Centrum's research report on DB Corp
We maintain our BUY rating on DB Corp with a target price of Rs435 as we roll forward to FY20E and value the company based on our conservative Adj. OCF based methodology. Ad growth declined during the quarter on the back of early festive season and higher base in last year pertaining to private treaty. We expect the ad growth to bounce from Q4FY18 while circulation revenues would be double digit given the aggressive expansion in the state of Bihar, Gujarat and Rajasthan. Despite decrease in margins, we have modelled margin expansion on the back of ad growth leading to healthy operating leverage.
OutlookWe maintain BUY rating on the stock, with a TP of Rs435 as we value the company on adjusted OCF (AOCF = OCF – Interest) to EV yield based on five year average cash flows and roll forward to FY20. Key downside risks are an increase in newsprint prices.
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