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DB Corp- Impressive ad growth…
On a consolidated basis, DB Corp reported better than expected
Q3FY11 results. Topline stood at | 348.2 crore (I-direct estimates of |
324.8 crore), growing 24.7% YoY on the back of 29.0% YoY print ad
revenue growth. EBITDA for the quarter grew 22.5% YoY and 20.7%
QoQ to | 114.8 crore. The EBITDA margin at 33.0% declined 60 bps YoY
on the back of the launch in Jharkhand. The company reported a PAT of
| 65.9 crore as compared to | 50.6 crore in Q3FY10.
ƒ Highlights for quarter
The company commercially launched its Jamshedpur and Jammu
edition in Q3FY11. The company also announced the launch of
several new printing centres across India.
The print advertisement revenue posted a YoY growth of 29.0% to |
268.8 crore, which included one-time net election billing of about |
7.0 crore. The company also reported healthy circulation numbers
of 43.5 lakh copies per day over 39.0 lakh copies per day in Q3FY10
on the back of launch in Jharkhand and Jammu. Circulation
revenues at | 54.0 crore improved from | 53.7 crore in Q3FY10.
Revenue from the radio business grew from | 12.9 crore in Q2FY10
to | 9.4 crore in Q3FY11. For FY10-11, the board of DB Corp has
proposed an interim dividend of 20%.
Valuation
On the back of strong ad revenue growth, DB Corp has reported healthy
revenue growth of 24.7%. However, going forward, we may see a decline
in the growth rate for Q4FY11. Also, the margins could come under
pressure on the back of high circulation in Jharkhand that led to increased
newsprint consumption. At the CMP of | 260, the stock is trading at 21.0x
FY11E EPS of | 12.4 and 17.1x FY12E EPS of | 15.2. We value the stock at
19x FY12E EPS to arrive at a target price of | 289. This implies an upside
of 11%. We maintain our BUY rating on the stock.
Result analysis
ƒ Better than expected ad revenue growth
The company reported 29.0% ad revenue growth in Q3FY11 to |
268.8 crore backed by festive led strong demand in sectors like
lifestyle, government, automobiles, electronics, real estate,
education and BFSI. The management has indicated that about 70%
of this growth is volume driven. Radio revenues grew by an
impressive 37.2% YoY to | 12.9 crore from | 9.4 crore in Q3FY10.
We expect the company to register a healthy ad revenue growth of
about 20.9% for FY11E.
ƒ Raw material prices trend
The raw material price has seen an 11.1% increase YoY to | 27868
per tonne from | 25081 per tonne in Q3FY10. Raw material cost as a
percentage of revenue has only marginally increased to 30.6% in
Q3FY11 as compared to 30.3% in Q3FY10, primarily due to healthy
ad revenue growth. Absolute raw material increased to | 106.5
crore led by the steep increase in circulation and increase in
newsprint prices.
Outlook
The company has once again delivered better than expectations in
Q3FY11. On the back of strong ad revenue growth, DB Corp has reported
healthy revenue growth of 24.7%. However, going forward, we may see a
decline in growth rate for Q4FY11. Also, the margins could come under
pressure on the back of high circulation in Jharkhand led to increased
newsprint consumption. We expect the company to end FY11E with
EBITDA margins of ~31.1%.
We expect DB Corp to post revenue growth of 16.8% and 13.8% driven
by robust ad revenue (print and radio) growth of 21.5% and 15.7% for
FY11E and FY12E, respectively.
Valuation
At the CMP of | 260, the stock is trading at 21.0x FY11E EPS of | 12.4 and
17.1x FY12E EPS of | 15.2. We have valued the stock at 19x FY12E EPS to
arrive at a target price of | 289. This implies an upside of 11%. We
maintain our rating on the stock as BUY.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
DB Corp- Impressive ad growth…
On a consolidated basis, DB Corp reported better than expected
Q3FY11 results. Topline stood at | 348.2 crore (I-direct estimates of |
324.8 crore), growing 24.7% YoY on the back of 29.0% YoY print ad
revenue growth. EBITDA for the quarter grew 22.5% YoY and 20.7%
QoQ to | 114.8 crore. The EBITDA margin at 33.0% declined 60 bps YoY
on the back of the launch in Jharkhand. The company reported a PAT of
| 65.9 crore as compared to | 50.6 crore in Q3FY10.
ƒ Highlights for quarter
The company commercially launched its Jamshedpur and Jammu
edition in Q3FY11. The company also announced the launch of
several new printing centres across India.
The print advertisement revenue posted a YoY growth of 29.0% to |
268.8 crore, which included one-time net election billing of about |
7.0 crore. The company also reported healthy circulation numbers
of 43.5 lakh copies per day over 39.0 lakh copies per day in Q3FY10
on the back of launch in Jharkhand and Jammu. Circulation
revenues at | 54.0 crore improved from | 53.7 crore in Q3FY10.
Revenue from the radio business grew from | 12.9 crore in Q2FY10
to | 9.4 crore in Q3FY11. For FY10-11, the board of DB Corp has
proposed an interim dividend of 20%.
Valuation
On the back of strong ad revenue growth, DB Corp has reported healthy
revenue growth of 24.7%. However, going forward, we may see a decline
in the growth rate for Q4FY11. Also, the margins could come under
pressure on the back of high circulation in Jharkhand that led to increased
newsprint consumption. At the CMP of | 260, the stock is trading at 21.0x
FY11E EPS of | 12.4 and 17.1x FY12E EPS of | 15.2. We value the stock at
19x FY12E EPS to arrive at a target price of | 289. This implies an upside
of 11%. We maintain our BUY rating on the stock.
Result analysis
ƒ Better than expected ad revenue growth
The company reported 29.0% ad revenue growth in Q3FY11 to |
268.8 crore backed by festive led strong demand in sectors like
lifestyle, government, automobiles, electronics, real estate,
education and BFSI. The management has indicated that about 70%
of this growth is volume driven. Radio revenues grew by an
impressive 37.2% YoY to | 12.9 crore from | 9.4 crore in Q3FY10.
We expect the company to register a healthy ad revenue growth of
about 20.9% for FY11E.
ƒ Raw material prices trend
The raw material price has seen an 11.1% increase YoY to | 27868
per tonne from | 25081 per tonne in Q3FY10. Raw material cost as a
percentage of revenue has only marginally increased to 30.6% in
Q3FY11 as compared to 30.3% in Q3FY10, primarily due to healthy
ad revenue growth. Absolute raw material increased to | 106.5
crore led by the steep increase in circulation and increase in
newsprint prices.
Outlook
The company has once again delivered better than expectations in
Q3FY11. On the back of strong ad revenue growth, DB Corp has reported
healthy revenue growth of 24.7%. However, going forward, we may see a
decline in growth rate for Q4FY11. Also, the margins could come under
pressure on the back of high circulation in Jharkhand led to increased
newsprint consumption. We expect the company to end FY11E with
EBITDA margins of ~31.1%.
We expect DB Corp to post revenue growth of 16.8% and 13.8% driven
by robust ad revenue (print and radio) growth of 21.5% and 15.7% for
FY11E and FY12E, respectively.
Valuation
At the CMP of | 260, the stock is trading at 21.0x FY11E EPS of | 12.4 and
17.1x FY12E EPS of | 15.2. We have valued the stock at 19x FY12E EPS to
arrive at a target price of | 289. This implies an upside of 11%. We
maintain our rating on the stock as BUY.
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