| Jagran Prakashan Limited | ||||||
| Ratings reaffirmed at 'CRISIL AA+/Stable/CRISIL A1+' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AA+/Stable/CRISIL A1+’ ratings on the debt instruments and bank facilities of Jagran Prakashan Limited (JPL; a part of the JPL group).
The ratings continue to reflect the leadership position of Dainik Jagran, the flagship daily published by the group, healthy market position of JPL in the radio business and its strong financial risk profile. These strengths are partially offset by exposure to risk arising from competition and volatility in newsprint prices and economic cycles.
Operating revenue has gradually recovered to over 80% of pre-pandemic levels, with revenue of Rs 1,397 crore reported for the nine months through December 2022 (as against 1,652 crore recorded for the nine months through December 2019 prior to the pandemic). However, earnings before interest, taxes, depreciation and amortisation (EBITDA) and operating margin were subdued at Rs 245 crore and 17.6% for the nine months ending December 31, 2022, respectively, vis-a-vis Rs 378 crore and around 23%, respectively, for the nine months ending December 31, 2019. The margin continues to be impacted by higher newsprint cost and higher operating expenses towards growing business segments such as outdoor and digital media, which have already surpassed pre-pandemic revenue levels.
Advertisement revenue, which forms nearly 75% of total revenue for print media companies such as JPL, is highly correlated with economic growth. With upcoming general elections, advertisement revenue is also likely to rise at a healthy pace in fiscal 2024. Moreover, newsprint cost has started correcting in the second half of fiscal 2023 and are expected to be lower by ~15-20% in fiscal 2024 year-on-year. This should help JPL increase its circulation copies and widen its reach without negatively impacting its operating margin. This should be a driver for ad revenues over the medium term.
While the EBITDA margin will be supported by recovery in advertisement revenue in fiscal 2024, better operating performance remains a key rating sensitivity factor |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of JPL, its subsidiaries – Music Broadcast Ltd (MBL; ‘CRISIL AA/Stable’) and Midday Infomedia Ltd (MIL; ‘CRISIL AA-/Stable’), and associate companies – Leet OOH Media Pvt Ltd, MMI Online Ltd, and X-Pert Publicity Pvt Ltd. This is because all these entities, collectively referred to as the JPL group, have strong links and are under common promoters.
CRISIL Ratings has also amortised the goodwill arising from the MBL over 10 years.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Leadership position of the flagship daily, Dainik Jagran Dainik Jagran is amongst the highest read and circulated newspaper across India. The JPL group enjoys a competitive position, aided by established presence of Dainik Jagran in the Hindi belt (across Uttar Pradesh, Uttarakhand, Bihar, Jharkhand, Punjab, Haryana, the National Capital Region, central and other regions). Strong position in the print media segment should also sustain, underpinned by Dainik Jagran and supported by Nai Dunia, MidDay and Inquilab.
Healthy market position in the radio business The JPL group runs 39 radio channels under the established Radio City brand. It is the second largest radio player with around 19% market share (in terms of volume) in the third quarter of fiscal 2023. This complements JPL’s offering to advertisers. The company has a diversified reach with strong presence in tier 2 and tier 3 cities as well. Focus on growth in revenue from non-FCT (free commercial time) segments such as digital media and events will also help diversify revenue streams.
Strong financial risk profile: The financial risk profile is supported by strong liquidity of over Rs 1,000 crore estimated as on March 31, 2023, against total debt of around Rs 275 crore. This was despite distributions (buyback+ dividend) of around Rs 450 crore in fiscal 2023. Liquidity was aided by sale of non-core property during the second half of fiscal 2023. With gearing estimated below 0.2 time as on March 31, 2023, there is sufficient headroom to build leverage though there are no such immediate plans.
Despite subdued operating profitability in fiscal 2023, the interest coverage ratio was above 10 times. Moreover, JPL is unlikely to raise further debt and shall use the existing liquidity for payouts to shareholders. Thus, the financial risk profile is likely to remain strong over the medium term.
Weaknesses: Susceptibility to volatility in newsprint prices and economic cycles JPL derives a substantial portion of its operating income from advertisement revenue, which is strongly linked with economic activity and remains susceptible to changing cycles. Recessionary trends and uncertain market conditions may curb spending and thus constrain advertisement revenue for newspapers, as seen in fiscal 2021.
In addition to linkages with overall economic activity and corporate spending, operating cost of newspaper players also depends on movements in newsprint prices. As newsprint accounts for 35-40% of the operating cost for JPL and the company generally imports about one-third of its requirement, the operating margin remains susceptible to volatility in newsprint prices and foreign exchange rates. EBITDA was significantly impacted in fiscal 2023 due to higher newsprint cost.
Exposure to competition from other Hindi dailies JPL faces competition from other Hindi dailies, such as Amar Ujala and Hindustan, which have healthy circulation in core markets of Uttar Pradesh and Uttarakhand. Ability to withstand competition and drive revenue growth will remain key monitorables. |
Liquidity: Strong Cash and cash equivalent were over Rs 1,000 crore as on March 31, 2023. This, along with healthy cash accrual, should suffice to cover the principal debt obligation of Rs 175 crore in fiscal 2024. Utilisation of the fund-based limit of Rs 125 crore averaged less than 10% for the 12 months through December 2022. Available liquidity and cash accrual will more than suffice to cover any dividend/buyback and moderate capital expenditure (capex) over the medium term. |
Outlook: Stable The JPL group will maintain a strong business risk profile, aided by its strong market leadership position in the Hindi belt and healthy contribution from the radio business. Improvement in cash accrual should further boost the financial risk profile. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group JPL group is a media conglomerate with interests spanning across printing and publication of newspapers & magazines, FM Radio, Digital, Outdoor Advertising and Promotional Marketing, Event Management and Activation Businesses. JPL is the flagship company of the JPL group that is based in Kanpur, Uttar Pradesh. It was promoted by late Mr PC Gupta and his family members. The group publishes 10 publications from 13 states/union territories in 5 different languages. JPL acquired MIL in a 2:7 equity-swap ratio in fiscal 2011. In April 2012, JPL acquired Suvi Info Management (Indore) Pvt Ltd (Suvi) at an enterprise value of Rs 225 crore. Suvi was the holding company of NadiDunia Media Ltd. (NDML), which published Nai Dunia. NDML merged with JPL effective April 1, 2012. In fiscal 2016, the JPL group acquired MBL, which has grown to 39 stations and 17 online stations.
Net profit was Rs 174 crore on revenue of Rs 1,397 crore for the nine months ended December 31, 2022, against Rs 164 crore and Rs 1,191 crore, respectively, in the corresponding period of the previous fiscal. |
Key Financial Indicators (JPL – consolidated)
These are CRISIL Ratings-adjusted numbers and may not match directly with the numbers reported by the JPL group. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
^Yet to be placed *Fully interchangeable with bank guarantee |
Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||
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Criteria Details
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