DB Corp Result Updated

7/31/2019 DB Corp Result Updated

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Please refer to important disclosures at the end of this report 1

(` cr) 4QFY12 4QFY11 % yoy 3QFY12 % qoqRevenue 361 317 13.6 396 (8.8)EBITDA 76 80 (4.8) 102 (25.6)

OPM (%) 21.0 25.1 (407)bp 25.7 (472)bp

PAT 45 45 0.9 56 (18.7)Source: Company, Angel Research

DB Corp. (DBCL) reported weak performance on the earnings front, primarily due

to sharp fall in operating margins despite moderate performance on the top-line

front. Operating margins fell rather steeply during the quarter on account of

pre-operative expenses for the new edition launched in Sholapur, operating losses

on recent editions launched in Maharashtra and Jharkhand and impact of rupee

depreciation on newsprint costs. Consequently, companys earning remained flat

on a yoy basis. We maintain our Buy recommendation on the stock.Key highlights for the quarter: For 4QFY2012, the companys top line grew by13.6% yoy to `361cr aided by moderate 5.4% yoy growth in ad revenue to

`263cr and healthy 16.2% yoy growth in circulation revenues on account of new

launches and selective increase in cover prices. Operating margin fell by 407bp

yoy (472bp qoq) on account of pre-operative expense on account of Sholapur

launch and operating losses on the new editions launched in Maharashtra and

Jharkhand. Radio business turned PAT positive and registered EBIDTA of `5.2crduring the year. The company reported flat yoy growth in adjusted profit to`45cr

due to aggressive launches during the year.

Outlook and valuation: At the CMP, DBCL is trading at 12.6x FY2014Econsolidated EPS of`16.1. We maintain our Buy view on the stock with a revisedtarget price of `269, based on 17x FY2014E EPS, benchmarking it to our printmedia sector valuations (which are at ~15% premium to our sensex target

valuation multiple). Downside risks to our estimates include 1) any further rise in

newsprint prices, 2) competition becoming fierce and 3) higher-than-expected

losses/increase in the breakeven period of the new launches.

Key financials (Consolidated)Y/E March (` cr) FY2011 FY2012E FY2013E FY2014ENet sales 1,265 1,463 1,652 1,863% chg 20.4 15.7 12.9 12.7

Net profit (Adj.) 259 202 247 295% chg 41.5 (22.0) 22.5 19.2

EBITDA margin (%) 31.9 24.2 25.7 26.3

EPS (`) 14.1 11.0 13.5 16.1P/E (x) 14.3 18.4 15.0 12.6

P/BV (x) 4.5 3.9 3.3 2.8

RoE (%) 35.1 22.6 23.8 24.2

RoCE (%) 33.7 25.9 28.3 30.1

EV/Sales (x) 3.1 2.7 2.2 1.8

EV/EBITDA (x) 9.4 10.5 8.4 7.0

Source: Company, Angel Research

BUYCMP `202

Target Price `269

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 86.4

MF / Banks / Indian Fls 4.7

FII / NRIs / OCBs 4.9

Indian Public / Others 4.0

Abs. (%) 3m 1yr 3yr

Sensex (7.5) (11.3) 38.2

DBCL (1.0) (16.8) -

Media

Market Cap (` cr) 3,931

Beta 0.4

52 Week High / Low 258/170

Avg. Daily Volume 9,796

Face Value (`) 10

BSE Sensex 16,420

Nifty 4,966

Reuters Code DBCL.BO

DBCL@IN

Amit Patil022-39357800 Ext: 6503

[email protected]

DB CorpPerformance Highlights

4QFY2012 Result Update | Media

May 10, 2012


2/10

DB Corp | 4QFY2012 Result Update

May 10, 2012 2

Exhibit 1:Quarterly PerformanceY/E March (` cr) 4QFY12 4QFY11 % yoy 3QFY12 % qoq FY2012 FY2011 % chgNet Sales 361 317 13.6 396 (8.8) 1,464 1,265 15.7Consumption of RM 130 104 24.9 135 (3.6) 508 383 32.5(% of Sales) 36.1 32.8 34.1 34.7 30.3

Operating Expense 94 84 11.0 96 (2.0) 358 294 21.8

(% of Sales) 26.0 26.6 24.2 24.4 23.2

Staff Costs 61 49 24.0 63 (3.3) 243 185 31.6

(% of Sales) 16.9 15.5 15.9 16.6 14.6

SG&A Expense - - - - -

(% of Sales) - - - - -

Total Expenditure 285 238 19.8 294 (3.0) 1,109 862 28.7Operating Profit 76 80 (4.8) 102 (25.6) 355 404 (12.0)OPM (%) 21.0 25.1 25.7 24.3 31.9

Interest (2) 3 (155.9) 8 (123.7) 16 15 1.5

Depreciation 13 11 17.0 13 (3.1) 51 43 16.8

Other Income 3 4 (5.4) 2 38.8 12 14 (18.7)

PBT (excl. Ext Items) 68 69 (0.9) 83 (17.7) 300 359 (16.4)Ext Income/(Expense) - - - - -

PBT (incl. Ext Items) 68 69 83 300 359(% of Sales) 18.9 21.6 20.9 20.5 28.4

Provision for Taxation 23 24 (2.9) 27 (15.7) 98 100 (1.8)

(% of PBT) 33.6 34.3 32.8 32.7 27.8

Recurring PAT 45 45 0.2 56 (18.7) 202 259 (22.0)PATM 13 14 14 14 20

Minority Interest 0 (0) (240.7) 0 (27.5) (0) (0) (39.8)

Reported PAT 45 45 0.9 56 (18.7) 202 259 (22.0)Equity shares (cr) 18.3 18.3 18.3 18.3 18.3

FDEPS (`) 2.5 2.5 0.9 3.0 (18.7) 11.0 14.1 (22.0)



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May 10, 2012 3

Moderate top-line growth at 13.6% yoy

DBCL reported moderate top-line growth of 13.6% yoy to `361cr in the current

quarter, driven by 5.4% yoy growth in ad revenue and 16% yoy growth in

circulation revenue primarily aided by increased circulation due to new launches in

Jharkhand and Maharashtra.

During the quarter, DBCL maintained its strong foothold in Madhya Pradesh,

Chandigarh, Punjab, Rajasthan, Haryana and Chhattisgarh. Among the other

segments, the companys radio business reported steady growth of 9.4% yoy in

revenues to`15cr.

Exhibit 2:Top-line continues double digit growth


Advertising Revenue aided by retail advertising

Advertising revenue registered 5.4% yoy growth and stood at `263cr for the

quarter mainly on account of increase in local advertising but decline in national

advertising pulled down the advertising revenues. Maharashtra and Jharkhand

have started getting local advertisements but it will take some time before they get

national advertisements since readership data for these states is yet to come in.

Circulation Revenue continue double digit growth

Circulation revenue continued to grow by double-digits. It stood at`62cr, a 16%

rise yoy basis due to DBCLs continued strong foothold in Madhya Pradesh,

Chandigarh, Punjab, Rajasthan, Haryana and Chhattisgarh along with recent

launches in Maharashtra and Jharkhand.

257

299 301

348 361 354 354

396361

-

5.0

10.0

15.0

20.0

25.0

-

50

100

150

200

250

300

350

400

450

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

(%)

(`cr)

Top line (LHS) yoy growth (RHS)


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May 10, 2012 4

Exhibit 3:Advertising Revenue


Exhibit 4:New launches inch up circulation revenue


OPM under pressure yoy on high start-up costs, newsprint prices

and forex losses

At the operating level, DBCL faced margin pressure (margin contracted by 407bp

yoy) on account of increased circulation volumes due to new edition launches and

increased staff cost by 142bp yoy/97bp qoq due to higher number of employees

because of new editions. Radio business reported EBIDTA of`5.2crfor the quarter.

The company also incurred pre-operative expense on Sholapur launch and higher

newsprint prices due to rupee depreciation.

Exhibit 5:OPMs contracts by 407bp yoy


Exhibit 6:Adjusted PAT ends up flat


Adjusted PAT flat due to aggressive launches

In terms of Profits, DBCL posted flat Adjusted PAT. It was primarily due to losses

because of new edition launches and pre-operative expenses. The company

reported a 23% qoq decline in its Adjusted PAT. Radio business achieved PAT of

`2.5 cr which acted as a small boost in Q4 profits. For 4QFY2012, Adjusted PAT

stood at`45cr.

191

236 236

269

250

283 274287

263

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

-

50

100

150

200

250

300

350

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

(%)

(`cr)

Advertising revenue (LHS) yoy growth (RHS)

5354 53

54 53

57

60

6362

(2.0)

-

2.0

4.0

6.0

8.0

10.0

12.014.0

16.0

18.0

46

48

50

52

54

56

5860

62

64

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

(%)

(`cr)

Circulation revenue (LHS) yoy growth (RHS)

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

(%)

Gross margins OPM

35

72

64

78

45

61

40

56

45

-

5.0

10.0

15.0

20.0

25.0

30.0

-

10

20

30

40

50

60

70

80

90

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

(%)

(`cr)

Recurring PAT (LHS) NPM (RHS)


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May 10, 2012 5

Investment rationale

Well-planned aggression in business edges DBCL over peers: DBCL, though adominant No. 2 player in the overall regional print space (trailing behind

Jagran Prakashan), enjoys a premium valuation to its peers Jagran Prakashan

(flagship daily Dainik Jagran) and Hindustan Media Ventures (flagship daily

Hindustan). We attribute the reason for this trend to DBCLs business model

(which is primarily driven by ad revenue) and well thought-out launches in new

markets. We believe the companys continuous endeavor to diversify its print

business coupled with aggressive expansion into new markets (urban towns

beyond metros) backed by exhaustive market research and focus on achieving

leadership is the key differentiating factor compared to its peers. The company

has been successful in executing its expansion plans with launches in

Maharashtra and Jharkhand.

Outlook and valuation

At the CMP, DBCL is trading at 12.6x FY2014E consolidated EPS of `16.1. Wemaintain our Buy view on the stock with a revised target price of `269, based on17x FY2014E EPS, benchmarking it to our print media sector valuations (which are

at ~15% premium to our sensex target valuation multiple). Downside risks to our

estimates include 1) any further rise in newsprint prices, 2) competition becoming

fierce and 3) higher-than-expected losses/increase in the breakeven period of the

new launches.

Exhibit 7:Change in estimatesOld estimates New estimates % chg

(` cr) FY2013E FY2014E FY2013E FY2014E FY2013E FY2014ERevenue 1,656 1,869 1,652 1,863 - -OPM (%) 26 26.8 25.7 26.3 (30bp) (50bp)

EPS (`) 14 16.1 13.5 16.1 (3.7) -Source: Company, Angel Research


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May 10, 2012 7

Profit and loss Statement (Consolidated)

Y/E March (` cr) FY2009 FY2010 FY2011 FY2012E FY2013E FY2014EGross sales 949 1,051 1,265 1,463 1,652 1,863Less: Excise duty - - - - - -

Net Sales 949 1,051 1,265 1,463 1,652 1,863

Total operating income 949 1,051 1,265 1,463 1,652 1,863% chg 11.6 10.7 20.4 15.7 12.9 12.7

Total Expenditure 814 720 862 1,109 1,227 1,372Cost of Materials 407 328 384 508 478 538

SG&A Expenses 266 249 284 329 444 501

Personnel 133 132 185 243 289 317

Others 7 12 10 29 16 16

EBITDA 135 331 403 355 425 491% chg (20.8) 144.2 22.0 (12.0) 19.8 15.5

(% of Net Sales) 14.3 31.5 31.9 24.2 25.7 26.3

Depreciation & Amortisation 29 38 43 51 59 59

EBIT 106 293 360 304 365 432% chg (28.5) 175.2 22.9 (15.5) 20.2 18.2

(% of Net Sales) 11.2 27.9 28.4 20.8 22.1 23.2

Interest & other Charges 40 25 15 16 18 19

Other Income 12 12 14 12 21 26

(% of PBT) 15.3 4.4 4.0 3.8 5.8 5.9

Share in profit of Associates - - - - - -

Recurring PBT 78 281 359 300 369 440% chg (41.1) 258.9 27.8 (16.4) 23.0 19.2Prior Period & Extra Exp/(Inc.) 0 0 - - - -

PBT (reported) 78 280 359 300 369 440Tax 42 106 100 98 122 145

(% of PBT) 54.1 37.6 27.9 32.7 33.0 33.0

PAT (reported) 36 175 259 202 247 295Add: Share of earn of assoc - - - - - -

Less: Minority interest (MI) (12) (8) (0.3) (0) (0) -

PAT after MI (reported) 48 183 259 202 247 295ADJ. PAT 48 183 259 202 247 295% chg (37.1) 283.5 41.6 (22.0) 22.5 19.1

(% of Net Sales) 5.0 17.4 20.5 13.8 15.0 15.8

Basic EPS (`) 2.8 10.1 14.1 11.0 13.5 16.1Fully Diluted EPS ( ) 2.6 10.0 14.1 11.0 13.5 16.1% chg (37.3) 283.9 41.7 (22.0) 22.4 19.2


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May 10, 2012 8

Balance Sheet (Consolidated)

Y/E March (` cr) FY2009 FY2010 FY2011 FY2012E FY2013E FY2014ESOURCES OF FUNDSEquity Share Capital 169 182 183 183 183 183Share Cap. suspense account - 1 - - - -

Reserves& Surplus 89 466 646 776 921 1,130

Shareholders Funds 258 649 829 959 1,104 1,313Minority Interest 12 4 0 2 0 0

Total Loans 563 321 201 213 164 154

Deferred Tax Liability 39 61 70 75 69 69

Total Liabilities 872 1,035 1,101 1,248 1,338 1,537APPLICATION OF FUNDSNet FA (includes CWIP) 647 647 709 793 801 834Investments 24 21 16 46 46 46

Current Assets 399 561 621 696 803 994

Cash 45 193 173 188 291 413

Loans & Advances 105 103 133 139 139 156

Other 248 266 315 368 373 424

Current liabilities 219 207 255 296 323 348

Net Current Assets 180 354 366 400 479 646Mis. Exp. not written off 22 13 10 9 11 11

Total Assets 872 1,035 1,101 1,248 1,338 1,537

Cash flow

Y/E March (` cr) FY2009 FY2010E FY2011 FY2012E F Y2013E FY2014EProfit before tax 78 281 359 300 369 440

Depreciation 29 38 43 51 59 59

Change in Working Cap. 13 (14) (37) (46) (32) (46)

Interest / Dividend (Net) 30 25 15 16 18 19

Direct taxes paid 36 101 100 98 122 145

Others (16) 2 19 9 31 1

Cash Flow from Operations 98 229 299 232 323 327(Inc.)/ Dec. in Fixed Assets (295) (38) (105) (84) (67) (91)

(Inc.)/ Dec. in Investments (18) 3 4 (30) - -

Cash Flow from Investing (313) (34) (101) (114) (67) (91)Issue of Equity (1) 251 2 - - -

Inc./(Dec.) in loans 219 (242) (120) (12) (49) (10)

Dividend Paid (Incl. Tax) 10 42 85 75 86 86

Interest / Dividend (Net) 29 13 15 16 18 19

Cash Flow from Financing 180 (48) (217) (103) (132) (114)Inc./(Dec.) in Cash (36) 147 (19) 15 103 122

Opening Cash balances 81 45 193 173 188 291Closing Cash balances 45 193 173 188 291 413


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May 10, 2012 9

Key Ratios

Y/E March FY2009 FY2010 FY2011 FY2012E FY2013E FY2014EValuation Ratio (x)P/E (on FDEPS) 78.0 20.3 14.3 18.4 15.0 12.6P/CEPS 44.7 16.7 12.3 14.3 12.1 10.5

P/BV 13.3 5.7 4.5 3.9 3.4 2.8

Dividend yield (%) 0.2 1.0 2.0 1.7 2.0 2.0

EV/Sales 4.5 3.7 3.1 2.7 2.2 1.9

EV/EBITDA 31.3 11.6 9.4 10.5 8.4 7.0

EV / Total Assets 4.9 3.7 3.4 3.0 2.7 2.2

Per Share Data (`)EPS (Basic) 2.8 10.1 14.1 11.0 13.5 16.1

EPS (fully diluted) 2.6 10.0 14.1 11.0 13.5 16.1

Cash EPS 4.5 12.2 16.5 14.2 16.7 19.3

DPS 0.5 2.0 4.0 3.5 4.0 4.0

Book Value 15.3 35.7 45.2 52.3 60.3 71.7

Dupont AnalysisEBIT margin 11.2 27.9 29.5 22.2 22.1 23.2

Tax retention ratio 0.5 0.6 0.7 0.7 0.7 0.7

Asset turnover (x) 1.4 1.3 1.4 1.5 1.6 1.7

ROIC (Post-tax) 7.1 21.9 30.0 21.8 23.7 26.7

Cost of Debt (Post Tax) 0.1 0.0 0.0 0.1 0.1 0.1

Leverage (x) 1.5 1.0 0.1 0.0 (0.1) (0.2)

Operating ROE 18.1 44.6 33.4 22.3 22.0 22.1

Returns (%)ROCE 14.2 30.7 33.7 25.9 28.7 30.0

Angel ROIC (Pre-tax) 12.9 34.8 37.4 29.4 34.9 38.4

ROE 20.0 40.3 35.1 22.6 24.1 24.4

Turnover ratios (x)Asset Turnover (Gross Block) 2.3 1.6 1.6 1.6 1.7 1.8

Inventory / Sales (days) 27 25 21 24 26 26

Receivables (days) 68 67 69 65 63 63

Payables (days) 70 59 48 57 56 54

Working capital cycle (ex-cash) (days) 52 56 58 49 48 52

Solvency ratios (x)Net debt to equity 1.9 0.2 0.1 (0.0) (0.1) (0.2)

Net debt to EBITDA 3.7 0.3 0.1 (0.0) (0.3) (0.6)

Interest Coverage (EBIT / Interest) 2.6 11.9 24.0 19.0 20.2 23.4


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May 10, 2012 10

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

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Disclosure of Interest Statement DB Corp.

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to 15%) Sell (< -15%)

Note: We have not considered any Exposure below`

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DB Corp Result Updated

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