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UBS Investment Research
DB Corp
S olid Q1 FY12 results
Event: Q1 FY12 results ahead of UBS and consensus estimates
DB Corp reported Q1 FY12 results: revenue grew 18% YoY to Rs3,537m versus
our estimate of Rs3,380m. Advertising revenue rose 20% YoY to Rs2,832m while
EBITDA margin declined from 38.0% in Q1 FY11 to 28.4% in Q1 FY12 versus
our estimate of 26.0%. The decline in EBITDA margin was caused by an increase
in newsprint and employee costs and losses related to the newspaper launches in
Jharkhand and Maharashtra. Net profit came in at Rs612m versus our estimate of
Rs524m and Bloomberg consensus of Rs492m.
Impact: We maintain our earnings estimates
DB Corp achieved 24% of our FY12 EBITDA and net profit estimates in Q1
FY12. We maintain our earnings estimates for FY12, as we believe EBITDA
margin will remain under pressure due to high losses from the Maharashtra launch.
Action: DB Corp is our top pick in the India print media segment
We expect India print media revenue to rise in the next five years, led by
favourable demographics, rising income and literacy levels, and increasing print
penetration. We maintain our Buy rating on DB Corp, as we believe it will benefit
the most from India’s rapidly growing regional print sector. DB Corp is well
diversified geographically with a presence in 14 states; it also plans to enter Bihar.
We believe the Maharashtra launch will be positive in the medium term.
Valuation: Maintain Buy rating and price target of Rs310.00
We derive our price target from a FY13E EPS of Rs17.20 and 18.0x PE, which is
in line with its historical trading average since listing. DB Corp’s management will
host a conference call on 22 July 2011 (refer to Table 2 for dial-in details).
DB Corp
DB Corp started operations in 1958, with the launch of its first Hindi newspaper
in Bhopal, Madhya Pradesh. The company was listed on the Bombay Stock
Exchange in January 2010. It publishes seven newspapers, 52 editions and 135
sub-editions in Hindi, Gujarati and English across 13 states in India. DB Corp is
the largest print media company in India in terms of cumulative readership of its
newspapers. The company's flagship brand ‘Dainik Bhaskar’ is the second most
widely-read Hindi newspaper in India with a daily average issue readership of
14m (Q410 IRS).
Statement of Risk
We believe the key risks for DB are: 1) intense competition; 2) rising newsprint
prices, which could impact profitability; 3) its heavy dependence on advertising
revenue; and 4) losses in new launches, which could be higher than anticipated.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
DB Corp
S olid Q1 FY12 results
Event: Q1 FY12 results ahead of UBS and consensus estimates
DB Corp reported Q1 FY12 results: revenue grew 18% YoY to Rs3,537m versus
our estimate of Rs3,380m. Advertising revenue rose 20% YoY to Rs2,832m while
EBITDA margin declined from 38.0% in Q1 FY11 to 28.4% in Q1 FY12 versus
our estimate of 26.0%. The decline in EBITDA margin was caused by an increase
in newsprint and employee costs and losses related to the newspaper launches in
Jharkhand and Maharashtra. Net profit came in at Rs612m versus our estimate of
Rs524m and Bloomberg consensus of Rs492m.
Impact: We maintain our earnings estimates
DB Corp achieved 24% of our FY12 EBITDA and net profit estimates in Q1
FY12. We maintain our earnings estimates for FY12, as we believe EBITDA
margin will remain under pressure due to high losses from the Maharashtra launch.
Action: DB Corp is our top pick in the India print media segment
We expect India print media revenue to rise in the next five years, led by
favourable demographics, rising income and literacy levels, and increasing print
penetration. We maintain our Buy rating on DB Corp, as we believe it will benefit
the most from India’s rapidly growing regional print sector. DB Corp is well
diversified geographically with a presence in 14 states; it also plans to enter Bihar.
We believe the Maharashtra launch will be positive in the medium term.
Valuation: Maintain Buy rating and price target of Rs310.00
We derive our price target from a FY13E EPS of Rs17.20 and 18.0x PE, which is
in line with its historical trading average since listing. DB Corp’s management will
host a conference call on 22 July 2011 (refer to Table 2 for dial-in details).
DB Corp
DB Corp started operations in 1958, with the launch of its first Hindi newspaper
in Bhopal, Madhya Pradesh. The company was listed on the Bombay Stock
Exchange in January 2010. It publishes seven newspapers, 52 editions and 135
sub-editions in Hindi, Gujarati and English across 13 states in India. DB Corp is
the largest print media company in India in terms of cumulative readership of its
newspapers. The company's flagship brand ‘Dainik Bhaskar’ is the second most
widely-read Hindi newspaper in India with a daily average issue readership of
14m (Q410 IRS).
Statement of Risk
We believe the key risks for DB are: 1) intense competition; 2) rising newsprint
prices, which could impact profitability; 3) its heavy dependence on advertising
revenue; and 4) losses in new launches, which could be higher than anticipated.
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