Hold DB Corp; target of Rs 280: ICICI Direct

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ICICI Direct's research report on DB Corp

Overall revenues came in at Rs 567.3 crore (up 9.7% YoY), marginally above our estimate of Rs 557.7 crore, on account of a better performance from the radio business and higher other operating revenues while advertisement and circulation revenues were almost in line with our expectations. Print advertisement revenues came in at Rs 337 crore (up 8.8% YoY), in line with our expectation of 9% YoY growth. Circulation revenues came in at Rs 132 crore (up 8.5% YoY) vs. our expectation of 8.2% YoY growth. Radio ad revenues were strong at Rs 36.2 crore, up 9.7% YoY (vs. our estimate of 7% YoY growth). Digital revenues declined 8% YoY, given the weakness in yields EBITDA came in at Rs 97.9 crore, which was weak compared to our expectations of Rs 112.8 crore on account of higher raw material expenses (up 21.7% YoY) and higher other expenses (up 20.3% YoY). This was due to expenses related to the circulation expansion strategy. EBITDA margins came in at 17.2% vs our expectation of 20.2% PAT came in at Rs 57.1 crore, lower than expectations of Rs 65.1 crore owing to a miss at the operating level.

Outlook

We value the company at 12x FY20E EPS of Rs 23.3 at a target price of Rs 280. We maintain our HOLD recommendation on the stock.

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