CMP 364.65

Target Price 420.00

ISIN: INE950I01011

OCTOBER 20th

2014

D B CORP LTD

Result Update (PARENT BASIS): Q2 FY15

BUYBUYBUYBUY

Index Details

Stock Data

Sector Publishing

BSE Code 533151

Face Value 10.00

52wk. High / Low (Rs.) 393.25/232.00

Volume (2wk. Avg.) 75000

Market Cap (Rs. mn.) 66949.01

Annual Estimated Results (A*: Actual / E*: Estimated)

YEARS FY14A FY15E FY16E

Net Sales 18562.09 20789.54 22868.49

EBITDA 5235.25 5563.81 6066.58

Net Profit 3062.85 3132.35 3437.51

EPS 16.69 17.06 18.72

P/E 21.85 21.37 19.48

Shareholding Pattern (%)

1 Year Comparative Graph

D B CORP LTD S&P BSE SENSEX

SYNOPSIS

D B Corp Ltd. is engaged in printing and publication

of Newspaper in four languages across 14 states, in

Radio Business with "My FM" Radio station in 7

states and 17 cities along with strong web presence

in India.

Net Profit for the quarter was up by 9.66% at Rs.

681.27 million against Rs. 621.23 million,

corresponding quarter of previous year.

Revenue for the quarter rose by 10.57% to Rs.

4799.60 million from Rs. 4340.74 million, when

compared with the prior year period.

EBDITA or operating profit of the company rose by

12.13% from Rs. 1133.58 million to Rs. 1271.08

million in the current September quarter.

During Q2 FY15, Consolidated revenue increased by

9.2% to Rs. 4838 million from Rs. 4430 million.

Print business EBIDTA margins stand at 26.3% at

Rs. 1195 million and PAT stands at Rs.646 million

(14% PAT margin).

DBCL’s core markets tier II and tier III cities

(population less than 4 million) witnessing

exponential growth in internet users.

Advertising Revenues grew by 9% to Rs. 3610

million as against Rs. 3311 million in the same

period last year.

Net Sales and PAT of the company are expected to

grow at a CAGR of 13% and 14% over 2013 to

2016E respectively.

PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND

Company Name (Rs.) Rs. mn. (Rs.) Ratio Ratio (%)

D B Corp Ltd 364.65 66949.01 16.69 21.85 5.85 42.50

Jagran Prakashan Ltd 123.10 40242.80 7.03 17.51 4.23 150.00

Hindustan Media Ventures Ltd 166.50 12220.10 16.53 10.07 2.01 12.00

HT Media Ltd 108.15 25359.50 6.01 18.00 1.80 20.00

QUARTERLY HIGHLIGHTS (PARENT BASIS)

Results updates- Q2 FY15,

Months Sep-14 Sep-13 % Change

Net Sales 4799.60 4340.74 10.57

PAT 681.27 621.23 9.66

EPS 3.71 3.39 9.55

EBITDA 1271.08 1133.58 12.13

The company net profit jumps to Rs. 681.27 million against Rs. 621.23 million in the corresponding quarter

ending of previous year, an increase of 9.66%. The company achieved a turnover of Rs. 4799.60 million

registering an increase of 10.57% for the 2nd quarter of the current year 2014-15 as against Rs. 4340.74 millions

in the corresponding quarter of the previous year. Reported earnings per share of the company stood at Rs. 3.71

a share during the quarter as against Rs. 3.39 over previous year period. Profit before interest, depreciation and

tax is Rs. 1271.08 million as against Rs. 1133.58 million in the corresponding period of the previous year.

Break up of Expenditure

Particulars

Rs. Millions

Q2 FY15 Q2 FY14

Raw Materials consumed 1620.92 1503.58

Depreciation 207.87 157.00

Employees Benefit Expenses 839.97 716.17

Other Expenditure 1113.19 1024.93

Latest Updates

� DBCL’s core markets tier II and tier III cities (population less than 4 million) witnessing exponential growth

in internet users.

� DB Digital subsuming of six digital portals has breached 14 million unique visitors mark.

� The properties saw phenomenal progress in Q2 with Unique Visitors growing by 56% and a growth of 83%

in Pages per Visit – the highest in the industry.

� DBCL’s newest digital property saw a significant growth of 155% increase in page views and 43% in unique

visitors.

� Dainik App active user base has grown by 260%, over last quarter to have 250,000 active users.

Highlights Q1 FY15 (Consolidated)

� During Q2 FY15, Consolidated revenue increased by 9.2% to Rs. 4838 million, from Rs. 4430 million.

� PAT margin stands at 14.1% to Rs. 681 million against Rs. 602 million, in Q2 of last year, with YOY growth of

13.2%.

� Advertising Revenues grew by 9% to Rs. 3610 million as against Rs. 3311 million in the same period last

year.

� The Company, Radio Business advertising revenue grew by 33.3% to Rs. 228 million in Q2 FY15 of current

period, against Rs. 171 million in Q2 FY14 of last fiscal. Radio business EBIDTA stands at Rs. 86 million (38%

margin). The business PAT stands at Rs. 43.4 million (19% margin).

� DB Corp Ltd, Digital business revenue grew by 57% to Rs. 63 million from Rs. 40 million of last year. Digital

business EBIDTA losses reduced to Rs. 9.6 million from Rs. 22 million of last year.

� During Q2 FY 2015, Total Revenue of print business at Rs. 340 million increase on YOY basis and the Print

business PAT stands at Rs. 646 million (14% PAT margin). EBIDTA margin of Print business stand at 26.3%

at Rs. 1195 million.

� Print business advertising revenues increase to Rs. 3319 million from Rs. 3099 million, reflecting a growth of

7.1% YOY basis.

COMPANY PROFILE

DB Corp Ltd. is India’s largest print media company that publishes 7 newspapers with Dainik Bhaskar 37

editions, Divya Bhaskar 7 editions, & Divya Marathi 7 editions with 199 sub-editions in 4 multiple languages

(Hindi, Gujarati, English and Marathi) across 14 states in India. The Company flagship newspapers Dainik

Bhaskar (in Hindi) established in 1958, Divya Bhaskar and Saurashtra Samachar (in Gujarati) have a combined

average daily readership of 19.8 million, making us one of the most widely read newspaper groups in India with

presence in Madhya Pradesh, Chhattisgarh, Rajasthan, Haryana, Punjab, Chandigarh, Himachal Pradesh,

Uttrakhand, Delhi, Gujarat, Maharashtra, Jharkhand and Jammu. Other noteworthy newspaper brands are Dainik

Divya Marathi, DB Star and, DNA (in Gujarat & Rajasthan) on a franchisee basis. DBCL is the only media

conglomerate that enjoys a leadership position in multiple states, in multiple languages and is a dominant player

in its all major markets.

The company’s other business interests also span the radio segment through the brand "My FM" Radio station in

7 states and 17 cities along with strong web presence in India.

Coverage Area

49% of Indian urban Population resides in D B Corp Market across 14 states. The Hindi daily Dainik Bhaskar is

present in 12 states with 37 editions. Its Gujarati Newspaper Divya Bhaskar is present in Gujarat and

Maharashtra with 7 editions. Its Marathi Newspaper Dainik Divya Marathi is present in Maharashtra with 7

editions. The company also has presence in Business Daily (Business Bhaskar) and English Daily through

franchisee model of DNA.

D B Corp Limited recently extended its presence to 7th language Marathi with launch of its 66th edition Dainik

Divya Marathi newspaper in Amravati, Maharashtra on 11th August, 2013. Since in last 2 Years DB Corp has

launched 6 more editions from Nasik, Jalgaon, Ahmednagar, Solapur, Akola and Amravati of its Marathi

newspaper Dainik Divya Marathi, increasing our strength to 7 editions in Maharashtra.

Newspaper and Magazines Brands

� Dainik Bhaskar

'Dainik Bhaskar', the flagship Newspaper brand is established since 1958. This newspaper spreads in 12

states with 37 editions and 163 district editions.

� Divya Bhaskar

Divya Bhaskar became No.1 from Day 1 of it’s launch in June 2003, out placing more than 50 year old local

Gujarati newspaper in Ahmedabad city and became a case study at IIM Ahmedabad. This newspaper has its

presence in Gujarat and Mumbai with 7 editions and 28 district editions.

� Dainik Divya Marathi

D B Corp Ltd has begun its journey in Maharashtra with the launch of Marathi language newspaper Dainik

Divya Marathi newspaper in Amravati, Maharashtra on 11th August, 2013. The newspaper has emerged as the

most popular paper in the city from day 1 of its launch. This newspaper has its presence in 1 state with 7

editions, Aurangabad, Nashik, Jalgaon , Ahmednagar, Solapur, Akola and Amravati.

� MYFM

MYFM launched in 2006 and has span the radio segment through the brand "My FM" Radio station with

presence in 7 states and 17stations, and a strong online presence in internet portals.

� Magazines

� Aha Zindagi!

� Bal Bhaskar

� Lakshya

� Young Bhaskar

FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as at March31, 2013 -2016E FY13A FY14A FY15E FY16E

I EQUITY AND LIABILITIES

A) Shareholder's Funds

a) Share Capital 1833.75 1834.86 1834.86 1834.86

b) Reserves and Surplus 8910.10 9609.18 11434.92 13493.21

Sub-Total- Total Net worth 10743.85 11444.04 13269.78 15328.07

B) Non Current Liabilities

a) Long-term borrowings 878.01 726.81 617.79 537.48

b) Deferred Tax Liabilities 833.74 885.13 858.58 815.65

c) Other Long Term Liabilities 310.25 346.38 363.70 370.97

Total Non Current liabilities 2022.00 1958.32 1840.06 1724.10

C) Current Liabilities

a) Short-term borrowings 495.85 536.93 483.24 444.58

b) Trade payables 958.48 1116.83 971.64 874.48

c) Other Current liabilities 1565.08 1558.62 1589.79 1605.69

d) Short term Provisions 941.35 1048.35 922.55 830.29

Sub-Total- Current Liabilities 3960.76 4260.73 3967.22 3755.04

TOTAL EQUITY AND LIABILITIES (A + B + C) 16726.61 17663.09 19077.07 20807.21

II APPLICATION OF FUNDS

D) Non-Current Assets

Fixed Assets

i. Tangible assets 7595.62 8248.73 8743.65 9443.15

ii. Intangible Assets 294.15 234.91 246.66 266.39

iii. Capital work-in-progress 70.25 22.24 24.91 27.15

a) Sub-Total-Total Fixed Assets 7960.02 8505.88 9015.22 9736.68

b) Other non-current assets 64.39 48.50 52.87 56.04

c) Non-current investments 1584.09 735.16 769.73 831.31

d) Long Term loans and advances 983.79 1855.19 2133.47 2432.15

Sub-Total-Non-Current Assets 10592.29 11144.73 11971.28 13056.18

E) Current Assets

a) Inventories 1298.20 1732.34 1992.19 2310.94

b) Trade receivables 3038.92 3274.17 3503.36 3716.96

c) Cash and Bank Balances 1247.28 1120.44 1187.67 1270.80

d) Short-terms loans & advances 534.05 375.54 405.58 433.97

e) Other Current Assets 15.87 15.87 16.98 18.34

Sub-Total-Total Current Assets 6134.32 6518.36 7105.78 7751.02

TOTAL ASSETS (D+E) 16726.61 17663.09 19077.07 20807.21

Annual Profit & Loss Statement for the period of 2013 to 2016E

Value(Rs. mn) FY13A FY14A FY15E FY16E

Description 12m 12m 12m 12m

Net Sales 15788.60 18562.09 20789.54 22868.49

Other Income 247.33 238.62 262.48 280.86

Total Income 16035.93 18800.71 21052.02 23149.35

Expenditure -11945.65 -13565.46 -15488.21 -17082.77

Operating Profit 4090.28 5235.25 5563.81 6066.58

Interest -79.78 -75.34 -58.01 -67.87

Gross profit 4010.50 5159.91 5505.80 5998.71

Depreciation -573.07 -641.54 -795.51 -890.97

Profit Before Tax 3437.43 4518.37 4710.29 5107.74

Tax -1131.37 -1455.52 -1577.95 -1670.23

Net Profit 2306.06 3062.85 3132.35 3437.51

Equity capital 1833.74 1834.86 1835.64 1835.98

Reserves 8910.10 9609.18 11434.92 13493.21

Face value 10.00 10.00 10.00 10.00

EPS 12.58 16.69 17.06 18.72

Quarterly Profit & Loss Statement for the period of 31st Mar, 2014 to 31st Dec, 2014E

Value(Rs. mn) 31-Mar-14 30-Jun-14 30-Sep-14 31-Dec-14E

Description 3m 3m 3m 3m

Net sales 4630.46 4891.52 4799.60 5471.54

Other income 81.80 94.98 36.14 33.25

Total Income 4712.26 4986.50 4835.74 5504.79

Expenditure -3640.04 -3544.58 -3564.66 -3994.23

Operating profit 1072.22 1441.92 1271.08 1510.57

Interest -14.17 -15.73 -14.52 -10.16

Gross profit 1058.05 1426.19 1256.56 1500.40

Depreciation -169.42 -203.61 -207.87 -209.95

Profit Before Tax 888.63 1222.58 1048.69 1290.45

Tax -186.85 -430.06 -367.42 -406.49

Net Profit 701.78 792.52 681.27 883.96

Equity capital 1834.86 1835.64 1835.98 1835.98

Face value 10.00 10.00 10.00 10.00

EPS 3.82 4.32 3.71 4.81

Ratio Analysis

Particulars FY13A FY14A FY15E FY16E

EPS (Rs.) 12.58 16.69 17.06 18.72

EBITDA Margin (%) 25.91 28.20 26.76 26.53

PBT Margin (%) 21.77 24.34 22.66 22.34

PAT Margin (%) 14.61 16.50 15.07 15.03

P/E Ratio (x) 29.00 21.85 21.37 19.48

ROE (%) 21.46 26.76 23.60 22.42

ROCE (%) 38.48 46.25 44.25 42.65

Debt Equity Ratio 0.13 0.11 0.08 0.06

EV/EBITDA (x) 16.35 12.78 12.03 11.04

Book Value (Rs.) 58.59 62.37 72.29 83.49

P/BV 6.22 5.85 5.04 4.37

Charts

OUTLOOK AND CONCLUSION

� At the current market price of Rs. 364.65, the stock P/E ratio is at 21.37 x FY15E and 19.48 x FY16E

respectively.

� Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs. 17.06 and Rs.

18.72 respectively.

� Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 14% over 2013 to 2016E

respectively.

� On the basis of EV/EBITDA, the stock trades at 12.03 x for FY15E and 11.04 x for FY16E.

� Price to Book Value of the stock is expected to be at 5.04 x and 4.37 x respectively for FY15E and FY16E.

� We expect that the company surplus scenario is likely to continue for the next three years, will keep its

growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs. 420.00 for Medium to Long term investment.

INDUSTRY OVERVIEW

As per a FICCI-KPMG report, India’s media and entertainment (M&E) industry reaches 161 million TV

households, 94,067 newspapers (12,511 dailies), about 2000 multiplexes, and 214 million internet users of

which 130 million are mobile internet users.

The year 2013 saw growth in the digitisation of media products and services, as well as development of regional

media. Gaming and digital advertising were two sub-sectors which recorded strong growth compared to 2012.

Today, the industry continues to grow, playing an important role in bringing about awareness on many issues

that impact the populace. India’s massive consumer base also gives the M&E industry a tremendous opportunity

for progress and the sector has the tools to exploit this potential. The current industry is armed with digital

technologies, state-of-the-art mobile devices, penetration of broadband internet and digital cinema, not to

mention backing from the country’s government.

Market size

In calendar year 2013, India’s M&E industry registered a growth of 11.8 per cent over 2012 and touched Rs 918

billon (US$ 14.93 billion), as per a report by FICCI-KPMG. The industry has the potential to grow at 14.2 per cent

to more than Rs 1.78 trillion (US$ 28.95 billion) in the next four years.

The television industry in India is anticipated to increase at a compound annual growth rate (CAGR) of 16.2 per

cent over 2013-18, to reach Rs 885000 million (US$ 14.39 billion). Digital advertising is projected to have the

highest CAGR of 27.7 per cent with other sub-sectors projected to grow at a CAGR in the range of 9-18 per cent,

till 2018.

The foreign direct investment (FDI) inflows in the information and broadcasting (I&B) sector (including print

media) in the period April 2000 - July 2014 stood at US$ 3,735.77 million.

Government Initiatives

The Indian and Canadian governments signed an audio-visual co-production deal in early 2014 that would help

producers from both countries to harness their technical, creative, artistic, financial and marketing resources for

co-productions and, subsequently, lead to exchange of culture and art amongst them.

The Centre has given the go-ahead for licences to 45 new news and entertainment channels in India. Among

those who have secured the licenses include established names such as Star, Sony, Viacom and Zee. Presently,

there are 350 broadcasters which cater to 780 channels. “We want more competition and we wanted to open it

up for the public. So far, we have approved the licences of 45 new channels. It’s a mix of both news and non-news

channels.

Road Ahead

Digitisation will drive India’s M&E industry forward. The internet user base which is already over 200 million

will likely generate vast revenue. Some time back, telecom companies began to focus on data as a means to create

revenue. Additionally, advertising agencies began competition with each other to acquire in the digital and social

media domains. These developments suggest growth for the M&E industry in India. Opportunities outside the

country also beckon. Africa and the Middle East are two burgeoning M&E markets, and Indian M&E companies

will do well to tap the regions’ potential.

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale

of any financial instrument or as an official confirmation of any transaction. The information contained herein is

from publicly available data or other sources believed to be reliable but do not represent that it is accurate or

complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall

not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. This document is provide for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision.

Firstcall India Equity Research: Email – info@firstcallindia.com

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