DB Corp hosted an analyst meeting to discuss its non-print businesses of radio and digital. Radio contributed 5% of total revenue and saw strong growth with its 17 stations. Digital revenue was smaller at 1% of total but grew 56% annually, however it is still in the early stages of monetization. The analyst maintains a 'Buy' rating for DB Corp, expecting 14% annual earnings growth driven by growth in its radio and developing digital segments.
DB Corp hosted an analyst meeting to discuss its non-print businesses of radio and digital. Radio contributed 5% of total revenue and saw strong growth with its 17 stations. Digital revenue was smaller at 1% of total but grew 56% annually, however it is still in the early stages of monetization. The analyst maintains a 'Buy' rating for DB Corp, expecting 14% annual earnings growth driven by growth in its radio and developing digital segments.
DB Corp hosted an analyst meeting to discuss its non-print businesses of radio and digital. Radio contributed 5% of total revenue and saw strong growth with its 17 stations. Digital revenue was smaller at 1% of total but grew 56% annually, however it is still in the early stages of monetization. The analyst maintains a 'Buy' rating for DB Corp, expecting 14% annual earnings growth driven by growth in its radio and developing digital segments.
DB Corp hosted an analyst meeting to discuss its non-print businesses of radio and digital. Radio contributed 5% of total revenue and saw strong growth with its 17 stations. Digital revenue was smaller at 1% of total but grew 56% annually, however it is still in the early stages of monetization. The analyst maintains a 'Buy' rating for DB Corp, expecting 14% annual earnings growth driven by growth in its radio and developing digital segments.
Radio a success story; building usage in digital for future monetization
Stock Info Bloomberg
DBCL IN
183.4
Equity Shares (m)
52-Week Range (INR)
345/211
1, 6, 12 Rel. Per (%)
2/-19/4
M.Cap. (INR b)
57.6
M.Cap. (USD b)
1.0
Financial Snapshot (INR billion)
Y/E March 2015E 2016E 2017E Net Sales
21.1
23.8
26.7
EBITDA
5.89
6.75
7.64
Net Profit
3.52
4.16
4.83
EPS (INR)
19.2
22.7
26.3
EPS Gr. (%)
20.6
18.3
16.0
BV/Sh (INR)
71.5
82.2
94.5
RoE (%)
28.6
29.5
29.8
RoCE (%)
24.3
25.6
26.3
P/E (x)
16.4
13.8
11.9
P/BV (x)
4.4
3.8
3.3
EV/EBITDA (x)
9.6
8.1
6.9
Div. Yield (%)
2.8
3.3
3.8
Shareholding pattern (%)
As on Mar-14 Dec-13 Mar-13 Promoter
74.9
75.0
75.0
DII
2.7
3.0
5.5
FII
18.5
17.7
14.4
3.8
4.4
5.2
Others
Note: FII Includes depository receipts
Radio: Strong EBITDA growth led by operating leverage
D B Corp Sensex - Rebased
375
DB Corp has 17 radio stations under the brand My FM. All radio stations are in its existing print markets across seven states - Rajasthan, Haryana, Punjab, Gujarat, Maharashtra, Madhya Pradesh and Chhattisgarh. Radio business posted revenue CAGR of 19% and EBITDA CAGR of 100% over FY10-14 as EBITDA margin expanded from 5% in FY10 to 40% in FY14. In phase III, new frequencies are expected to be auctioned in ~100 cities in the current DB Corp footprint. DB Corp would bid for these based on the market attractiveness and reserve price. Entry into metros is ruled out.
Digital: Yet to reach monetization phase; focus on building usage
Stock Performance (1-year)
DB Corp hosted an analyst meet to discuss its non-print business strategy
Radio and digital segments contribute ~5% to DB Corps consolidated revenue but are growing faster (25% YoY revenue growth in FY14). FY14 radio business revenue was INR0.8b with EBITDA margin of 40%. Radio growth to be led by 1) phase III (~100 towns coming up in DB Corp markets) and 2) expected government approval to broadcast news which will let DB Corp leverage its existing strength in news content. FY14 digital business revenue was ~INR190m with PAT loss of ~INR65m. With monetization still at a nascent stage, focus is on growing unique visitors (currently ~14m) and page views (currently at 383m/month).
Key digital properties: News websites in Hindi (dainikbhaskar.com),
Gujarati (divyabhaskar.com), Marathi (divyamarathi.com), and English (dailybhaskar.com). Digital business has reached ~14m unique visitors and 383m page views per month. Almost 60% of visitors are from metros and international markets. Digital revenue grew 56% YoY to ~INR190m (1% of consolidated revenue). FY14 PAT loss in the digital business stood at ~INR65m. During CY14, DB digital launched three new properties UP online edition, bollywood content website (bollywoodbhaskar.com) and a financial news website focusing on the SME/investor segment (moneybhaskar.com).
325
Ad growth to accelerate; maintain Buy with TP of INR410
275
225
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
175
While ad environment has been subdued due to model code of conduct
impacting government vertical, we expect a strong rebound from 3QFY15. We expect 19% EPS CAGR over FY14-16E driven by 14% ad revenue CAGR. The stock trades at a P/E of 16.4x FY15E and 13.8x FY16E. DB Corp has attractive FY15E dividend yield of 2.8% and RoE of 29%. Maintain Buy with a target price of INR410 based on 18x FY16 EPS, implying 31% upside.
Investors are advised to refer through disclosures made at the end of the Research Report.
D B Corp Radio and Digital: Contribution to consolidated DB Corp revenue Radio 3.8
3.7
0.2
0.2
FY10
FY11
3.9
0.5
FY12
Digital 4.2
0.8
FY13
4.3
1.0
FY14
Source: Company, MOSL
My FM: Geographical footprint
My FM stations
Chandigarh Amritsar Ajmer Jalandhar Jaipur Bhopal Gwalior Jabalpur Bilaspur Kota Raipur Jodhpur Nagpur Ajmer Surat Indore Ahmedabad Source: Company, MOSL
9 July 2014
D B Corp Radio: Revenue and EBITDA growth (INR m) Revenue
EBITDA
EBITDA margin (%)
801
576
33
469
406
25
18 5
40
672
318 220
144
84 20
FY10
FY11
FY12
FY13
FY14
Source: Company, MOSL
Digital revenue trajectory (INR m)
190
122 74 22
30
FY10
FY11
FY12
FY13
FY14
Source: Company, MOSL
Site wise unique visitors (m)
Geography wise unique visitors (m)
DailyBhaskar, 2.8
4 4 DivyaBhaskar, 2.2
6 DainikBhaskar, 9.0
Source: Company, MOSL
9 July 2014
14
India (non-metro) India (metro)
International
Total
Source: Company, MOSL
D B Corp DB Corp: A Snapshot Print ad revenue (INR b) YoY (%) Circulation revenue (INR b) YoY (%) Av circulation/day -Group (m) YoY (%) Newsprint price (USD/ton) YoY (%) RM cost/Revenue (%) Revenue mix (%) Print ad revenue Circulation revenue Other
FY06 3.5
51
FY07 4.9 38 1.6 -2 3.3 14 630 4 49
FY08 6.3 30 1.8 10 3.5 6 640 1 39
FY09 7.0 10 1.9 9 3.6 5 645 1 42
FY10 7.7 11 2.1 6 3.5 -3 531 -18 31
FY11 9.5 23 2.1 4 4.0 14 594 12 30
FY12 10.7 12 2.4 13 4.6 16 650 9 35
FY13 11.3 6 2.8 16 4.7 1 604 -7 34
66 31 3
72 24 4
73 21 6
73 20 7
73 19 8
75 17 8
73 17 10
71 18 11
1.7 2.8 603
FY14 13.3 17 3.2 15 4.8 3 597 -1 34
FY15E 15.1 14 3.6 12 5.1 6 609 2 33
FY16E 17.1 14 3.9 8 5.3 3 621 2 32
71 71 72 17 17 16 11 11 12 Source: Company, MOSL
DB Corp: One year forward P/E (x)
28
PE (x)
Peak(x)
Median(x)
Avg(x)
Min(x) 23.6
24 20
17.9 17.4
16
13.8
16.2
Jul-14
Jan-14
Aug-13
Mar-13
Sep-12
Apr-12
Nov-11
Jun-11
Dec-10
Jul-10
Jan-10
12
Source: Company, MOSL
9 July 2014
D B Corp
Financials and valuations
Income Statement (Consolidated, INR million) Y/E March Net Sales YoY (%) Operating expenses EBITDA EBITDA margin (%) Depreciation Interest Other Income PBT Tax Tax rate (%) PAT Minority Interest Adjusted PAT Change (%) Extra-ordinary items Reported PAT
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