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DB Corp. (DBCL) reported modest performance on the revenue front and weak
performance on the earnings front. The company’s top-line growth was driven by
a mix of ad revenue growth and circulation revenue growth. On account of new
launches in Maharashtra and Jharkhand, earnings for the quarter declined.
We maintain our Buy recommendation on the stock.
Key highlights for the quarter: For 2QFY2012, the company’s top line grew by
17.6% yoy (flat qoq) at `354cr. Consolidated ad revenue for the quarter grew by
15.9% yoy to `274cr. The company’s circulation revenue grew by impressive 13%
yoy and 5.8% qoq on account of new edition launches in Maharashtra and
Jharkhand. DBCL reported a weak set of numbers on the earnings front primarily
on account pre-operative expenses of `9.9cr and operating losses on the three
editions launched in the above-mentioned states. The company reported a 37.1%
yoy and 34.1% qoq decline in its recurring earnings. Recurring PAT for the quarter
stood at `40cr. Operating margin during 2QFY2012 fell steeply by 981bp yoy
and 657bp qoq on account of new edition losses as well as forex losses.
Outlook and valuation: We have revised our earnings estimate downwards
considering the higher-than-anticipated increase in newsprint price due to
increased circulation, forex fluctuations impact and higher number of loss-making
editions. At the CMP, DBCL is trading at 14.9x FY2013E consolidated EPS of
`15.5. We maintain our Buy view on the stock with a revised target price of `278,
based on 18x FY2013E earnings, which is in-line with its historical trading
average since its listing. Downside risks to our estimates include 1) any further rise
in newsprint prices, 2) competition becoming fierce and 3) higher-than-expected
losses/increase in the breakeven period of the new launches.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
DB Corp. (DBCL) reported modest performance on the revenue front and weak
performance on the earnings front. The company’s top-line growth was driven by
a mix of ad revenue growth and circulation revenue growth. On account of new
launches in Maharashtra and Jharkhand, earnings for the quarter declined.
We maintain our Buy recommendation on the stock.
Key highlights for the quarter: For 2QFY2012, the company’s top line grew by
17.6% yoy (flat qoq) at `354cr. Consolidated ad revenue for the quarter grew by
15.9% yoy to `274cr. The company’s circulation revenue grew by impressive 13%
yoy and 5.8% qoq on account of new edition launches in Maharashtra and
Jharkhand. DBCL reported a weak set of numbers on the earnings front primarily
on account pre-operative expenses of `9.9cr and operating losses on the three
editions launched in the above-mentioned states. The company reported a 37.1%
yoy and 34.1% qoq decline in its recurring earnings. Recurring PAT for the quarter
stood at `40cr. Operating margin during 2QFY2012 fell steeply by 981bp yoy
and 657bp qoq on account of new edition losses as well as forex losses.
Outlook and valuation: We have revised our earnings estimate downwards
considering the higher-than-anticipated increase in newsprint price due to
increased circulation, forex fluctuations impact and higher number of loss-making
editions. At the CMP, DBCL is trading at 14.9x FY2013E consolidated EPS of
`15.5. We maintain our Buy view on the stock with a revised target price of `278,
based on 18x FY2013E earnings, which is in-line with its historical trading
average since its listing. Downside risks to our estimates include 1) any further rise
in newsprint prices, 2) competition becoming fierce and 3) higher-than-expected
losses/increase in the breakeven period of the new launches.
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