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DBCL 2Q earnings declined 39%YOY - while losses in the new editions were inline
with our expectations, higher newsprint costs and higher interest were the key
negative surprises. Advertising growth held up well, up 16% yoy, despite sharp
slowdown in national advertising. DBCL is looking to consolidate its new
editions, with no new launches planned in 2HFY12.
Local markets help sustain advertising growth. 16% ad growth in 2Q is
driven largely by local retail markets (20%+ growth), while national ad
continue to remain sluggish (<10%). Management indicated that national
advertising remains muted despite the onset of festive season, with large MNCs
cutting down on ad spends. While management has a cautious outlook, they
indicated that DBCL should be able to sustain ad growth rates similar to 2Q.
New launches ramping up well, consolidation ahead. New editions launched
in 4 cities of Maharashtra are scaling up well and DBCL expect to complete the
Maharashtra roll out by end 2012. Entry into Bihar has been put on hold owing
to uncertain growth environment and management will re-assess the decision in
Mar 12. Over the next 2 quarters, management is looking to consolidate
operations in Maharashtra, with new edition launches planned only for FY13E.
Non-print, radio faring well with 2Q top-line growth of 29% YoY and
EBITDA growth of 198% YoY. Digital business crossed more than 100MM
page views per month in September helped by expanded presence through
mobile platforms. Management see significant synergies between the print and
non print, largely from advertising sales.
Q2FY12 result highlights. Revenues up 16% YoY driven by ad revenues
(+16% YoY), circulation (+13% YoY) and Radio (+29% YoY). EBITDA
margins declined 960bps YoY, with new edition losses accounting for 650bps of
the decline. Net profits declined 39% YoY pared by Rs58.2MM MTM FX loss.
Maintain OW. We cut FY12/13E EPS estimates by 15%/9% factoring in higher
newsprint costs and higher losses for new launches. We cut our PT to Rs280,
rolled forward to Sep-12 and based on 18x Sep13E P/E. DBCL has managed to
sustain strong ad-growth in a challenging environment and its successful
expansion track record gives us confidence on its plans in Maharashtra. Key
risks include rising competitive intensity, failure to scale up in new markets,
increase in newsprint costs and further slowdown in growth.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
DBCL 2Q earnings declined 39%YOY - while losses in the new editions were inline
with our expectations, higher newsprint costs and higher interest were the key
negative surprises. Advertising growth held up well, up 16% yoy, despite sharp
slowdown in national advertising. DBCL is looking to consolidate its new
editions, with no new launches planned in 2HFY12.
Local markets help sustain advertising growth. 16% ad growth in 2Q is
driven largely by local retail markets (20%+ growth), while national ad
continue to remain sluggish (<10%). Management indicated that national
advertising remains muted despite the onset of festive season, with large MNCs
cutting down on ad spends. While management has a cautious outlook, they
indicated that DBCL should be able to sustain ad growth rates similar to 2Q.
New launches ramping up well, consolidation ahead. New editions launched
in 4 cities of Maharashtra are scaling up well and DBCL expect to complete the
Maharashtra roll out by end 2012. Entry into Bihar has been put on hold owing
to uncertain growth environment and management will re-assess the decision in
Mar 12. Over the next 2 quarters, management is looking to consolidate
operations in Maharashtra, with new edition launches planned only for FY13E.
Non-print, radio faring well with 2Q top-line growth of 29% YoY and
EBITDA growth of 198% YoY. Digital business crossed more than 100MM
page views per month in September helped by expanded presence through
mobile platforms. Management see significant synergies between the print and
non print, largely from advertising sales.
Q2FY12 result highlights. Revenues up 16% YoY driven by ad revenues
(+16% YoY), circulation (+13% YoY) and Radio (+29% YoY). EBITDA
margins declined 960bps YoY, with new edition losses accounting for 650bps of
the decline. Net profits declined 39% YoY pared by Rs58.2MM MTM FX loss.
Maintain OW. We cut FY12/13E EPS estimates by 15%/9% factoring in higher
newsprint costs and higher losses for new launches. We cut our PT to Rs280,
rolled forward to Sep-12 and based on 18x Sep13E P/E. DBCL has managed to
sustain strong ad-growth in a challenging environment and its successful
expansion track record gives us confidence on its plans in Maharashtra. Key
risks include rising competitive intensity, failure to scale up in new markets,
increase in newsprint costs and further slowdown in growth.
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