Hold DB Corp; target of Rs 395: ICICI Direct

ICICI Direct's research report on DB Corp

Overall revenues at Rs.  568.3 crore (up 7.5% YoY) were largely in line with our estimate of Rs.  554.5 crore. Print advertisement revenues came in at Rs.  350.3 crore, up 6.1% YoY and higher than our expectations of 5% YoY growth. We note that print ad growth of 6.1% YoY, despite pre GST led uncertainty, is noteworthy and bodes well for the company. The radio ad growth continued to outperform print at 16.7% YoY (Rs.  34.9 crore) vs. our estimate of 9% YoY growth. Digital revenues, which declined 12.1% YoY, were disappointing. Subscription revenues came in at Rs.  127.3 crore, up 8% YoY, and higher than our estimates of 6.0% YoY growth.

Print players continue to face challenges such as demonetisation overhang (more impact owing to larger proportion of local advertisers and impacted segments) along with uncertainty on GST, RERA. We believe the revival will be a gradual process. The management not putting a guidance for ad growth is a testimony to the same. We now build in higher costs given the company’s intent to increase circulation copies in Bihar and other costs related to “15 crore Jeeto offer”. We value the company at 15x FY19E EPS of Rs.  26.4 with a target price of Rs.  395. We have a HOLD recommendation on the stock.

 

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