Buy DB Corp - Q3FY12 Result Review - PINC Research

Q3FY12 Result Review - DB Corp - Bleak ad environment and high base lower Ad growth; Maintain 'BUY'; TP Rs244

Bleak ad environment and high base lower Ad growth

DB Corp's top-line grew 13.6%YoY to Rs3.9bn, higher than our estimates (PINCe Rs3.8bn). Advertisement revenue posted single digit growth of 6.8%YoY (4% QoQ) to Rs2.9bn due to the bleak ad environment and higher base in Q3FY11. However circulation revenue saw strong sequential growth of 4.8%QoQ (16.7%YoY) to Rs630mn driven by increased circulation copies with new launches. OPM declined to 25.7% (v/s 32.9% in Q3FY11) mainly due to Rs165mn operating losses of emerging editions.

- Ad growth declines; circulation continues to foster
- New edition launches and forex losses impact Margins

VALUATIONS AND RECOMMENDATION

We have revised our FY12 and FY13 EPS estimates to Rs11 (Rs12 earlier) and Rs13.6 (Rs15 earlier) factoring lower advertisement revenue, forex losses and increased newsprint prices (Rs/USD currency impact). However, attractive growth opportunities in Hindi/regional print dailies and attractive valuations (13.6x FY13E EPS) make investment case for DB Corp. We reiterate our 'BUY' recommendation on the stock with a reduced target price of Rs244 at 18xFY13E EPS (earlier TP of Rs270 at 18xFY13E EPS). We have also introduced FY14 financial estimates.

Source : Equity Bulls

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