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Buy DB Corp; target of Rs 270: Emkay

Emkay Global Financial Services is bullish on DB Corp and has recommended buy rating on the stock with target price of Rs 270 in its January 22, 2013 research report.

January 24, 2013 / 11:03 AM IST
 
 
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Emkay Global Financial Services is bullish on DB Corp and has recommended buy rating on the stock with target price of Rs 270 in its January 22, 2013 research report.


“DB Corp reported in-line revenues with consolidated advertisement revenue growth of 11.5% yoy, led by festive season and strong growth in local ads. Ad revenue was driven by both volume growth (+60%) and yield improvement (+40%). Print ad revenue grew 10.9% to Rs3.2bn (our expectation of 10% yoy). Circulation revenue grew 15.2% yoy to Rs729, led by higher number of circulated copies and improvement in realization/copy. Radio revenue also reported strong growth of 21.7% yoy to Rs191mn. Emerging market revenue stood at Rs497mn (+32% yoy). However, other operating revenues declined 15.4% yoy to Rs248mn.”


“Reported EBIDTA grew 25.3% yoy to Rs1192mn with EBITDA margin at 27.2% (-87bps yoy). Adj. for forex loss of Rs36mn, EBITDA stood at Rs1.22bn (+25% yoy). Radio EBITDA grew 68% yoy to Rs73mn, with EBITDA margin at 38.3% v/s 30% in Q2FY13. Robust ad growth and stable cost structure lead to beat in EBITDA estimates in Q3FY13. APAT stood at Rs730mn up 13.6% yoy. Losses from emerging markets reduced to Rs56mn v/s Rs98mn in the last quarter. EBITDA losses from the emerging editions were at 4.6% (v/s 11% in Q2FY13) of mature editions EBITDA. Ad growth during Q3FY13 was in-line with estimates, driven by festive season. Low base ad revenue base in Q4FY12 and H1FY13 and improving sentiments in macro environment would augur well in FY14E. Further, stable cost structure with stabilization of newsprint prices would continue to support healthy operational performance.”


“We reiterate that long term story for DB Corp remains on strong footing, given the DB Corp’s leadership position in key markets with uniform distribution of readership, revenue and EBITDA across the markets. At CMP of Rs233, the stock trades at 16.6x/14.6x on our FY14E/15E EPS with dividend yield of 2.2% and healthy RoE of 24% for FY14E. We estimate EBITDA/EPS CAGR of 15%/18.1% over FY13E-15E. Upgrade the stock to buy with revised target price of Rs270 (17x FY15E EPS), implying 16% upside,” says Emkay Global Financial Services research report.


Public holding more than 90% in Indian cos


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To read the full report click on the attachment

first published: Jan 24, 2013 11:03 am

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