Buy DB Corp; target of Rs 285: Angel Broking
Angel Broking is bullish on DB Corp and has recommended buy rating on the stock with a target of Rs 285 in its May 17, 2013 research report.
May 21, 2013 / 12:09 PM IST
Angel Broking`s research report on DB Corp
“For 4QFY2013, DB Corp (DBCL) reported a robust performance on the earnings front, registering a 21.8 percent yoy growth to Rs 55cr (in-line with our expectations), aided by reduction in losses in emerging editions from Rs 18.5cr in 4QFY2012 to Rs 5.8cr in 4QFY2013.”
“For 4QFY2013, DBCL posted healthy 12.7 percent yoy growth in its top-line to Rs 398cr. Advertising revenue grew by 13.1 percent yoy to Rs 298cr, primarily driven by higher yields. Sectors such as lifestyle, FMCG, real-estate and automobile, among others, have contributed to strong growth in advertising. National advertising, which has been subdued in last few quarters, has also grown by ~12 percent yoy (due to increase in government advertising). The company also reported strong growth of 18.2 percent yoy in circulation revenue to Rs 73cr (driven by both cover price hike as well as increase in circulation). Among the other segments, the company’s radio business reported a robust advertising revenue growth of 24.2 percent yoy to Rs 19cr. At the operating level, EBITDA grew by 29.3 percent yoy to Rs 94cr on account of reduction in losses of emerging editions as well as cost rationalization measures such as improving ad edit ratio, and pagination efficiency, among others. Consequently, the OPM expanded by 304bp yoy to 23.6 percent and net profit grew by 21.8 percent yoy to Rs 55cr.”
“At the current market price, DBCL is trading at 14.6x FY2015E consolidated EPS of Rs 16.8. We maintain our Buy view on the stock with a revised target price of Rs 285, based on 17x FY2015E EPS, benchmarking it to our print media sector valuations (which are at ~15 percent premium to our Sensex target valuation multiple). The downside risks to our estimates include 1) sharp rise in newsprint prices in INR terms, and 2) higher-than-expected losses/increase in the breakeven period of the new launches,” says Angel Broking research report.
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