Hold DB Corp; target of Rs 88: ICICI Direct

ICICI Direct's research report on DB Corp

DB Corp reported a weak set of Q4FY20 numbers on account of economic slowdown and Covid-19 outbreak. Revenues dipped 17.3% YoY to Rs 486.7 crore. Print & digital ad revenue declined 20.2% YoY to Rs 298.7 crore while radio ad revenue also registered de-growth of 16.5% YoY to Rs 32.6 crore. Circulation revenue also de-grew 5.7% YoY toRs 120 crore mainly due to disruption caused by lockdown. EBITDA was down 36.7% to Rs 65.9 crore with margins at 13.6%, down 415 bps YoY. Softened newsprint prices provided some relief on the costs front. Consequently, reported PAT was down 55.8% YoY at Rs 24.1 crore.

Outlook

The stock price has sharply corrected since our last recommendation but we remain wary of promoters’ pledge (~35.3% of promoters stake is pledged) and would await removal of the same. We maintain HOLD, valuing it at 6x FY22E EPS for a target price of Rs 88.

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