Motilal Oswal is bullish on DB Corp and has recommended buy rating on the stock with a target of Rs 292 in its January 23, 2013 research report.
“DB Corp (DBCL), one of India's largest print media companies, publishes 8 newspapers with 65 editions and 199 sub-editions in four languages (Hindi, Gujarati, English and Marathi) across 13 states in India. Flagship newspapers - Dainik Bhaskar (in Hindi; established in 1958), and Divya Bhaskar and Saurashtra Samachar (in Gujarati) - have a combined readership of ~19m. Other business interests span the radio segment through the brand "My FM" radio station, with presence in seven states and 17 cities, and a strong online presence.”
“DB Corp's 3QFY13 PAT grew 28% YoY and 45% QoQ to INR706m v/s our estimate of INR671m. Ad revenue grew 11% YoY to INR3.2b (our estimate: INR3b) v/s 0-1% YoY in the two preceding quarters. While some part of the recovery in ad revenue can be attributed to the delay in the festive season, we believe that 3QFY13 performance validates our view that print sector ad growth has bottomed out. Consolidated revenue grew 11% YoY to INR4.4b (4% higher than our estimate). Circulation revenue grew 15% YoY (in line). EBITDA increased 17% YoY and 38% QoQ to INR1.19b. Margin expanded 140bp YoY and 440bp QoQ on operating leverage but partially offset by INR36m forex loss on buyer's credit for newsprint. Emerging edition EBITDA loss declined 66% YoY and 43% QoQ to INR56.5m - profitability has been improving over the past six quarters, with increasing revenue base and steady operating costs.”
“We are upgrading our revenue and PAT estimates by 2-3%. We expect 18% earnings CAGR over FY13-15, driven by 11% ad revenue CAGR. The stock trades at 17x FY14E and 14.7x FY15E EPS. Maintain Buy, with a target price of INR292 (18x FY15E EPS),” says Motilal Oswal research report.
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