ICICI Direct recommended hold rating on DB Corp with a target price of Rs 210 in its research report dated dated May 17, 2019.
ICICI Direct's research report on DB Corp
DB Corp reported largely in line revenue numbers in Q4FY19 but a beat on EBITDA (margin of 17.7% vs. 16.7% expected), driven by lower-than-anticipated newsprint as well as employee costs. Overall revenues at Rs 588.5 crore, up 5% YoY, were driven by print ad growth of 8.2% YoY and radio revenue growth of 7.7%. Circulation revenues came in at Rs 127.3 crore (up 1.7% YoY) with growth being largely volume led. Digital revenues, on the other hand, declined 24.1% YoY to Rs 9.9 crore, with the company focusing on building direct traffic to site and doing away with low paying inventory. PAT came in better than anticipated at Rs 54.5 crore driven by superior operating profitability.
Given the lower than earlier estimated growth, we marginally cut our earnings estimates, despite superior margins. Therefore, we downgrade the stock to HOLD, valuing the stock at 10x FY21E EPS to arrive at a target price of Rs 210.
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