ICICI Direct's research report on DB Corp
Overall revenues came in at Rs 659.7 crore (up 10.2% YoY), much ahead of our estimates of Rs 639.8 crore, on account of superior print and radio ad revenues. Print ad revenues came in at Rs 420.8 crore, up 11.5% YoY ahead of our expectation of ~9.5%, with delta possibly contributed by festivities and elections led boost. The key surprise was on radio ad revenues front, which were at Rs 46.5 crore, up 38.4% YoY (vs. our expectation of 15% YoY growth). We await clarification on such growth. Print circulation revenues, however, were slightly lower at Rs 130.1 crore (vs. our expectation of ~Rs 133 crore) EBITDA came in at Rs 139.7 crore (flattish YoY), much ahead of our expectation of Rs 124.5 crore. Consequently, EBITDA margins came in at 21.2% (down 214 bps YoY), ahead of our expectation of 19.5%. We note that EBIDTA beat is largely driven by better-than-expected ad growth and sharp growth in radio’s EBITDAPAT came in at Rs 75.6 crore (down ~3% YoY), above our expectations of Rs 67.3 crore, given the beat on the operating front.
Outlook
We note that print players (including DB Corp) have had a forgettable FY19 on account of slower print ad revenue growth on account of subdued advertising from local players, which was impacted badly on account of regulations like RERA and GST. However, respite in the form of correction of newsprint prices coupled with incremental benefits from DAVP rate hike and election led tailwind are likely to boost topline and earnings, going ahead. We are also encouraged by DB Corp’s superior ad growth and cost control than peers. We maintain our BUY rating and value the company at 10x FY21E EPS to arrive at a target price of Rs 215.
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