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DB Corp: Success in new markets holds the key to future
We met with the management of DB Corp (DBCL IN) to understand the
outlook for the Indian Print media players, business drivers of the company
and its positioning vs. offerings of other Indian media vendors.
D B Corp Ltd., also known as the Bhaskar Group, has a presence in
newspaper, radio and internet services. The group’s Radio segment is under
the Brand Name - MYFM.
Dominant position in Tier 2/3 Markets
Market Leader. DB Corp is the leader by circulation in MP, Chhattisgarh,
Chandigarh, Haryana and is in the Top 3 in Gujarat and Rajasthan. In terms
of financials, these markets contribute uniformly to the EBITDA of the
company, thereby reducing any dependence on a single market.
Bihar, Jharkhand and Jammu: Markets for future growth. DB corp
launched operations in Jharkhand and Jammu in August and October 2010,
respectively. The company is targeting release in Bihar in FY12. These
territories represent the next growth markets as they fare higher on the
parameters of target market GDP growth rate, readership-penetration gap and
favourable competitive scenario for the company.
Advertising contributes ~80% of revenues. DB Corp has over 300,000
retail advertisers, showing its reach and depth of client base in the Tier 2 and
Tier 3 cities of India. This should be the dominant factor in the company’s
growth, given the broad macro-economic strength seen in India.
Focus on expanding the presence
Growth Drivers for print business. The company aims to drive growth
through yield improvement in advertising revenues due to the premium for its
leadership position in the states of operation and increased rates for colour
advertisements. Additionally, the company will cross sell its portfolio of
multiple languages, geographies and medium of delivery.
Radio – Strategy to permeate the consumer psyche in target markets.
DB Corp launched its radio stations in 2006, and has expanded to 17 stations
in seven states. We see a case of gaining the mindshare of iconsumers and
advertisers due to local knowledge and presence in these markets. This
should become a source of competitive advantage in comparison to its peers.
The segment currently contributes around ~4% of revenues.
Risks & valuation
Newsprint prices contribute 45% of costs. DB Corp will be affected by
fluctuations in the prices of inputs in the global market, which can lead to
margin pressure and reduced profitability. The company maintains 3-month
inventory levels and uses both domestic and imported newsprint for its print
business.
Based on consensus estimates DB Corp is expected to deliver 2-year EPS
CAGR of 14% over FY10–12E and trades at 15x FY12E PER.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
DB Corp: Success in new markets holds the key to future
We met with the management of DB Corp (DBCL IN) to understand the
outlook for the Indian Print media players, business drivers of the company
and its positioning vs. offerings of other Indian media vendors.
D B Corp Ltd., also known as the Bhaskar Group, has a presence in
newspaper, radio and internet services. The group’s Radio segment is under
the Brand Name - MYFM.
Dominant position in Tier 2/3 Markets
Market Leader. DB Corp is the leader by circulation in MP, Chhattisgarh,
Chandigarh, Haryana and is in the Top 3 in Gujarat and Rajasthan. In terms
of financials, these markets contribute uniformly to the EBITDA of the
company, thereby reducing any dependence on a single market.
Bihar, Jharkhand and Jammu: Markets for future growth. DB corp
launched operations in Jharkhand and Jammu in August and October 2010,
respectively. The company is targeting release in Bihar in FY12. These
territories represent the next growth markets as they fare higher on the
parameters of target market GDP growth rate, readership-penetration gap and
favourable competitive scenario for the company.
Advertising contributes ~80% of revenues. DB Corp has over 300,000
retail advertisers, showing its reach and depth of client base in the Tier 2 and
Tier 3 cities of India. This should be the dominant factor in the company’s
growth, given the broad macro-economic strength seen in India.
Focus on expanding the presence
Growth Drivers for print business. The company aims to drive growth
through yield improvement in advertising revenues due to the premium for its
leadership position in the states of operation and increased rates for colour
advertisements. Additionally, the company will cross sell its portfolio of
multiple languages, geographies and medium of delivery.
Radio – Strategy to permeate the consumer psyche in target markets.
DB Corp launched its radio stations in 2006, and has expanded to 17 stations
in seven states. We see a case of gaining the mindshare of iconsumers and
advertisers due to local knowledge and presence in these markets. This
should become a source of competitive advantage in comparison to its peers.
The segment currently contributes around ~4% of revenues.
Risks & valuation
Newsprint prices contribute 45% of costs. DB Corp will be affected by
fluctuations in the prices of inputs in the global market, which can lead to
margin pressure and reduced profitability. The company maintains 3-month
inventory levels and uses both domestic and imported newsprint for its print
business.
Based on consensus estimates DB Corp is expected to deliver 2-year EPS
CAGR of 14% over FY10–12E and trades at 15x FY12E PER.
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