Brics Securities prefers Jagran Prakashan to DB Corp

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS See fair value of DB Corp at Rs 234/sh: Angel Broking DB Corp lists at Rs 254/share on NSE See DB Corp fair value at Rs 240-245/sh: Udayan Mukherjee

DB Corp , the publisher of leading Hindi daily Dainik Bhaskar, listed at Rs 254 per share on the National Stock Exchange (NSE) today as against issue price of Rs 212 per share. In an interview with CNBC-TV18, Anand Tandon, Director Equities, Brics Securities, speaks about DB Corp and the media sector.

Here is a verbatim transcript of the exclusive interview with Anand Tandon on CNBC-TV18. Also watch the accompanying video.

Q: Any thoughts on the DB Corp and the Vernacular Print Media at large because that is the big one this morning?

A: The Vernacular Media is an area, which we like. In terms of relative value, I would imagine that our better pick would be a Jagran Prakashan , which is also a market leader in its own space and I think relatively you have lower price than what the current listing is at.

Q: Where does this lead the other leg of media i.e. the television medium?

A: I think the regional media is still showing quite strong growth. The national media is a little more stressed out in terms of potential earnings and because of the higher level of competition that is there. So while it is a space where the ad spend does continue to increase year-on-year (YoY) as the economy grows, but the problem is to see how many new entrants there are and how many of them survive. So it is essentially an ability to raise capital more than anything else because the initial launches will always be losing money. So if you can raise capital that is where the erosion in margins will happen. For the rest of the players, if the capital raising becomes more difficult then the market leaders are the place you want to be in.

Q: What about the new power listings, some of them took off yesterday. Are you convinced that you should be chasing those or you are more circumspect in your view of valuations there?

A: Right now, I don't think valuations are what the market is really worried at. It is essentially a theme which the market tends to like and valuations can take a walk for the moment. None of the power companies are cheap. There will come a time when they will look extremely expensive because all said and done it will become a commodity. Right now, the commodity is in short supply and therefore all kinds of assumptions are being made that you will be able to get merchant power sold at Rs 8.

You should also look at the price that you had for peak power last year, there have been cases where it has been less than 10 paise. So to assume that you will get a sustained Rs 6-8 per unit kind of number for merchant power going forward is living in a fool's paradise.

But that said, for the moment at least there is a shortage and there is some incentive for people to set up the power plants. If you are able to get in early and get an operational plant, there is a high probability that you will be able to recover the money very quickly, given the fact that near-term prices don't look like they are going to be under pressure. So it is a question of timing the cycle. Overall, as a strategy it is not something that I would go very excitedly into but right now you are riding the wave and this is one of the waves that you need to be in.