagran: Historical P/E band
Source: Company, MOSL
19 December 2012
7

Print Media
Indian print media: Operating, financial and valuation details
DB Corp
Jagran
HT Media
HMVL
CMP
Target Upside
Mcap
EBITDA margin (%)
Adj. PAT margin (%)
(INR)
(INR)
(%) (USDm)
FY13E
FY14E
FY15E
FY13E
FY14E
FY15E
Buy
224
287
28
742
23.4
24.3
24.7
13.4
14.5
15.1
Buy
101
136
34
585
21.6
21.6
21.6
11.4
11.9
12.4
Neutral
104
111
6
446
13.0
14.4
13.5
7.2
7.7
7.5
Buy
151
200
32
202
19.3
21.4
21.5
14.0
15.8
16.3
Revenue growth (%)
EBITDA growth (%)
Adj. PAT growth (%)
Adj. EPS growth (%)
FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E
7
12
11
3
16
12
4
20
16
4
20
16
7
10
12
6
10
13
0
15
17
0
15
17
3
11
10
-6
23
3
-9
19
8
-9
19
8
10
14
11
35
26
12
44
28
15
44
28
15
P/E (x)
EV/EBITDA (x)
EV/Sales (x)
Dividend payout (%)
FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E
19.6
16.3
14.1
10.9
9.1
7.7
2.5
2.2
1.9
41
41
42
18.0
15.7
13.4
10.1
9.0
7.8
2.2
1.9
1.7
73
54
53
16.5
13.9
12.9
7.3
5.5
4.8
1.0
0.8
0.6
10
8
8
12.1
9.5
8.2
6.3
4.3
3.2
1.2
0.9
0.7
14
13
11
Revenue (INRb)
EBITDA (INRb)
Adj. PAT (INRb)
Adj. EPS (INR)
FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E
15.6
17.5
19.3
3.7
4.2
4.8
2.1
2.5
2.9
11.4
13.8
15.9
15.6
17.2
19.3
3.4
3.7
4.2
1.8
2.0
2.4
5.6
6.4
7.5
20.7
23.0
25.2
2.7
3.3
3.4
1.5
1.8
1.9
6.3
7.5
8.1
6.5
7.4
8.3
1.3
1.6
1.8
0.9
1.2
1.4
12.4
16.0
18.4
ROE (%)
ROCE (%)
Net Debt/EBITDA (x)
Net Debt/Equity (x)
FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E
21
22
22
17
18
19
-0.3
-0.6
-0.9
-0.1
-0.2
-0.3
21
20
22
18
15
16
0.6
0.3
0.1
0.2
0.1
0.0
9
10
9
10
11
11
-1.7
-1.9
-2.4
-0.3
-0.3
-0.4
19
20
19
19
20
19
-2.5
-2.7
-3.1
-0.6
-0.7
-0.7
Capex (INRb)
Capex/Sales (%)
Asset Turnover (x)
Sales/Net block (x)
FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E
0.3
0.4
0.4
2
2
2
1.6
1.8
2.0
2.0
2.3
2.6
0.6
0.7
0.8
4
4
4
1.4
1.6
1.7
1.7
1.9
2.1
0.5
0.7
0.8
3
3
3
2.3
2.7
3.1
2.6
3.1
3.5
0.3
0.4
0.4
5
5
5
3.1
3.5
3.6
3.3
3.6
3.8
Print Ad revenue
Print Ad revenue
Newsprint cost
Newsprint cost
growth (%)
(% of total rev)
(% of total rev)
(% of total cost)
FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E
3
12
11
71
71
71
35
34
33
46
45
44
16
11
14
70
70
71
32
32
32
41
41
41
0
11
10
85
85
85
29
28
28
34
32
32
8
14
12
72
73
73
39
38
39
49
49
50
Circulation/
Circulation
Circulation
Reader- Readership/
day (m)
growth (%)
revenue/copy (INR)
ship /circulation
FY13E
FY14E
FY15E
FY13E
FY14E
FY15E
FY13E
FY14E
FY15E
(m)
(x)
4.7
4.8
4.9
1
3
3
1.7
1.8
1.9
18.4
3.9
4.7
4.9
5.2
7
6
6
1.9
2.0
2.0
18.6
4.0
4.2
4.5
4.8
1
7
6
1.4
1.5
1.5
16.2
3.9
2.4
2.7
2.9
6
10
7
1.8
1.8
1.8
12.2
5.3
Newsprint
Growth in news
Newsprint cost/
Newsprint used
cost YoY (%)
print qty (%)
copy (INR)
('000 MT)
FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E FY13E FY14E FY15E
8
8
8
2
6
6
3.2
3.4
3.6
166
175
185
6
9
14
1
9
11
3.0
3.0
3.2
152
166
185
4
5
10
-2
9
6
4.0
3.9
4.0
176
191
204
5
11
13
3
12
9
2.9
2.9
3.1
77
87
95
8
Rating
DB Corp
Jagran
HT Media
HMVL
DB Corp
Jagran
HT Media
HMVL
DB Corp
Jagran
HT Media
HMVL
DB Corp
Jagran
HT Media
HMVL
DB Corp
Jagran
HT Media
HMVL
DB Corp
Jagran
HT Media
HMVL
DB Corp
Jagran
HT Media
HMVL
DB Corp
Jagran
HT Media
HMVL
19 December 2012

Print Media
Print ad cycle has bottomed after worst show in a decade
Advertising growth recovery seen from 2HFY13E
Early signs of advertising growth bottoming-out were already visible in 2QFY13 results,
with like-to-like ad growth improving to ~8% for regional print companies.
We believe that advertising growth has bottomed out and expect a recovery from 2HFY13E
(aggregate ad growth improves to 4-5% YoY) driving ~11% ad revenue growth over FY13E-
15E, compared to 3% profoma ad growth expected in FY13E.
Advertising growth remains highly correlated to the overall GDP growth, especially in
national advertising.
Expected decline in interest rates would be positive for ‘print heavy’ categories like real
estate, automobiles, consumer durables and BFSI, which together constitute >30% of ad
revenues for the print media sector.
Advertising, the bed rock for print media companies accounting for ~80% of print
revenues, has witnessed the worst cycle in a decade, with aggregate advertising
revenue for our universe remaining flat YoY in 1HFY13. We believe that advertising
growth has bottomed out and expect a recovery from 2HFY13E (aggregate ad growth
improves to 4-5% YoY) driving ~11% ad revenue growth over FY13E-15E, compared to
3% profoma ad growth expected in FY13E. Early signs of advertising growth bottoming-
out were already visible in 2QFY13 results, with like-to-like ad growth improving to
~8% for regional print companies. However, it was masked by the one-month
postponement of festive season, resulting in a tough YoY base during September
2012.
Aggregate ad growth for our print universe excluding
and including English (%)
Ad revenues constitute >70% of overall revenues of
print media companies
Source: Company, MOSL
Advertising growth remains highly correlated to the overall GDP growth, especially in
national advertising. The slowdown in FY09 and recent slowdown in FY12/13 had a
direct impact on advertising growth for print companies. With the anticipated recovery
in economic activity, we expect aggregate ad growth for print companies to claw back
to FY12 level of 10-11%. However, there could be an upside risk to our ad growth
estimates if the recovery is sharper.
19 December 2012
9

Print Media
India GDP growth (%)
Aggregate proforma ad growth for our print universe (%)
Source: Company, MOSL
Key drivers for improved advertising revenue performance would be:
1) Stability in GDP growth:
Advertising sentiment has been impacted by sharp
correction in the overall GDP growth, leading to cost cutting across businesses. As
the GDP growth stabilizes, the ad spends are expected to normalize, resulting in
higher ad growth.
India: Quarterly GDP growth (%)
2) Favorable base effect from 1QFY14:
1QFY13 was the worst quarter for ad growth
and hence we expect a favorable base effect to come into play from 1QFY14. Print
advertising down-cycle lagged broadcasting due to higher mix of non-FMCG.
3) Expected easing in interest rate cycle:
Expected decline in interest rates would be
positive for ‘print heavy’ categories like real estate, automobiles, consumer durables
and BFSI, which together constitute >30% of ad revenues for the print media sector.
Top 12 categories advertising in print media (CY11)
19 December 2012
10

Print Media
Our economist expects policy rates to ease
Source: MOSL
4) Continued growth traction in local advertising:
Retail advertising continued to be
strong even during the down-cycle, underscoring the resilience of growth in tier
II/III cities. For DB Corp, which enjoys the leadership position in many regional
markets, national advertising is estimated to have declined by more than 10%,
while local has likely continued to grow in double digits. During 1HFY13, local
advertisements contributed 67-68% of ad revenues, compared to 57% in FY10/11.
DB Corp: Estimated growth in local and national advertising (%)
Source: Company, MOSL
19 December 2012
11

Print Media
Margin pressure to ease
Ad growth rebound, declining newsprint cost and cost control to aid margins
Newsprint price inflation has come off significantly, with YoY increase easing from ~15% in
FY12 to much more manageable level of ~6% in 1HFY13, and no major spikes expected
going forward.
We expect operating costs for our print universe to clock a CAGR of 10-11% over FY13E-
15E, largely in line with the revenue growth, and result in stable margins and EBITDA
CAGR of 13% and PAT CAGR of 17%.
FY13 is set to be the third consecutive year of margin contraction for print media
companies, with a cumulative margin decline of ~750bp during FY10-13E. However,
margin contraction in FY13 is expected to be restricted at ~100bp, compared to ~600bp
in FY12, due to declining newsprint prices and commendable cost control across
companies, with restricted circulation growth, lower pagination and efficiency
improvement in other cost items.
Aggregate EBITDA margin for our print universe (%)
Source: Company, MOSL
Newsprint prices have come off significantly, with YoY increase easing from ~15% in
FY12 to much more manageable level of ~6% in 1HFY13, and no major spikes are
expected, going forward. We have assumed a moderate increase in newsprint cost,
going forward.
Newsprint price for print companies (INR)
Newsprint cost (INR/ton)
Jagran (Standlone)
DB Corp
HT Media (English)
HMVL
YoY growth (%)
Jagran (Standlone)
DB Corp
HT Media (English)
HMVL
FY05
24,265
25,597
23,352
FY06
24,767
26,716
27,942
25,590
2.1
9.2
9.6
FY07
26,281
28,527
31,839
29,241
6.1
6.8
13.9
14.3
FY08
25,321
25,747
28,352
27,682
-3.7
-9.7
-11.0
-5.3
FY09
28,898
29,690
34,916
33,215
14.1
15.3
23.2
20.0
FY10
23,931
25,168
32,071
28,808
-17.2
-15.2
-8.1
-13.3
FY11
26,174
27,141
31,373
28,316
9.4
7.8
-2.2
-1.7
FY12
31,384
31,324
32,726
32,478
19.9
15.4
4.3
14.7
FY13E
33,021
32,987
35,779
33,255
FY14E
33,021
33,647
33,642
32,950
FY15E
34,011
34,320
34,651
33,938
3.0
2.0
3.0
3.0
MOSL
5.2
5.3
9.3
2.4
Source:
0.0
2.0
-6.0
-0.9
Company,
19 December 2012
12

Print Media
Newsprint cost as a percentage of revenue is expected to peak in FY13E at 33.5% and
subsequently decline to 32.5% in FY14E and 32.3% in FY15E. Apart from moderation in
cost inflation, newsprint consumption too witnessed a muted growth given various
efficiency measures to reduce wastage etc and reduced push to increase the average
circulation.
Newsprint cost as a percentage of revenue (%)
Source: Company, MOSL
We expect operating costs for our print universe to clock a CAGR of 10-11% over FY13-
15E, largely in line with the revenue growth, and result in stable margins and EBITDA
CAGR of 13% and PAT CAGR of 17%.
Aggregate operating costs to clock 10% CAGR over FY13-15E (%)
Source: Company, MOSL
19 December 2012
13

Print Media
‘It’s the impact that matters’ – print platform delivers
Print media accounts for almost half of total ad spends
Total print media industry revenues are estimated at ~USD4b, of which ~30% comes from
circulation and the balance ~70% is based on advertising. During CY06-11, the industry
posted revenue CAGR of ~9%.
Print companies have high dominance in their respective markets and drive incumbents’
pricing power as they become the ‘default choice’ for advertisers.
Print advertising's intensity is much higher in the metro markets, compared to pan-India
average. Print advertising revenues are estimated at ~0.17% of GDP at the pan-India
level.
With a ‘call-for-action’ positioning, significant reach, high ‘attention span’, localized
product and concentrated industry structure in the respective markets, print media is
the largest platform for Indian advertisers accounting for ~45% share of the total ad
spends in the country.
Despite growing at a slower rate, print media accounts for almost half of total ad spends
Source: FICCI-KPMG, MOSL
Indian print media landscape is segregated into two main markets — English and
regional. Regional is further divided into Hindi and vernacular markets. English print
caters largely to top 6 metros, with a population base of ~60m.
Hindi caters to 11 states, with a combined population of ~600m, while the balance
(~500m) prefers vernacular languages. The North-Eastern states and union territories
are not considered priority markets for the print media due to their small size.
19 December 2012
14

Print Media
Indian print landscape
INDIA PRINT LANDSCAPE
20 States + 2 Union territories
Assam, Meghalaya, Manipur, Mizoram, Tripura, Sikkim, Nagaland,
Arunachal Pradesh + Pondicherry, Daman, Andaman Nicobar, Lakshwadeep,
Dadra Nagar Haveli are not considered as priority print markets
English market
Geography
Mumbai, Delhi,
Chennai, Kolkata,
Bangalore,
Hyderabad
Regional / Language market
Hindi
Population Geography
~60m 11 states - Uttar Pradesh,
Bihar, Rajasthan,
Madhya Pradesh, Jharkhand,
Chattisgarh, HP, J&K, Punjab,
Haryana, Uttarakhand
Vernacular
Population Geography
Population
Note: Goa, Chandigarh
also important for English
~600m Andhra Pradesh
78m
(excl Hyderabad)
Maharashtra
90m
(excl. Mumbai)
Gujarat
60m
Karnartaka
53m
(excl. Bangalore)
Tamil Nadu
67m
(excl. Chennai)
Kerala
33m
West Bengal
86m
(excl. Kolkata)
Orissa
42m
Source: Census data, Company MOSL
~500m
Total print media industry revenues are estimated at ~USD4b, of which ~30% comes
from circulation and the balance ~70% is based on advertising. During CY06-11, the
industry posted revenue CAGR of ~9%.
Print industry revenues estimated at ~USD4b
Source: FICCI-KPMG, MOSL
Historically, print companies have expanded by increasing penetration and keeping
the cover prices affordable, thus resulting in relatively lower circulation revenue
growth. However, over the past few quarters, the industry has been in a consolidation
mode and circulation revenue growth for most print companies has been higher than
the ad growth.
19 December 2012
15

Print Media
YoY growth: Advertising has been the primary growth driver historically (%)
Source: FICCI-KPMG, MOSL
While English is the largest segment in terms of ad revenues and accounts for ~40% of
print ad revenues with ~18m daily readers, Hindi is the most popular language with
~65m daily readers (but only ~30% of print ad spends). Vernacular markets account for
the balance ~30% of ad revenues.
Language-wise breakup of print advertising revenues (INR b)
Source: FICCI-KPMG, MOSL
Print advertising’s intensity is much higher in the metro markets, compared to pan-
India average. Print advertising revenues are estimated at ~0.17% of GDP at the pan-
India level.
Estimated print ad revenues to NDP across regions (%)
Source: Company, MOSL
19 December 2012
16

Print Media
Among the population that reads, Hindi is the most read langauge with a total
readership of 134m. Total readership for English is 32m in India.
Reading preferences: ~38% of the population reads dailies
Source: IRS Q1 2010
Print companies have high dominance in their respective markets and drive
incumbents’ pricing power as they become the ‘default choice’ for advertisers. Despite
strong competitive headwinds, the average readership concentration (top 2 players)
in Hindi markets is ~75% (range of 60-95%). English print (primarily top six metros) is
even more concentrated, with ~90% (range of 75-95%+) readership share controlled
by top 2 players due to higher entry barriers.
Relative readership share of top 2 publications (%)
76
90
Source: IRS, MOSL
19 December 2012
17

Print Media
Hindi print - downturn has reduced competitive intensity
High return ratios maintained even in down-cycle
Hindi speaking states offer potential to increase readership given low readership (~18%)
among the literates.
Cyclical ad slowdown resulted in rationalization in competitive activity, leading to print
companies controlling their circulation growth and increase in average cover prices
On a pan-India basis, Dainik Jagran has the highest readership market share of ~21%,
while Dainik Bhaskar is a close second with 18% share followed by Hindustan (15%). Amar
Ujala and Rajasthan Patrika group have ~11% share each in Hindi dailies.
Regional markets (especially Hindi) have been growing faster than metro-focused
English markets, driven by increased penetration of consumer products/branded goods
in tier 2/3 cities. However, cyclical ad slowdown resulted in rationalization in competitive
activity, leading to print companies controlling their circulation growth and increase in
average cover prices. These would drive ~12% circulation revenue growth in FY13E,
compared to only ~3% advertising revenue growth for our coverage universe.
Aggregate print universe YoY revenue growth: Ad v/s circulation (%)
Readership growth impacted by lower push for circulation increase:
Print readership
of top 25 Hindi dailies in the country grew by only 2% in CY11 and 1% in 1HCY12,
compared to 9% growth in CY10.
Aggregate average issue readership of top 25 Hindi dailies (m)
Source: IRS, MOSL
19 December 2012
18

Print Media
Hindi speaking states offer potential to increase readership given low readership
(~18%) among the literates. While UP, the largest regional advertising market,
continues to grow at a rate lower than the national average, markets like Bihar, Delhi,
Haryana and Rajasthan are growing at a faster clip. Average NDP per capita in the
Hindi markets is INR44,000, compared to INR66,000 on a pan-India basis.
Key economic and other indicators of Hindi markets
State
Population
(m)
Net state NDP growth
domestic
over
product
FY10-12
(INRb)
(%)
14
15
22
10
14
15
19
18
16
13
18
15
17
14
17
NDP per
capita
(INR 000)
30
75
23
31
83
190
178
111
74
39
48
39
47
44
66
Literacy as Cumulative Readership
per 2011 AIR of top
(% of
Census
hindi
(%) dailies (m)
literates)
70
80
64
68
77
86
86
77
84
69
67
71
71
70
74
21.2
2.0
9.4
4.8
2.5
0.3
4.3
3.7
1.1
0.2
13.6
8.5
2.9
74.6
216.0*
Source: RBI/ IRS/
15
25
14
21
12
37
30
19
19
2
29
17
16
18
24
MOSL
Uttar Pradesh 200
5,967
Uttarakhand
10
758
Bihar
104
2,431
Jharkhand
33
1,015
Punjab
28
2312
Chandigarh
1
190
Delhi
17
2,978
Haryana
25
2,806
HP
7
508
J&K
13
494
Rajasthan
69
3300
MP
73
2800
Chattisgarh
26
1188
Aggregate
603
26,746
All India
1,210
79,914
*Avg issue readership for all languages
In terms of ad revenue, UP is the largest market constituting ~30% of Hindi market
followed by Rajasthan (~18%), CPHH (Chandigarh, Punjab, Haryana, Himachal) at ~16%
and MP at ~13%.
Estimated state-wise Hindi ad revenue mix ( %)
*CPHH: Chandigarh, Punjab, Haryana and HP
While competitive intensity in several major Hindi markets had been on a rising
trend driven by formidable challengers in UP (Hindustan), Jharkhand (DB), MP (Patrika)
and Chhattisgarh (Patrika), we believe that a sluggish market environment has reduced
19 December 2012
19

Print Media
the competitive intensity and brought back rationality in the market place.
Competitive scenario varies from a strong hold of incumbents in states like Rajasthan
and Bihar, with top 2 players controlling 80-90% of readership and ~60% share with
top 2 in Haryana and Chhattisgarh.
State-wise readership market share of leading Hindi newspapers (%)
State
Dainik
Jagran
Dainik Hindustan
Bhaskar
19
18
51
36
Amar
Ujala
32
43
Punjab Rajasthan
Kesari
Patrika
group
Others
Total
Uttar Pradesh
42
Uttarakhand
36
Bihar
31
Jharkhand
19
17
Punjab
27
30
Chandigarh
6
55
Delhi
15
Haryana
25
34
HP
4
4
J&K
17
Rajasthan
46
MP
18**
48
Chattisgarh
13**
32
* Prabhat Khabar,## Hari Bhoomi & Nav
7
100
1
2
100
18
100
28*
100
1
41
1
100
24
12
3
100
25
1
15
44#
100
2
4
27
8
100
41
34
18
100
62
21
0
100
1
49
4
100
22
12
100
55##
100
Bharat, # Nav Bharat Times,** Incl Nai Duniya, Source: IRS
Dainik Jagran has the highest readership market share of ~21%, while Dainik Bhaskar
is a close second with 18% share followed by Hindustan (15%). Amar Ujala and Rajasthan
Patrika group have ~11% share each in Hindi daily readership on a pan-India basis.
Pan-India readership market share in Hindi (%)
Source: IRS, MOSL
Dainik Jagran is the highest-read Hindi newspaper in the country with an Average
Issue Readership of 16.4m followed by Dainik Bhaskar at 14.4m and Hindustan at
12.2m. Including other brands, both Dainik Jagran group and DB Corp have a combined
readership of ~19m.
19 December 2012
20

Print Media
Avg. issue readership of top 10 Hindi dailies (m)
Source: IRS, MOSL
Rajasthan Patrika group and Hindustan have been relatively more aggressive over
the past three years, growing their readership base by 9-10% CAGR on the back of
geographical expansion. Dainik Jagran witnessed the lowest CAGR in readership at
1% but remains the No.1 Hindi newspaper in the country.
3-yr readership CAGR: Aggressive expansion from Patrika/Hindustan (%)
Source: IRS, MOSL
State-wise readership market share in Hindi speaking states (%)
UP: Jagran has lost share to Hindustan
Uttarakhand: Hindustan’s share up to 18%
19 December 2012
21

Print Media
Bihar: Hindustan/Jagran together have 82% share
Jharkhand: DB giving tough fight to Jagran for No.3 slot
Delhi: Navbharat Times leads with significant margin
Punjab: DB maintains No.2 position
Chandigarh: DB has a strong hold
Haryana: DB remains the leader
HP: Amar Ujala has ~40% share
MP: Patrika, Nai Duniya challenge DB’s high share
19 December 2012
22

Print Media
Chattisgarh: Competition intensifies
Rajasthan: Top 2 account for ~95% share
J&K: Amar Ujala commands ~60% share
Gujarat: A three-player market
Maharashtra: Lokmat has lost some market share post DB’s entry West Bengal: Anand Bazar Patrika has >50% share
Source: IRS, MOSL
19 December 2012
23

Print Media
Langauge-wise share of readership in vernacular markets (%)
Source: IRS, MOSL
Regional print companies in our universe – DB Corp, Jagran Prakashan and HMVL –
would maintain 19-21% RoE in FY13E, despite the cyclical downturn which underscores
strong pricing power, ability to manage tough environment and limited capital
intensity of the business. We expect RoEs to progressively increase going forward
driven by earnings growth and limited capital requirement, thus sustaining high
dividend payouts.
RoE: Robust across players except HT Media
Source: Company, MOSL
19 December 2012
24

Print Media
English print - well-fortified business model...
... but lacks growth drivers
English dailies command higher ad revenue per reader due to higher purchasing power of
its readers.
English print is even more concentrated compared to regional, with an average 90% of
readership with top 2 players.
However it has a higher risk of potential competition from digital media. This is mainly due
to imminent increase in broadband penetration (currently ~1%) and higher socio-economic
strata of English readers, which make it more affordable for them to switch to Internet.
English print is primarily concentrated in six metros – Delhi, Mumbai, Kolkata, Chennai,
Bangalore and Hyderabad. Delhi and Mumbai are the largest English print markets
constituting an estimated 30%+ each of the ad market. English print is more
concentrated compared to regional, with an average 90% of readership with top 2
players. Higher concentration is led by a well-fortified business model, with
advertisements constituting ~95% of revenues, low cover prices and high cost/copy
(higher number of pages plus use of better quality newsprint).
Estimated ad revenue from English markets (INR b, %)
Avg. issue readership of top 10 English dailies (m)
Source: FICCI-KPMG, IRS, MOSL
The Times of India (TOI) remains the highest-read English newspaper on a pan-India
basis and has also been the fastest growing English daily among the top 3, with a
three-year readership CAGR of 4%.
English dailies: Average issue readership (AIR)
growth in past 3 years (%)
Pan-India readership share in English (%)
Readership of TOI is ~2x of Hindustan Times given its presence among
the top 3 English dailies across metros.
19 December 2012
Source: IRS, MOSL
25

Print Media
English dailies command higher ad revenue per reader due to higher purchasing power
of its readers. While English print commands almost 1.5x premium on ‘cost-per-
thousand’ (CPT) basis compared to regional print, higher maturity of metro markets
and a high base implies lower growth.
Ad rates: Premium of English v/s Hindi
Source: FICCI-KPMG, MOSL
We estimate ad revenue per reader of INR2,700-4,000 for leading English dailies,
compared to INR400-600 for leading Hindi dailies. Apart from the price premium (on
per sq cm basis), English newspapers also sell a higher ad volume due to higher
pagination.
English dailies attract high ad revenue per reader (INR)
Hindi and vernacular publications have significantly
lower ad revenue/reader (INR)
Readership shares in English markets (%)
Delhi NCR: TOI and HT broadly at par
Mumbai: Tough competition between HT and DNA for No.2 spot
Source: Company, MOSL
19 December 2012
26

Print Media
Andhra Pradesh: DECH remains the dominant English daily
Karnataka: TOI, Deccan Herald dominate
Tamil Nadu: The Hindu has a strong foothold
West Bengal: The Telegraph maintains leadership
Source: IRS, MOSL
Digital media poses comparatively higher risk for English print
In our view, English print has a higher risk of potential competition from digital media.
This is mainly considering the imminent increase in broadband penetration (currently
~1%) and higher socio-economic strata of English readers, which make it more
affordable for them to switch to Internet.
India still in nascent stage of Internet/broadband penetration (<2%)
Source: TRAI, MOSL
19 December 2012
27

Print Media
According to the data from telecom regulator, almost 50% of the ~900m wireless
subscribers in India are capable of accessing data service/Internet. Continued rollouts
of 3G services and 4G launch would further boost data penetration in the country.
~50% of wireless subscribers have access to Internet/data services
Source: TRAI, MOSL
19 December 2012
28

Print Media
Dominant footprint v/s investment footprint
DB has the most dominant footprint, HMVL the least
Companies with the right mix of 'dominance' and 'expansion' are best placed as they
offer 'incumbent pricing power' along with 'growth-beyond-home-market' and potential
diversification of earnings.
DB Corp has the highest mix of dominant footprint and lowest mix of investment footprint,
given its strong leadership position (either No.1 or No.2 in most incumbent markets) and
limited expansion footprint (only Maharashtra and Jharkhand).
Dominance v/s expansion – who’s got the right balance?
Print media industry’s structure is that of regional dominance, with incumbents
enjoying strong entry barriers in their respective markets. However, increased
corporatization, capital market listing and increased margins/growth in home markets
motivated many players to pursue geographical expansion.
DB has the most dominant footprint, HMVL the least
We believe that companies with the right mix of ‘dominance’ (we use the percentage
readership base contribution from markets where the publication is within top 2) and
‘expansion’ (we use percentage circulation in markets where publication is not within
top 2) are best placed as they offer ‘incumbent pricing power’ along with ‘growth-
beyond-home-market’ and potential diversification of earnings. Classifying the
operations into ‘dominant’ and ‘expansion’ footprint, we conclude that DB Corp has
the highest mix of dominant operations and lowest mix of investment footprint,
given its strong leadership position (either No.1 or No.2 in most incumbent markets)
and limited expansion footprint (only Maharashtra and Jharkhand). HMVL is on the
other end of spectrum, with significant proportion of readership coming from its
‘expansion footprint’ in UP.
Detailed methodology used to compute ‘Net Score’
We use percentage contribution based on readership from markets where the
publication features in the top 2 for ‘dominant footprint’ and percentage contribution
based on circulation in markets where the publication is not in top 2 for ‘investment
footprint’. A Net Score is then calculated to represent the company’s overall balance
between incumbent operations and investment footprint.
DB has the highest Net Score of 78 bifurcated into: 1) ranked top 2 in 92% of its
readership footprint and 2) ranked beyond top 2 in 14% of its circulation footprint. DB
is followed by HT (English), with a net score of 54. Jagran has a lower Net Score of 28
as it is among the top 2 only in three states – UP, Bihar and Jharkhand, which together
account for 76% of its readership mix. Jagran’s investment footprint has also increased
due to the recent acquisition of ‘Nai Duniya’ in MP. HMVL has the lowest Net Score
largely due to the high proportion of readership and circulation from UP market,
where it holds the No.3 position.
19 December 2012
29

Print Media
Dominant footprint v/s investment footprint: DB most dominant, HMVL the least
Hindi print: Top 2 account for 60-95% of readership
Readership in the Hindi speaking states is highly concentrated, with top 2 dailies
accounting for 61-95% of the overall Hindi readership in a state. On a weighted average
basis, top 2 Hindi dailies control 76% of readership state-wise.
Hindi readership* concentration: Average readership share of top 2 players at ~76%
English print: Top 2 account for 75-100% of readership
English print (primarily top six metros) is even more concentrated (v/s Hindi belt),
with top 2 players constituting ~90% readership market share. Top 2 dailies control
almost the entire English readership, which enables them to drive significant pricing
power as they become ‘default choice’ for advertisers and thereby create high entry
barriers in the market.
English readership* concentration: Average share of top 2 players at ~90%
Source: IRS, MOSL
19 December 2012
30

Print Media
Vernacular print: Maharashtra is the most fragmented market
Top 2 players in the vernacular markets like West Bengal, Gujarat and Maharashtra
account for 60-80% of the readership. Maharashtra is the most fragmented market,
with lower readership concentration of 61%.
Vernacular: Top 2 Marathi newspapers have relatively lower concentration
*Analysis based on relative readership shares of only top 10 dailies in each state.
19 December 2012
31

Print Media
Newsprint prices stable
Volatility can impact earnings for print companies
Newsprint prices are an important driver for print universe’s earnings as newsprint
constitutes ~40% of operating costs and ~33% of revenues for the companies.
While print sector’s earnings remain vulnerable to volatility in newsprint prices, structurally
prices shall remain stable due to declining demand from developed countries
USD denominated news print price exhibited a CAGR of ~3% over the past ten years
compared to ~7% CAGR in the CRB index.
Newsprint prices are an important driver for print universe’s earnings as they
constitute ~40% of operating costs and ~33% of revenues for the companies. Though
international newsprint prices in USD terms were largely stable over past two years,
newsprint cost for Indian companies hardened due to an increase in domestic prices
and INR depreciation.
5-year trend: newsprint prices stable now v/s significant volatility earlier (USD/ton)
Source: Bloomberg
During FY13, we expect the newsprint price increase to be restricted to ~5%. While
print sector’s earnings remain vulnerable to volatility in newsprint prices, structurally
prices shall remain stable due to declining demand from developed countries. We
model ~2% CAGR in newsprint prices over FY13E-15E.
Newsprint cost (INR/ton)
FY05
Jagran (Standlone)
DB Corp
HT Media (English)
HMVL
YoY growth (%)
Jagran (Standlone)
DB Corp
HT Media (English)
HMVL
24,265
25,597
23,352
FY06
24,767
26,716
27,942
25,590
2.1
9.2
9.6
FY07
26,281
28,527
31,839
29,241
6.1
6.8
13.9
14.3
FY08
25,321
25,747
28,352
27,682
-3.7
-9.7
-11.0
-5.3
FY09
28,898
29,690
34,916
33,215
14.1
15.3
23.2
20.0
FY10
23,931
25,168
32,071
28,808
-17.2
-15.2
-8.1
-13.3
FY11
26,174
27,141
31,373
28,316
9.4
7.8
-2.2
-1.7
FY12
31,384
31,324
32,726
32,478
19.9
15.4
4.3
14.7
FY13E
33,021
32,987
35,779
33,255
FY14E
33,021
33,647
33,642
32,950
FY15E
34,011
34,320
34,651
33,938
5.2
0.0
3.0
5.3
2.0
2.0
9.3
-6.0
3.0
2.4
-0.9
3.0
Source: Company, MOSL
19 December 2012
32

Print Media
The long term trend supports this thesis as USD denominated newsprint price
exhibited a CAGR of ~3% over the past 10 years, compared to ~7% CAGR in the CRB
index.
Newsprint prices do not track other commodities: 10-year trend of newsprint prices (USD/
tonne) v/s commodities index
Source: Bloomberg, MOSL
19 December 2012
33

Print Media
Earnings more sensitive to ad revenue v/s newsprint price
HT Media has the highest earnings sensitivity
Earnings are 1.3-2x more sensitive to change in ad revenue than in newsprint prices.
HTML has the highest sensitivity to ad revenue due to higher contribution from English
business, with 1% change in ad revenue impacting earnings by ~5%, compared to 2.5% for
DB/Jagran/HMVL
For every 1% change in newsprint prices, the earnings impact is least for DB Corp (1.6%),
followed by HMVL/Jagran (1.8-1.9%) and HTML (2.4%).
Print companies earnings are relatively volatile compared to broadcasters due to 1)
advertising-heavy business model (80% of revenues), 2) higher dependence on non-
FMCG cyclical categories for advertising and 3) volatility in newsprint prices, which is
the major cost head and represents 33% of revenues.
Ad revenues remain the primary swing factor for print earnings:
Earnings are 1.3-2x
more sensitive to a change in ad revenue than the change in newsprint prices. HTML
has the highest sensitivity to ad revenue due to higher contribution from English
business, with 1% change in ad revenue impacting earnings by ~5%, compared to
2.5% for DB/Jagran/HMVL.
Earnings sensitivity to 1% change in ad revenue (%)
Newsprint prices - second most important variable for earnings:
Newsprint is the
highest operating cost item for all print media companies and price volatility can
have a significant bearing on the earnings performance. For every 1% change in
newsprint prices, the earnings impact is least for DB Corp (1.6%), followed by HMVL/
Jagran (1.8-1.9%) and HTML (2.4%).
Earnings sensitivity to 1% change in newsprint (%)
19 December 2012
Source: MOSL
34

Print Media
Strong balance sheet and cash flow generation to drive
stock performance
Re-rating possible as earnings visibility improves
Over the past two years, print media stocks have underperformed the Sensex by 10-
25%.
Print stocks are currently trading at a weighted average P/E of ~15x FY14E.
Print companies could be strong re-rating candidates as earnings visibility improves.
Over the past two years, print media stocks have underperformed the Sensex by 10-
25% as earnings were dragged largely on 1) lower ad growth due to macro-economic
slowdown, 2) newsprint price increase aggravated by sharp INR depreciation and 3)
company specific factors like certain new launches aimed at geographical expansion
(DB Corp) or strategic acquisition of loss-making business (Jagran).
Print media index v/s Sensex (re-based)
2-year performance of print media stocks v/s Sensex (%)
Source: Bloomberg
19 December 2012
35

Print Media
Print media stocks witnessed a sharp de-rating largely due to muted earnings
performance, compared to the strong growth track record in the period before FY12.
Print stocks are trading at a weighted average P/E of ~15x FY14E. We believe print
companies could be strong re-rating candidates as earnings visibility improves,
implying further upside to our target prices which are based on 18x FY15E P/E for DB/
Jagran and 25/45% discount to these target multiples for HTML/HMVL.
Jagran: trading at discount to historical P/E
DB: trading at discount to historical P/E
HT Media: at significant discount to historical P/E
HMVL: trading at discount to historical P/E
192.8
19 December 2012
36

Print Media
Growth rate, valuation and other key ratios
FY13E-15E Print ad revenue CAGR (%)
FY13E-15E EBITDA CAGR (%)
Expect double digit ad revenue CAGR for the print universe
We expect healthy EBITDA growth over FY13E-15E
FY13E Newsprint cost (% of revenue)
FY13E-15E EPS CAGR (%)
HMVL has the highest raw material/sales ratio
Expect 13-22% earnings CAGR over FY13E-15E for our print
universe
FY12 Dividend payout (%)
FY14 PE (x)
Jagran has the highest dividend payout ratio in our print
HMVL is trading at the lowest P/E while Jagran/DB are
universe
relatively expensive
19 December 2012
37

Print Media
FY14 EV/EBITDA (x)
FY13 ROE (%)
Aggregate print universe FY14 EV/EBITDA at 7x
All companies except HT Media enjoy ~20% RoE despite the
down-cycle
FY13 Net debt/equity (x)
FY13 Net cash and invest (INR b)
HMVL is the best placed in the net debt to equity ratio
HT Media and HMVL have high cash and investments on the
balance sheet
19 December 2012
38

Print Media
Companies
BSE Sensex: 19,244
Company Name
DB Corp
Jagran Prakashan
HT Media
Hindustan
Media Ventures
S&P CNX: 5,858
Pg.
40
53
64
76
19 December 2012
19 December 2012
39

Update
DB Corp
BSE SENSEX
S&P CNX
19,244
5,858
CMP: INR224
TP: INR287
Buy
Bloomberg
Equity Shares (m)
52-Week Range
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
DBCL. IN
181.5
235/170
3/3/-8
40.7
0.7
Leader with diversified regional play
We initiate coverage on DB Corp with a Buy rating and target price of INR287 (18x one-
year forward P/E), implying 28% upside. DB Corp has a strong regional franchise, with
leadership position across most of its footprint and a geographically diversified revenue/
earnings profile. Valuation at ~16x FY14E P/E is attractive given expected earnings CAGR
of 18% over FY13E-15E along with high return ratios (20%+ RoE in down-cycle) and attractive
dividend payout (~40%) and yield (2%).
Valuation summary (INR m)
Y/E March
2013E 2014E 2015E
Sales
15,646 17,452 19,331
EBITDA
3,659 4,244 4,767
PAT
2,095 2,523 2,922
EPS (INR)
11.4 13.8 15.9
EPS Gr. (%)
3.7 20.4 15.8
BV/Sh. (INR) 58.7 66.7 76.0
P/E (x)
19.6 16.3 14.1
P/BV (x)
3.8
3.4
2.9
EV/EBITDA (x) 10.9
9.1
7.7
EV/Sales (x)
2.5
2.2
1.9
RoE (%)
20.6 22.0 22.3
RoCE (%)
16.7 18.4 19.0
EPS CAGR of 18% over FY13E-15E:
During FY13E-15E, we expect EPS CAGR of 18%
and EBITDA CAGR of 14% led by recovery in ad revenues, receding newsprint cost
and lower new circle losses. Expansion plans have been put on hold due to adverse
macro environment.
Diversified regional play, no language barrier:
DB Corp publishes the Hindi daily
'Dainik Bhaskar', Gujarati daily 'Divya Bhaskar' and Marathi daily 'Danik Divya
Marathi', with a total readership base of ~19.5m and circulation of ~4.7m.
Company's radio business 'My FM' is present in 17 cities and covers 7 states. DB
has the most diversified revenue/EBITDA stream in the listed print media space,
with not more than 35% revenue/EBITDA contribution coming from any single
state. Established print business is divided into four circles: MP&CG, Rajasthan,
Gujarat and CPHH, while emerging markets include Jharkhand (launched in CY10)
and Maharashtra (launched in CY11).
Strong franchise across markets:
DB has leadership position across markets despite
being a relatively young brand (15 years or lower) in all markets, except Madhya
Pradesh (MP) and Chattisgarh (CG). Company has a strong presence in all of its
key markets, holding No.1 or No.2 position in almost all its major mature markets.
Revenue CAGR of 11% driven by ad revenue recovery:
We expect ad revenue
CAGR of 11% over FY13E-15E driven by continued strength in local advertising and
improvement in national advertising, which has been under pressure. Cover price
increases undertaken along with moderate growth in copies should drive ~9%
CAGR in circulation revenues for DB.
Expect ~130bp improvement in EBITDA margin over FY13E-15E:
Company's EBITDA
margin would decline from a peak of ~32% in FY10/11 to ~23% in FY13 due to
decline in mature edition margins and EBITDA loss from emerging editions.
Emerging edition losses seem to have peaked, with quarterly loss run-rate
declining from ~INR230m in 2QFY12 to ~INR100m in 2QFY13 led by stable operating
costs and ~50% YoY increase in revenues for emerging editions. Previous market
entries took 3-4 years to reach EBITDA break-even. We expect newsprint costs to
post 8% CAGR, thus capping overall opex growth at 10% CAGR over FY13E-15E.
40
Shareholding pattern %
As on
Sep-12
Promoter
81.5
Dom. Inst
6.0
Foreign
9.6
Others
2.9
Jun-12 Sep-11
81.5
86.5
6.3
4.2
8.2
5.4
4.0
3.9
Stock performance (1 year)
19 December 2012

DB Corp
DB Corp: Geographical footprint
Punjab
0.8
30
HP
0.0
4
Chandigarh
0.2
55
Haryana
1.3
34
Rajasthan
6.3
46
Bihar
Planned -
Jharkhand
0.8
17
Chattisgarh
0.9
32
Maharashtra
0.7
4
Gujarat
3.9
33
MP
4.1
48
Statewise details
States
UP
Uttarakhand
Bihar
Jharkhand
Punjab
Chandigarh
Delhi
Haryana
HP
J&K
Rajasthan
MP
Chattisgarh
WB
Orissa
Gujarat
Maharashtra
Aggregate
DB Corp (Dainik+Divya)
Readership
Readership
(m)
share (%)
Planned
0.8
0.8
0.2
1.3
0.0
6.3
4.1
0.9
17
30
55
34
4
46
48
32
3.9
0.7
19.0
33
4
19 December 2012
41

DB Corp
DB Corp: Product snapshot
Dainik Bhaskar
(Hindi daily)
Divya Bhaskar
(Gujarati daily)
Saurashtra Samachar
(Gujarati daily)
Business Bhaskar
(Hindi business daily)
DB Star
(Hindi daily tabloid)
19 December 2012
42

DB Corp
Diversified regional play, no language barrier
Top 3 position in all large Hindi markets, except Rajasthan
DB Corp publishes the Hindi daily 'Dainik Bhaskar', Gujarati daily 'Divya Bhaskar' and
Marathi daily 'Danik Divya Marathi' with a total readership base of ~19.5m and
circulation of ~4.7m. Company's radio business 'My FM' is present in 17 cities and
covers 7 states. DB has the most diversified revenue/EBITDA stream in the listed print
media space, with not more than 35% revenue/EBITDA contribution coming from any
single state. Established print business is divided into four circles: MP&CG, Rajasthan,
Gujarat and CPHH, while emerging markets include Jharkhand (launched in CY10) and
Maharashtra (launched in CY11).
Hindi newspaper
Gujarati newspaper
Hindi business newspaper
FM Radio
Digital and mobile platform
DB Corp: A Snapshot
Print ad revenue (INR b)
YoY (%)
Circulation revenue (INR b)
YoY (%)
Av circulation/day -Group (m)
YoY (%)
Newsprint price (USD/ton)
YoY (%)
RM cost/Revenue (%)
Revenue mix (%)
Print ad revenue
Circulation revenue
Other
FY06
3.5
1.7
2.8
603
51
66
31
3
FY07
4.9
38
1.6
-2
3.3
14
630
4
49
72
24
4
FY08
6.3
30
1.8
10
3.5
6
640
1
39
73
21
6
FY09
7.0
10
1.9
9
3.6
5
645
1
42
73
20
7
FY10
7.7
11
2.1
6
3.5
-3
531
-18
31
73
19
8
FY11
9.5
23
2.1
4
4.0
14
594
12
30
75
17
8
FY12
10.7
12
2.4
13
4.6
16
650
9
35
73
17
10
FY13E
11.0
3
2.8
16
4.7
1
611
-6
35
FY14E
12.3
12
3.1
10
4.8
3
623
2
34
FY15E
13.7
11
3.3
8
4.9
3
636
2
33
71
71
71
18
18
17
11
12
12
Source: Company, MOSL
19 December 2012
43

DB Corp
DB Corp: Key market details
States
Launch year
MP Chattis-
garh
1958
1988
Rajas-
than
1996
Mature Markets
Har- Chandi-
yana
garh
2000
2000
Gujarat
2003
Punjab
2006
HP Uttara-
khand
2008
NA
Emerging Markets
Jhar-
J&K Maha-
khand
rashtra
2010
2010
2011
Bihar
Yet to
launch
Hindi
104
2,431
2
9.4
9
NA
NA
Language
Hindi
Hindi
Hindi Hindi
Hindi Gujarati
Hindi Hindi
Hindi
Hindi
Hindi Marathi
Population (m)
73
26
69
25
1
60
28
7
10
33
13
112
State NDP*
2,800
1,188
3,300 2,806
176
5,071
2,312
508
758
1,015
494 10,755
NDP per capita#
39
47
48
111
131
84
83
74
75
31
39
96
Mkt AIR (m)**
8.5
2.9
13.6
3.7
0.3
11.7
2.5
1.1
2.0
4.8
0.2
19.2
LRP (%)##
12
11
20
15
23
19
9
16
20
15
1
17
DB readership(m) 4.1
0.9
6.3
1.3
0.2
3.9
0.8
0.0
NA
0.8
NA
0.7
LRS (%) ^
48
32
46
34
60
33
30
4
NA
17
NA
4
Bhopal Raipur Jaipur Pani Chandi- Ahmeda- Jaland- Shimla Dehra- Ranchi Jammu Auran-
Sagar B h i l a i
Alwar
pat
garh
bad
har
dun
Jam-
gabad
Indore
/Durg
Sikar Hissar
Surat Amritsar
shedpur
Nasik
Group
Ujjain Bilas- Jodhpur Fari-
Vadodara Ludhi-
Dhanbad
Jalgaon
editions
Ratlam
pur
Pali dabad
Rajkot
ana
Ahmednagar
including
Jagdal- Udaipur
Bhuj
Bhat-
Sholapur
all brands
pur
Kota
Bhavnagar
inda
of the
Ajmer
Mumbai
company
Bhilwara
Bikaner
Nagour
Sriganganagar
Total editions
5
4
12
3
1
7
4
1
1
3
1
5
NA
*NDP: Net Domestic Product (INR b); # (INR '000); ** AIR: Average Issue Readership; ## LRP: Language Readership Penetration;
^LRS: Language Readership Share
Avg issue readership (m): Dainik Bhaskar is the second
most-read Hindi daily on a pan-India basis
Dainik Bhaskar, flagship newspaper of DB Corp, is present in
11 states and published in 36 editions
DB: Readership has been growing at a modest pace (m)
Dainik Bhaskar has clocked readership at a CAGR of 4% over
the past three years (v/s 9% for Hindustan)
Source: IRS, Company, MOSL
19 December 2012
44

DB Corp
DB: State-wise readership mix (%)
Hindi dailies constitute ~75% of DB's readership, Gujarati
20% and balance 4% is Marathi
Top 5 sectors contribute ~50% to DB's advertising revenues (%)
During FY12, the education sector contributed ~14% to ad
revenues followed by government and automobile at ~11%
each
Source: IRS, Company, MOSL
Local advertisers constitute ~67% of ad revenues
National advertising has been under pressure due to macro slowdown
Source: Company, MOSL
Strong franchise across markets
DB has the leadership position across markets despite being a relatively young brand
(15 years or lower) in all markets, except Madhya Pradesh (MP) and Chattisgarh (CG).
Company has a strong presence in all its key markets and holds No.1 or No.2 position
in almost all major mature markets.
DB's strong presence
across key mature
markets is further
underscored by its
relatively higher
readership share in the
urban market, which is
the key focus of print
advertisers
Readership (m) and market share (%)
2012 Q2
MP
Chattisgarh
Rajasthan
Punjab
Haryana
Gujarat
Urban
3.3
0.5
3.6
0.7
0.7
2.7
DB Corp
Rural
0.8
0.4
2.7
0.1
0.6
0.9
Market
Urban
Rural
6.8
1.8
1.8
1.3
6.9
6.1
2.1
0.3
1.6
1.6
8.3
3.4
Mkt share (%)
Urban
Rural
49
43
30
32
53
44
31
27
43
36
33
27
Source: IRS, MOSL
19 December 2012
45

DB Corp
Indexed card rate: Up 7x in nine years
Company's card rate (all editions) has increased by more than
7x over FY04-13, thus underscoring significant expansion and
the underlying franchise with strong pricing power
DB: Average circulation/day at ~4.7m
Circulation growth to remain muted due to focus on
consolidating operations
Rajasthan readership share (%): DB is a close No.2
Dainik Bhaskar is a close competitor to Rajasthan Patrika
constituting ~45% in the overall readership share in
Rajasthan. However, DB has >50% share in the urban market
MP readership share (%): Traditional bastion for DB
DB is the undisputed market leader in MP; DB's readership
market share of ~48% is more than the next three competitors
put together
Chattisgarh readership share (%): Close competition with
Hari Bhoomi
Dainik Bhaskar (32% share) leads narrowly over Hari Bhoomi
Gujarat readership share (%): DB is No.2 in a three-player
market
DB is the undisputed market leader in MP; DB's readership
market share of ~48% is more than the next three competitors
put together
Source: Company, IRS, MOSL
19 December 2012
46

DB Corp
Revenue CAGR of 11% driven by ad revenue recovery
We expect ad revenue CAGR of 11% over FY13E-15E driven by continued strength in
local advertising and improvement in national advertising, which has been under
pressure. Cover price increases undertaken along with moderate growth in copies
should drive ~9% CAGR in circulation revenues for the company.
Revenue mix (%): print advertising constitutes ~70% of
revenues
We expect contribution from print advertising to remain
steady at ~71%
Revenue CAGR of 11% over FY13E-15E
We expect revenue growth to improve from 7% in FY13E to 12%
in FY14E driven by higher ad growth
Ad revenue CAGR of 11% over FY13E-15E
Ad growth to improve from 3% in FY13E to 12% in FY14E
Circulation revenue CAGR of 9% over FY13E-15E
Circulation revenue growth to decelerate as advertising
environment improves
Circulation revenue per copy up meaningfully in FY13 due to cover price hikes (INR)
Depressed ad markets led to print media companies resorting to cover price increases
Source: Company, MOSL
19 December 2012
47

DB Corp
Expect ~130bp improvement in EBITDA margin over FY13E-15E
DB Corp's EBITDA margin would decline from a peak of ~32% in FY10/11 to ~23% in
FY13 due to decline in mature edition margins and EBITDA loss from emerging editions.
Emerging edition losses seem to have peaked, with quarterly loss run-rate declining
from ~INR230m in 2QFY12 to ~INR100m in 2QFY13, led by stable operating costs and
~50% YoY increase in revenues for emerging editions. Previous market entries took 3-
4 years to reach EBITDA break-even. We expect newsprint costs to post 8% CAGR, thus
capping overall opex growth at 10% CAGR over FY13E-15E.
EBITDA CAGR of 14% over FY13E-15E
EBITDA margin has bottomed out
Expect PAT CAGR of 18% over FY13E-15E
PAT growth to increase from 4% in FY13E to 20% in FY14E
Newsprint consumption to post 6% CAGR over FY13E-15E
Newsprint consumption growth to be restricted to ~2% in FY13E
due to lower volumes and improved efficiency
Imported newsprint proportion increased in FY12
Mix of imported newsprint increased to 31% in FY12 from 21%
in FY11
Source: Company, MOSL
19 December 2012
48

DB Corp
Expect lower volatility in newsprint price
We estimate 2% CAGR in USD denominated newsprint price
Newsprint cost (% of revenue) expected to decline
We believe that newsprint cost pressure has already peaked
Source: Company, MOSL
18% EPS CAGR; Initiate with Buy and TP of INR287
During FY13E-15E, we expect EPS CAGR of 18% and EBITDA CAGR of 14% led by recovery
in ad revenues, receding newsprint cost and lower new circle losses. Expansion plans
have been put on hold due to adverse macro environment. Valuation at ~16x FY14E P/
E is attractive due to expected earnings CAGR of 18% over FY13E-15E along with high
return ratios (20%+ RoE in down-cycle) and attractive dividend payout (~40%) and
yield (2%).
DB Corp: P/E band chart
Since listing, DB Corp has traded at a one-year median P/E of
19.5x. We value the company at a P/E of ~18x one-year forward
DB Corp: P/B band chart
Since listing, DB Corp has traded at one-year median P/B of
4.5x
Source: Company, MOSL
19 December 2012
49

DB Corp
Quarterly trends
Revenue growth has remained flattish; margins
bottoming-out
Print advertising constitutes significant portion of
revenues (INR b)
YoY revenue growth impacted by flat ad growth (%)
Contribution from national advertising has declined to 33%
Newsprint consumption flat YoY in 2QFY12
Cost pressure from newsprint abates
RM cost stable at ~35% of revenues
Source: Company, MOSL
19 December 2012
50

DB Corp
Financials and Valuation
Income Statement
Y/E March
Net Sales
YoY (%)
Operating expenses
Printing and other exp
Employee Cost
Administrative exp
EBITDA
EBITDA margin (%)
Depreciation
Interest
Other Income
PBT
Tax
Tax rate (%)
PAT
Minority Interest
Adjusted PAT
Change (%)
Extra-ordinary items
Reported PAT
2010
10,630
10.6
7,200
3,279
1,318
2,604
3,429
32.3
378
357
112
2,806
1,057
37.7
1,749
-79
1,828
284
0
1,828
2011
12,652
19.0
8,621
3,839
1,846
2,937
4,031
31.9
433
153
123
3,569
1,273
35.7
2,296
3
2,293
25
273
2,566
2012
14,638
15.7
11,088
5,080
2,429
3,579
3,550
24.3
506
155
115
3,004
982
32.7
2,022
2
2,021
-12
0
2,021
2013E
15,646
6.9
11,987
5,471
2,794
3,722
3,659
23.4
567
88
159
3,162
1,066
33.7
2,097
2
2,095
4
0
2,095
2014E
17,452
11.5
13,207
5,901
3,213
4,094
4,244
24.3
596
81
241
3,808
1,283
33.7
2,525
2
2,523
20
0
2,523
(INR Million)
2015E
19,331
10.8
14,564
6,366
3,695
4,504
4,767
24.7
620
81
344
4,410
1,486
33.7
2,924
2
2,922
16
0
2,922
Balance Sheet
Y/E March
Share Capital
Share Premium
Reserves
Net Worth
Loans
Minority Interest
Deffered Tax Liability
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
Curr. Assets
Inventory
Debtors
Cash & Bank Balance
Loans & Advances
2010
1,828
2,366
2,293
6,487
3,207
44
609
10,347
7,165
1,305
5,861
614
205
5,614
722
1,934
1,951
1,008
2011
1,862
2,373
4,054
8,289
2,372
4
695
11,359
8,408
1,729
6,678
680
163
5,918
728
2,401
1,731
1,058
2,189
1,648
541
3,729
110
11,359
2012
1,862
2,373
5,356
9,590
2,130
15
746
12,482
9,487
2,235
7,252
681
460
6,945
1,186
2,481
1,884
1,394
2,962
2,442
520
3,983
106
12,482
2013E
1,862
2,373
6,511
10,746
1,800
15
746
13,307
9,737
2,802
6,935
681
460
8,372
1,277
2,651
2,953
1,490
3,166
2,610
555
5,206
25
13,307
(INR Million)
2014E
1,862
2,373
7,975
12,209
1,800
15
746
14,771
10,137
3,399
6,739
681
460
10,422
1,377
2,957
4,425
1,662
3,531
2,912
620
6,891
0
14,771
2015E
1,862
2,373
9,684
13,919
1,800
15
746
16,480
10,537
4,019
6,519
681
460
12,732
1,486
3,276
6,129
1,841
3,911
3,225
686
8,821
0
16,480
Current Liab. & Prov.
2,073
Creditors
1,706
Provisions and other liabilities 367
Net Current Assets
3,542
Miscellanous exp
126
Application of Funds
10,347
E: MOSL Estimates
19 December 2012
51

DB Corp
Financials and Valuation
Ratios
Y/E March
Basic (INR)
Adjusted EPS
Growth (%)
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.) (%)
Valuation
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
Cash flow statement
Y/E March
EBITDA
Other Income
Interest Paid
Direct Taxes Paid
(Inc)/Dec in Wkg. Cap.
CF from Op.Activity
(inc)/Dec in FA + CWIP
(Pur)/Sale of Investments
CF from Inv.Activity
Issue of Shares
Inc/(Dec) in Debt
Dividends Paid
Other Financing Activities
CF from Fin.Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
E: MOSL Estimates
19 December 2012
2010
10.1
257.0
12.2
36.0
2.0
23
2011
12.6
24.8
14.9
45.5
4.0
37
2012
11.0
-12.3
13.8
52.4
4.0
42
2013E
11.4
3.7
14.5
58.7
4.0
41
2014E
13.8
20.4
17.0
66.7
4.8
41
2015E
15.9
15.8
19.3
76.0
5.7
42
20.3
16.3
11.6
2.8
4.3
1.8
19.6
15.4
10.9
2.5
3.8
1.8
16.3
13.2
9.1
2.2
3.4
2.2
14.1
11.6
7.7
1.9
2.9
2.5
39.6
20.7
30.9
24.6
22.6
17.8
20.6
16.7
22.0
18.4
22.3
19.0
66
25
86
1.3
69
21
70
1.5
62
30
80
1.5
62
30
79
1.6
62
29
80
1.8
62
28
81
2.0
0.5
0.3
0.2
0.2
0.1
0.1
(INR Million)
2015E
4,767
344
-81
-1,486
-226
3,318
-400
0
-400
0
0
-1,213
-2
-1,214
1,704
4,425
6,129
2010
3,429
112
-357
-841
-153
2,190
-382
33
-350
2,506
-2,424
-424
0
-341
1,499
452
1,951
2011
4,305
123
-153
-1,187
-346
2,741
-1,316
42
-1,274
41
-835
-849
-43
-1,687
-220
1,951
1,730
2012
3,550
115
-155
-931
37
2,616
-1,080
-297
-1,378
0
-242
-854
10
-1,085
153
1,731
1,884
2013E
3,659
159
-88
-1,066
-154
2,509
-250
0
-250
0
-330
-859
-2
-1,191
1,069
1,884
2,953
2014E
4,244
241
-81
-1,283
-213
2,908
-400
0
-400
0
0
-1,035
-2
-1,036
1,472
2,953
4,425
52

Media
Jagran Prakashan
BSE SENSEX
S&P CNX
19,244
5,858
CMP: INR101
TP: INR136
Buy
Bloomberg
Equity Shares (m)
52-Week Range
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
JAGP. IN
316.3
115/78
-5/2/-18
31.9
0.6
Undisputed leader in UP
We upgrade Jagran Prakashan from Neutral to Buy with a target price of INR136 (18x
FY15 P/E), implying 34% upside. Jagran has strong regional franchise in large states like
Uttar Pradesh and Bihar. Valuation at ~16x FY14E P/E is attractive considering expected
earnings CAGR of 16% over FY13E-15E along with high return ratios (20%+ RoE in down-
cycle), attractive dividend payout (~70%) and yield (3.5%).
Valuation summary (INR m)
Y/E March
2013E 2014E 2015E
Sales
15,565 17,158 19,282
EBITDA
3,355 3,699 4,173
PAT
1,774 2,036 2,385
EPS (INR)
5.6
6.4
7.5
EPS Gr. (%)
-0.5 14.8 17.2
BV/Sh. (INR) 30.9 33.2 36.1
P/E (x)
18.0 15.7 13.4
P/BV (x)
3.3
3.0
2.8
EV/EBITDA (x) 10.1
9.0
7.8
EV/Sales (x)
2.2
1.9
1.7
RoE (%)
20.5 20.1 21.8
RoCE (%)
18.4 14.6 16.0
Undisputed leader in UP, the largest Hindi market; top 3 position in all large Hindi
markets, except Rajasthan:
'Dainik Jagran' (DJ) is the highest-read daily in India,
with an average issue readership of 16m and circulation of ~3.5m. DJ has a pan-
India Hindi readership share of ~21%; its readership is relatively concentrated,
with Bihar and UP accounting for ~65%, though they constitute only ~40% of Hindi
market readership. DJ's relative readership share in UP remains strong at 42%
despite a decline from ~50% over CY05-12 due to increased competition, mainly
from 'Hindustan'. In Bihar, DJ has a No.2 rank with ~30% readership share, compared
to 50% for 'Hindustan'. Jagran (including 'Nai Duniya') is among the top 3
newspapers in all large Hindi markets, except Rajasthan.
Ad revenues: impressive track record; FY13 worst year in past decade; expect
12% ad revenue CAGR over FY13E-15E:
During FY03-12, Jagran's ad revenues
clocked 22% CAGR, with only a year of sub-15% (FY09) growth and no year of
single-digit growth. However, proforma ad growth (excluding 'Nai Duniya'
acquisition) is expected to decline to ~7% YoY in FY13E led by macro slowdown.
We expect the ad growth to bounce back to 11% in FY14E and 14% in FY15E as the
macro environment stabilizes.
Investing back in circulation for future monetization:
DJ reported circulation CAGR
of just 3% during FY06-10, compared to 20% during FY03-06, as it focused on
monetizing the expanded coverage. Jagran started investing back in circulation,
with an estimated 11% increase during FY11 and 7% CAGR over FY11-13E. This
should ensure healthy yield improvement over the medium term as benefits of
increased readership start accruing after 2-3 years.
MP entry through 'Nai Duniya' acquisition; synergy benefits to restrict impact on
consolidated earnings:
Over past few years, Jagran took several diversification
initiatives by launching 'I Next' (bilingual daily) and 'City Plus' (English weekly),
entry into outdoor and event management business, acquisition of Mid-day
Infomedia which publishes 'Mid-Day' (afternoon daily) and 'Inquilab' (Urdu daily)
and recent acquisition of 'Nai Duniya' (ND) to expand its footprint into MP and
Chhattisgarh. Though the acquisition would impact proforma earnings, initial
trends post-acquisition were encouraging. National advertising for ND is set to
double in FY13E and net loss from ND could be restricted to ~INR100m, compared
to >INR300m loss in FY12 (before Jagran took over operations).
53
Shareholding pattern %
As on
Sep-12
Promoter
59.7
Dom. Inst 14.8
Foreign
13.0
Others
12.5
Jun-12 Sep-11
59.7
59.5
13.9
16.1
13.6
11.1
12.8
13.3
Stock performance (1 year)
19 December 2012

Jagran Prakashan
EBITDA margin to stabilize at ~22%:
FY13 would be third consecutive year of EBITDA
margin contraction at the consolidated level, with a cumulative decline of ~800bp to
~22%. Raw material cost inflation is largely over, with printing costs expected to
remain at FY12 level (45% of revenues) in FY13E and FY14E, thus driving 12%
consolidated EBITDA CAGR over FY13E-15E compared to ~8% growth in standalone
EBITDA during FY13E.
Jagran Prakashan: A Snapshot
Group ad revenue (INR b)
YoY (%)
-Standalone
YoY (%)
-Mid-Day + Inquilab
YoY (%)
-Nai Duniya
YoY (%)
Group circulation revenue (INR b)
YoY (%)
-Standalone
YoY (%)
-Mid-Day + Inquilab
YoY (%)
-Nai Duniya
YoY (%)
Dainik Jagran av circulation/day (m)
YoY (%)
Newsprint price (USD/ton)
YoY (%)
RM cost/Revenue (%)
Revenue mix (%)
Ad revenue
Circulation revenue
Other
FY06
3.1
33
3.1
33
FY07
3.9
26
3.9
26
FY08
5.0
28
5.0
28
FY09
5.5
11
5.5
11
FY10
6.4
16
6.4
16
0.8
FY11
8.5
34
7.7
20
0.9
4
FY12
9.4
10
8.5
11
0.9
2
FY13E
10.8
16
9.0
6
0.9
5
0.9
28
3.1
18
2.7
10
0.2
9
0.2
10
3.5
7
610
-6
31
70
20
10
FY14E
12.0
11
10.0
11
1.0
5
1.0
15
3.4
8
2.9
8
0.2
9
0.3
15
3.7
6
610
0
31
70
20
10
FY15E
13.7
14
11.5
15
1.0
5
1.2
12
3.7
10
3.2
9
0.3
9
0.3
0
3.9
6
627
3
32
71
19
10
1.6
16
1.6
1.7
5
1.7
5
1.8
8
1.8
8
2.0
8
2.0
8
2.1
9
2.1
10
0.1
2.4
12
2.2
4
0.2
4
2.7
11
2.4
10
0.2
28
2.5
20
559
4
46
64
33
2
2.4
-2
581
4
39
65
28
7
2.6
8
629
8
36
67
24
9
2.8
6
628
0
39
67
24
9
2.7
-2
505
-20
29
68
23
10
3.0
11
573
13
29
70
20
11
3.2
8
652
14
34
69
20
11
19 December 2012
54

Jagran Prakashan
Jagran Prakashan: Geographical footprint
J&K
0.03 17
HP
Chandigarh
0.02
6 Uttarakhand
Haryana
0.72 36
0.95 25
Delhi
0.65 15
Rajasthan
UP
0.02
-
8.87
42
Punjab
0.68 27
0.04
4
Bihar
2.93 31
Jharkhand
0.91 19
MP
1.55 18
Chattisgarh
0.38 13
WB
0.15
-
Orissa
0.03
-
Statewise details
Jagran Prakshan
(Dainik Jagran + Nai Duniya)
Readership
Readership
(m)
share (%)
8.87
42
0.72
36
2.93
31
0.91
19
0.68
27
0.02
6
0.65
15
0.95
25
0.04
4
0.03
17
0.02
1.55
18
0.38
13
0.15
0.03
States
UP
Uttarakhand
Bihar
Jharkhand
Punjab
Chandigarh
Delhi
Haryana
HP
J&K
Rajasthan
MP
Chattisgarh
WB
Orissa
Gujarat
Maharashtra
Aggregate
17.9
19 December 2012
55

Jagran Prakashan
Jagran Prakashan: Product snapshot
Dainik Jagran
(Hindi daily)
I Next
(Bi-lingual daily)
City Plus
(Weekly infotainment English
newspaper)
Mid-day
(Afternoon English daily)
Inquilab
(Urdu daily)
Nai Duniya
(Hindi Daily in MP and Chhattisgarh)
Undisputed leader in UP, the largest Hindi market
'Dainik Jagran' (DJ) is the highest-read daily in India, with an average issue readership
of 16m and circulation of ~3.5m. DJ has a pan-India Hindi readership share of ~21%; its
readership is relatively concentrated, with Bihar and UP accounting for ~65%, though
they constitute only ~40% of Hindi market readership. DJ's relative readership share
in UP remains strong at 42% despite a decline from ~50% over CY05-12 due to increased
competition, mainly from 'Hindustan'. In Bihar, DJ has a No.2 rank with ~30% readership
share, compared to 50% for 'Hindustan'. Jagran (including 'Nai Duniya') is among the
top 3 newspapers in all large Hindi markets, except Rajasthan.
19 December 2012
56

Jagran Prakashan
Dainik Jagran is most-read Hindi daily by average issue
readership (m)
DJ: Average issue readership stagnant (m)
Average readership for DJ remained stagnant at ~16m
Jagran (incl Nai Duniya): Hindi dailies readership mix (%)
UP constitutes ~50% of readership for Jagran's Hindi dailies
Hindi dailies readership mix: Jagran more exposed to UP and
Bihar
UP and Bihar constitute ~40% of Hindi market readership
but ~65% of Jagran's readership
Strong franchise in UP
Significant gap v/s No. 1 in Bihar
Source: IRS, MOSL
19 December 2012
57

Jagran Prakashan
Ad revenues: impressive track record; FY13 worst year in past
decade
During FY03-12, Jagran's ad revenues clocked 22% CAGR, with only a year of sub-15%
(FY09) growth and no year of single-digit growth. However, proforma ad growth
(excluding 'Nai Duniya' acquisition) is expected to decline to ~7% YoY in FY13E led by
macro slowdown. We expect the ad growth to bounce back to 11% in FY14E and 14% in
FY15E as the macro environment stabilizes.
Ad revenue growth to accelerate
Ad revenue growth expected to bounce back
DJ contributes ~80% of ad revenues (%)
Acquired businesses contribute ~17% to ad revenues
Source: Company, MOSL
Investing back in circulation for future monetization
DJ reported circulation CAGR of just 3% during FY06-10, compared to 20% during FY03-
06, as it focused on monetizing the expanded coverage. Jagran started investing back
in circulation, with an estimated 11% increase during FY11 and 7% CAGR over FY11-
13E. This should ensure healthy yield improvement over the medium term as benefits
of increased readership start accruing after 2-3 years.
Expect ~7% CAGR in average circulation
Average daily circulation to grow by ~7% in FY13E on a
proforma basis
Acquired business constitutes ~15% of circulation
DJ constitutes ~75% of circulation for the company
Source: Company, MOSL
19 December 2012
58

Jagran Prakashan
Expect revenue growth to accelerate
FY13E revenues to grow ~7%, excluding acquisition
Ad revenues constitute ~70% of Jagran's total revenues
Mix of ad revenues to remain stable
Source: Company, MOSL
Madhya Pradesh entry through 'Nai Duniya' acquisition
Over past few years, Jagran took several diversification initiatives by launching 'I
Next' (bilingual daily) and 'City Plus' (English weekly), entry into outdoor and event
management business, acquisition of Mid-day Infomedia which publishes 'Mid-Day'
(afternoon daily) and 'Inquilab' (Urdu daily) and recent acquisition of 'Nai Duniya'
(ND) to expand its footprint into MP and Chhattisgarh. Though the acquisition would
impact proforma earnings, initial trends post-acquisition were encouraging. National
advertising for ND is set to double in FY13E and net loss from ND could be restricted to
~INR100m, compared to >INR300m loss in FY12 (before Jagran took over operations).
Nai Duniya: Key Financials (INR m)
Nai Duniya (INRm)
Ad revenue
-National
-Local
Circulation revenue
Other revenue
Total revenue
Operating costs
RM
Other manufacturing
Distribution and others
EBITDA
FY12E
700
140
560
200
50
950
1,200
500
100
600
-250
FY13E
896
280
616
220
50
1,166
1,215
550
95
570
-49
FY14E
FY15E
1,030
1,154
322
361
708
793
253
283
50
50
1,333
1,487
1,298
1,423
633
708
95
102
570
613
36
64
Source: Company, MOSL
19 December 2012
59

Jagran Prakashan
MP: Nai Duniya readership share (%)
Chhattisgarh: Nai Duniya readership share (%)
Source: IRS, MOSL
EBITDA margin to stabilize at ~22%
FY13 would be third consecutive year of EBITDA margin contraction at the consolidated
level, with a cumulative decline of ~800bp to ~22%. Raw material cost inflation is
largely over, with printing costs expected to remain at FY12 level (45% of revenues) in
FY13E and FY14E, thus driving 12% consolidated EBITDA CAGR over FY13E-15E
compared to ~8% growth in standalone EBITDA during FY13E.
Expect stable EBITDA margin at ~22%
Margins were under pressure during FY10-12
Newsprint cost at ~32% of revenues
RM cost increase is largely behind
RM cost mix (%)
Domestic mix of RM cost at ~80% in FY12
Newsprint prices unlikely to increase meaningfully
Newsprint costs have been well managed
Source: Company, MOSL
19 December 2012
60

Jagran Prakashan
EPS CAGR of 16%; Upgrade to Buy with TP of INR136
Jagran has strong regional franchise with leadership positions in large states like UP
and Bihar. Valuation at ~16x FY14E P/E is attractive given expected earnings CAGR of
16% over FY13E-15E along with high return ratios (20%+ RoE in down-cycle) and
attractive dividend payout (~70%) and yield (3.5%).
Jagran: Historical P/E band
Jagran: Historical P/B band
Since listing, Jagran has traded at a one-year average P/E of ~18x. We value Jagran at ~18x FY15 P/E
Source: Company, MOSL
Quarterly trends (Standalone)
Advertising revenues at INR2.2b; 3.3x circulation revenues
YoY ad growth has been tapering down (%)
EBITDA margin has stabilised (%)
RM costs steady at 34-36% of revenues
Source: Company, MOSL
19 December 2012
61

Jagran Prakashan
Financials and Valuation
Income Statement (Consolidated)
Y/E March
Net Sales
YoY (%)
EBITDA
EBITDA margin (%)
Depreciation
Interest
Other Income
PBT
Tax
Tax rate (%)
Adjusted PAT
Change (%)
Extra-ordinary items
Reported PAT
2010
9,419
14.4
2,823
30.0
507
66
343
2,592
833
32.1
1,759
92.0
0
1,759
2011
12,211
29.6
3,568
29.2
575
91
256
3,158
976
30.9
2,183
24.1
-105
2,078
2012
13,557
11.0
3,168
23.4
709
158
255
2,556
773
30.2
1,783
-18.3
0
1,783
2013E
15,565
14.8
3,355
21.6
755
326
260
2,534
760
30.0
1,774
-0.5
760
2,534
2014E
17,158
10.2
3,699
21.6
794
380
384
2,908
873
30.0
2,036
14.8
0
2,036
(INR Million)
2015E
19,282
12.4
4,173
21.6
838
380
453
3,408
1,022
30.0
2,385
17.2
0
2,385
Balance Sheet
Y/E March
Share Capital
Share Premium
Reserves
Net Worth
Loans
Deffered Tax Liability
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
Curr. Assets
Inventory
Debtors
Cash & Bank Balance
Loans & Advances
Other current assets
Current Liab. & Prov.
Creditors
Provisions & other liabilities
Net Current Assets
Application of Funds
E: MOSL Estimates
2010
602
3,590
1,932
6,125
1,214
580
7,919
5,635
1,945
3,690
251
1,666
4,173
533
1,812
852
717
259
1,861
1,296
566
2,312
7,919
2011
633
3,590
2,799
7,022
1,924
617
9,564
7,723
2,570
5,153
316
2,018
4,979
639
2,310
362
1,415
252
2,902
1,545
1,357
2,077
9,564
2012
633
3,590
3,296
7,519
6,434
701
14,654
12,273
3,279
8,994
316
2,481
6,688
775
2,889
995
1,891
138
3,825
2,433
1,392
2,863
14,654
2013E
633
3,590
5,535
9,758
5,434
0
15,192
12,895
4,034
8,861
316
2,481
7,925
819
2,985
1,792
2,171
158
4,392
2,794
1,598
3,534
15,192
(INR Million)
2014E
633
3,590
6,276
10,499
5,434
0
15,933
13,582
4,828
8,753
316
2,481
9,224
902
3,291
2,464
2,393
174
4,841
3,080
1,762
4,382
15,933
2015E
633
3,590
7,181
11,404
5,434
0
16,838
14,353
5,666
8,687
316
2,481
10,795
1,030
3,698
3,182
2,690
196
5,441
3,461
1,980
5,355
16,838
19 December 2012
62

Jagran Prakashan
Financials and Valuation
Ratios
Y/E March
Basic (INR)
Adjusted EPS
Growth (%)
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.) (%)
2010
5.8
92.0
7.5
20.3
3.5
70
2011
6.9
18.2
8.7
22.2
3.5
59
2012
5.6
-18.3
7.9
23.8
3.5
73
2013E
5.6
-0.5
8.0
30.9
3.5
73
2014E
6.4
14.8
8.9
33.2
3.5
54
2015E
7.5
17.2
10.2
36.1
4.0
53
Valuation
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
17.9
12.8
11.3
2.6
4.2
3.5
18.0
12.6
10.1
2.2
3.3
3.5
15.7
11.3
9.0
1.9
3.0
3.5
13.4
9.9
7.8
1.7
2.8
4.0
30.0
23.3
33.2
24.4
24.5
15.6
20.5
18.4
20.1
14.6
21.8
16.0
70
21
72
1.8
69
19
65
1.9
78
21
85
1.5
70
19
84
1.4
70
19
84
1.6
70
19
84
1.7
0.2
0.3
0.9
0.6
0.5
0.5
Cash Flow Statement
Y/E March
Op.Profit/(Loss) bef Tax
Other Income
Interest Paid
Direct Taxes Paid
(Inc)/Dec in Wkg. Cap.
CF from Op.Activity
(inc)/Dec in FA + CWIP
(Pur)/Sale of Investments
CF from Inv.Activity
Issue of Shares
Inc/(Dec) in Debt
Dividends Paid
Other Financing Activities
CF from Fin.Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
E: MOSL Estimates
2010
2,823
343
-66
-774
-311
2,015
-459
-98
-557
0
-201
-1,233
0
-1,434
24
828
852
2011
3,463
256
-91
-938
-255
2,435
-2,103
-352
-2,455
30
711
-1,295
84
-470
-490
852
362
2012
3,168
255
-158
-690
-153
2,423
-4,550
-464
-5,014
0
4,510
-1,295
9
3,224
633
362
995
2013E
4,115
260
-326
-1,461
126
2,715
-623
0
-623
0
-1,000
-1,295
1,000
-1,295
797
995
1,792
2014E
3,699
384
-380
-873
-178
2,653
-686
0
-686
0
0
-1,295
0
-1,295
671
1,792
2,464
(INR Million)
2015E
4,173
453
-380
-1,022
-254
2,970
-771
0
-771
0
0
-1,480
0
-1,480
718
2,464
3,182
19 December 2012
63

Update
HT Media
BSE SENSEX
S&P CNX
19,244
5,858
CMP: INR104
TP: INR111
Neutral
Bloomberg
HTML. IN
Equity Shares (m)
235.0
52-Week Range (INR)
150/82
1,6,12 Rel. Perf. (%)
2/-9/-37
M.Cap. (INR b)
24.4
M.Cap. (USD b)
0.4
Diversified portfolio
Despite undemanding valuations at ~14x FY14E P/E, we maintain Neutral on HT Media
with a target price of INR111 based on 13.5x one-year forward EPS (25% discount to
target P/E of 18x for DB/Jagran). We expect EPS CAGR of 13% over FY13E-15E driven by
10% revenue CAGR. Company has several businesses in the investment phase (HT-Mumbai,
Mint and Hindustan-UP), which would require significant improvement in the macro
environment to start contributing to the bottom line. While balance sheet is strong with
net cash and investment of ~INR25/sh, adverse macro environment, low dividend payout
and diversification beyond core areas has depressed RoE to single-digit levels. HT Media
has the highest earnings sensitivity to change in ad growth/newsprint prices.
Valuation summary (INR m)
Y/E March
2013E 2014E 2015E
Sales
20,673 22,953 25,207
EBITDA
2,690 3,310 3,414
Adj PAT
1,485 1,761 1,897
Adj EPS (INR) 6.3
7.5
8.1
EPS Gr. (%)
-9.2 18.6
7.7
BV/Sh. (INR) 73.5 81.3 89.7
P/E (x)
16.5 13.9 12.9
P/BV (x)
1.4
1.3
1.2
EV/EBITDA (x) 7.3
5.5
4.8
EV/Sales (x)
1.0
0.8
0.6
RoE (%)
9.0
9.7
9.4
RoCE (%)
9.7 11.0 11.4
Diversified portfolio with exposure to English print, Hindi print, radio and online:
'Hindustan Times' (English daily) and 'Hindustan' (Hindi daily) are leading brands
ranked 2nd and 3rd respectively on a pan-India basis in their respective genres,
with a combined readership base of 16m. 'Mint' is the second-most read business
daily in India. Radio business is concentrated in four metros. Company's online
portfolio is focused on news, networking, jobs and education space and could
continue incurring operating loss.
Strong franchise in Delhi and Bihar markets:
HT has a strong franchise in Delhi
(Rs15b+ market) and Bihar (one of the fastest growing markets), with ~50%
readership share in both these markets. Dominant position in these markets gives
stability to its business model, thus providing good mix of mature and emerging
businesses.
FY13E ad revenues to remain flat YoY; we estimate 10% CAGR over FY13-15E:
HT
has been one of the worst hit from current ad slowdown in FY13, with expected
~3% YoY decline in English segment, though Hindi ad growth is expected to remain
relatively better at ~8% YoY. We model ad revenue CAGR of 10% over FY13-15E
based on expected recovery to 9% CAGR in English and 13% CAGR in Hindi.
Margin performance expected to bottom out:
EBITDA margin declined ~300bp
YoY to ~11% in 2QFY13 due to lack of operating leverage. We expect margin