KRChoksey is bullish on DB Corp and has recommended buy rating on the stock with a target of Rs 283 in its July 22, 2011 research report.
“DB Corp Ltd reported net sales of Rs 354cr which is 18% higher y-o-y and 12% up on q-o-q. This strong growth was driven by robust advertising revenue and healthy growth in circulation revenue. EBITDA stood at Rs 101cr, a growth of 26% on Q4FY11 and lower by 12% y-o-y. Higher raw material costs dragged EBITDA margin to 28%. Net profit was Rs 61cr, up 37% q-o-q and down by 12% on y-o-y. Net profit margin for Q1FY12 was 17% as compared to 14% in Q4FY11 and 23% in Q1FY11.”
“DB Corp reported consolidated advertising revenue of Rs 283cr in Q1FY12 which is higher by 20% over Q1FY11. Although there was little slowdown in national advertising, regional advertising was strong. The mix between national and regional was 40:60 for the quarter. The management expects this growth momentum to continue. The company had circulation revenue of Rs 56.8cr for Q1FY12 which is up by 6% over y-o-y. DB Corp Ltd is the largest print media group amongst national dailies with 1.81cr readers across India’s fastest growing markets. The company launched Marathi edition ‘Dainik Divya Marathi’ in Aurangabad and Nasik in Maharashtra. The company plans to launch one more edition in Jalgoan. Since newsprint prices are on upward trend and considering advertising spend volatility the company has postponed its Bihar edition launch to FY13.”
“The management guided net profit margin of 18%-22% in spite of losses in new launches and newer markets. Currently domestic newsprint prices are hovering at the peak and still it can go up by another 5%-10%. This will dent the margin. With international newsprint prices easing out, we believe domestics prices will also soften in the time to come. DBCL has dominance in its area of operations. Considering its footprint and growth of regional advertising, we believe the company will post healthy profit margin. DB Corp is well positioned to capture advertising growth in regional markets. The company’s entry into Maharashtra and plans to enter into Bihar supports long term earnings outlook. We believe DB Corp will grow at a rate of 15-18% for next two years driven by higher advertising revenue and healthy growth in circulation revenue. We maintain our ‘BUY’ recommendation on the stock with a target price of Rs 283 by assigning 16x pe to FY13E eps of Rs 17.7,” says KRChoksey research report.
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