Dear All,
Forwarding you the Result Update on DB Corp for 4QFY2011 with a Buy recommendation and a Target Price of `335 (12 months).
DB Corp. (DBCL) reported strong set of numbers on both the revenue and earnings front. The top-line was driven by advertisement revenue; earnings were aided by lower interest expense and tax rate. We maintain our Buy recommendation on the stock.
Strong top-line growth led by ad revenue growth: As expected, DBCL reported strong top-line growth of 23.4% yoy, led by 30% yoy growth in print advertising revenue and 41.7% yoy growth in radio ad revenue. Circulation revenue was marginally higher by 1.3% yoy but dipped by 1.1% qoq (on account of cover price cuts in Chattisgarh and launching DB Star along with the main newspaper).
Earnings robust at 22.6% yoy, despite margin contraction: In terms of earnings, DBCL posted robust 29% yoy growth on a recurring basis and 22.6% yoy growth on a reported basis, aided by a 60.8% yoy decrease in interest expense to `3.4cr and lower tax rate (down 177bp yoy), despite a 197bp yoy margin contraction (on account of higher raw-material price and increased circulation volumes resulting in gross margin contraction of 216bp yoy).
Outlook and valuation: We have marginally revised our earnings estimates downwards to factor the increase in newsprint price and higher number of
loss-making editions (due to the slew of new launches). At the CMP of `243, DBCL is trading at 14.5x FY2013E consolidated EPS of `16.8. We maintain our Buy rating on the stock with a revised target price of `335 (`358), based on 20x FY2013E earnings. Downside risks to our estimates include – 1) higher-than-anticipated rise in newsprint prices, 2) increased competition and 3) higher-than-expected losses/increase in the breakeven period of its new launches.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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