Jan 23, 2013, 03.39 PM | Source: Moneycontrol.com

Accumulate DB Corp; target of Rs 270: KRChoksey

KRChoksey is bullish on DB Corp and has recommended accumulate rating on the stock with a target of Rs 270 in its January 23, 2013 research report.

KRChoksey is bullish on DB Corp and has recommended accumulate rating on the stock with a target of Rs 270 in its January 23, 2013 research report.

“DB Corp Ltd’s Q3FY13 result was above our estimates. The company reported net sales of Rs 439crs, a robust growth of 16% QoQ primarily driven by strong growth in advertising revenue. EBITDA stood at Rs 119crs, a strong growth of 38.5% driven by cost rationalization across the board. Consequently EBITDA margins increased by healthy 440bps to 27.2%. At net profit level, the company reported Rs 71crs, a robust growth of 45.8% over sequential quarter. Higher revenue base and improved EBITDA margins led to growth in net profitability by 330bps to 16.2%. The company reported healthy pick up in advertising revenue in the quarter led by both festive season and ad spent improvement across the sectors.”

“DB Corp reported consolidated advertising revenue of Rs 341.2crs in Q3FY13, a healthy growth of 11% YoY as ad environment improved across the sectors of ad pie on account of festive season. Advertising revenue grew by 12% YoY to Rs 341.2crs. This growth was driven by both volume (60%) and yield improvement (40%) in the quarter. Circulation revenue grew by healthy 16% YoY to Rs 72.9crs. Radio business also showed robust growth of 21.7% YoY to Rs 19.1crs.”

“After sluggish ad revenue growth in last 2 quarters, ad spend is back on track for print media. Festive season has led to revival in ad spend across the sectors of ad pie. Circulation revenue showed another quarter of steady growth. We believe DB Corp will cash in Numero Uno position in the major markets it operates in and will post healthy revenue growth in future. Cost rationalization and absence of any new launches in near future supports EBITDA margin improvement going ahead. At current price, the stock is trading at 15.1x PE to its FY14E earnings. We maintain accumulate with a target price of Rs 270,” says KRChoksey research report.

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