Buy D B Corp; target of Rs 251: Dolat Capital

Dolat Capital's research report on D B Corp

Revenue disappointment, but lower opex drives EBITDA: Consol. revenue declined 4% YoY to INR6.1b (9% miss) due to weak print ad growth (-5% YoY) and lower circulation revenue (-2% YoY). However, consol. EBITDA increased 4% YoY to INR1.8b (14% miss), benefiting from a 6%/12% drop in newsprint/SG&A cost, partly due to Ind-AS 116 cost reallocation of INR85m (exhibit 4). PAT declined 4% YoY to INR937m (22% miss) owing to (a) lower other income and (b) reallocation and higher cost of depreciation/interest cost of INR92m based on Ind-AS 116. Radio segment performance was the only silver lining with healthy revenue/EBITDA growth of 19%/84% YoY.

Outlook

Our target price stands at INR210 (prior: INR215) - ascribing 10x (~40% discount to three-year average) P/E on FY21E EPS. Despite the cut in earnings, PAT is estimated to grow at 12%/19% in FY20/21, given the sharp reduction in opex. Maintain Buy.