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1QFY12 Results
DB Corp’s reported 1QFY12 revenue growth of 18%YoY/11%QoQ to
Rs3.5bn was ahead of estimates. The positive surprise was led by robust
20%YoY ad-revenue growth aided by regional advertising and share gain.
However Ebitda margin at 28.4% was down 10pptYoY following jump in
raw material and employee cost alongside new edition launch expenses.
DB has launched its Marathi editions in Aurangabad and Nashik, taking
the total to 62 across newspapers. Meanwhile, led by projected 18%YoY
ad growth, earnings will grow 15%Cagr over FY12-13CL and with the
stock trading at 14x FY13CL earnings, we maintain Outperform.
Positive surprise in ad-growth but margin pressures
DB Corp’s (DB) 1QFY12 revenue of Rs3.5bn, up 11%QoQ and 18%YoY, was
ahead of our expectations, led by a positive surprise in ad growth of 14%QoQ
and 20%YoY with share gain in established market and new edition launches.
Circulation/subscriptions account for 16% of total revenues and grew 6%YoY.
However Ebitda was down 12%YoY with margin at 28% down 10pptYoY
(+3ppt QoQ) due to higher raw material cost which increased 42%YoY. Also a
40%YoY jump in employee cost and Rs62m of pre marketing expenses on
new markets of Jharkhand, Maharashtra and Bihar led to lower margins.
Profit was up 36%QoQ but down 12%YoY. DB’s radio (brand My FM) revenues
for 17 cities presence increased slower at 14%YoY with 14% Ebitda margin.
Multiple new edition launches
After the successful launch of its Ranchi and Jamshedpur edition in 2H10, DB
launched the Dhanbad edition in April 2011 completing its Jharkhand foray.
Now DB has expanded its presence in Maharashtra state with the launch of
Marathi newspaper Divya Marathi in Aurangabad and Nashik this quarter. The
company plans to launch seven-eight editions in Maharashtra and is looking
at an entry strategy led by lower cover price. In Maharashtra DB will compete
with Lokmat and Sakal which have an average readership of 7.3m and 4.5m
respectively. Meanwhile DB’s launch in Bihar has been deferred to FY13. DB
continues to maintain an impressive track record of success in new edition
launches even amid intense competition and has guided for breakeven in new
editions in three to four years of launch.
Earnings Cagr of 15%, retain O-PF
Despite the positive surprise in DB ad-revenues we maintain our estimates of
18%Cagr with softening ad-spend environment. Also newsprint prices at
about Rs30,500/tonne are still high and with the challenge of high newsprint
prices, we forecast 15% earnings Cagr over FY12-13CL. With the stock
trading at 14x FY13CL earnings, we maintain Outperform. However we
remain negative on DB’s radio business where it will likely bid for more
stations in upcoming phase III of licensing.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
1QFY12 Results
DB Corp’s reported 1QFY12 revenue growth of 18%YoY/11%QoQ to
Rs3.5bn was ahead of estimates. The positive surprise was led by robust
20%YoY ad-revenue growth aided by regional advertising and share gain.
However Ebitda margin at 28.4% was down 10pptYoY following jump in
raw material and employee cost alongside new edition launch expenses.
DB has launched its Marathi editions in Aurangabad and Nashik, taking
the total to 62 across newspapers. Meanwhile, led by projected 18%YoY
ad growth, earnings will grow 15%Cagr over FY12-13CL and with the
stock trading at 14x FY13CL earnings, we maintain Outperform.
Positive surprise in ad-growth but margin pressures
DB Corp’s (DB) 1QFY12 revenue of Rs3.5bn, up 11%QoQ and 18%YoY, was
ahead of our expectations, led by a positive surprise in ad growth of 14%QoQ
and 20%YoY with share gain in established market and new edition launches.
Circulation/subscriptions account for 16% of total revenues and grew 6%YoY.
However Ebitda was down 12%YoY with margin at 28% down 10pptYoY
(+3ppt QoQ) due to higher raw material cost which increased 42%YoY. Also a
40%YoY jump in employee cost and Rs62m of pre marketing expenses on
new markets of Jharkhand, Maharashtra and Bihar led to lower margins.
Profit was up 36%QoQ but down 12%YoY. DB’s radio (brand My FM) revenues
for 17 cities presence increased slower at 14%YoY with 14% Ebitda margin.
Multiple new edition launches
After the successful launch of its Ranchi and Jamshedpur edition in 2H10, DB
launched the Dhanbad edition in April 2011 completing its Jharkhand foray.
Now DB has expanded its presence in Maharashtra state with the launch of
Marathi newspaper Divya Marathi in Aurangabad and Nashik this quarter. The
company plans to launch seven-eight editions in Maharashtra and is looking
at an entry strategy led by lower cover price. In Maharashtra DB will compete
with Lokmat and Sakal which have an average readership of 7.3m and 4.5m
respectively. Meanwhile DB’s launch in Bihar has been deferred to FY13. DB
continues to maintain an impressive track record of success in new edition
launches even amid intense competition and has guided for breakeven in new
editions in three to four years of launch.
Earnings Cagr of 15%, retain O-PF
Despite the positive surprise in DB ad-revenues we maintain our estimates of
18%Cagr with softening ad-spend environment. Also newsprint prices at
about Rs30,500/tonne are still high and with the challenge of high newsprint
prices, we forecast 15% earnings Cagr over FY12-13CL. With the stock
trading at 14x FY13CL earnings, we maintain Outperform. However we
remain negative on DB’s radio business where it will likely bid for more
stations in upcoming phase III of licensing.
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