See fair value of DB Corp at Rs 234/sh: Angel Broking

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See fair value of DB Corp at Rs 234/sh: Angel Broking

In an interview with CNBC-TV18, Anand Shah, Research Analyst at Angel Broking, spoke on the listing of DB Corp.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS DB Corp lists at Rs 254/share on NSE See DB Corp fair value at Rs 240-245/sh: Udayan Mukherjee Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news HT Media | Deccan Chronicle Holdings | DB Corp |

In an interview with CNBC-TV18, Anand Shah, Research Analyst at Angel Broking, spoke on the listing of DB Corp .

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

Q: It will list with gains. What do you think will be its fair value given peer valuations for DB Corp?

A: We had arrived at a fair value roughly about Rs 234. This is based on a calculation of an expectation of earnings per share (EPS) of about 11.7% for FY11. Most of its peers including Jagran are trading at about 20 times. So given that, the fair value will come to Rs 234.

Q: What are you working for on an FY10 and FY11 bases in terms of revenues and an EPS?

A: We are factoring revenues at about 12% growth. In FY11 we are factoring revenues of about Rs 100 crore. Margins are expected to sustain about more than 30% and EPS of about 11.7. However, in FY12, people have started discounting then.

It has a potential to move up to even Rs 250-260 levels where we are expecting EPS of about Rs 13. The fair value zone would be between Rs 234-250-260 levels. For anything above that we would advice investors to book profits and rather look at shifting to Jagran also which is currently trading at 20 times FY11 at about Rs 135 where our fair value is about Rs 160.

Q: Comparisons with Jagran Prakashan are inevitable but what about the other print peers? if the stock lists and settle somewhere around Rs 240 given or take few rupees, would you rather look at being in DB Corp? Would you look at Jagran at current market or even some of the other listed peers like HT Media or Deccan Chronicle ?

A: In comparison to HT Media or a Deccan Chronicle as against DB Corp wouldn't be fair because HT has more revenues coming from English and Deccan is completely into English. Hence, both have different dynamics and comparison to Jagran. If it list above Rs 240 then one can still say invested in DB Corp because given and initial public offering (IPO) we definitely see some potential upside in terms of news flow, in terms of uncertainty, in terms of growth as well. So as and when that resolves you will see the stock also moving up and given on FY11 basis even Jagran right now. We believe it is fairly valued but it has the potential to move to about Rs 160 levels, which is our target price for Jagran. So anything above Rs 240-250 levels particualry we would advice investors to move from DB Corp to Jagran otherwise one can stay invested at Rs 235-240 levels even in DB Corp.

Q: Any worries that additional businesses like internet etc, might drag on profitability - a problem that Jagran doesn't have?

A: Not concern with DB Corp or Jagran either. It's more of a concern for companies like HT Media, which has a lot of loss making businesses and into heavy investment mode. This is not a concern for both Jagran as well as DB Corp. Even in DB Corp, the radio business, we are expecting more or less breakeven coming into the year end or at least in FY11 - no significant losses and it's a small contribution in terms of revenue.

So the core business remains print, which is showing strong profit and showing strong growth in terms of earnings.