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Recommendations India

DB Corp 1QFY2015 performance highlights and results update

July 22, 2014, Tuesday, 04:32 GMT | 23:32 EST | 08:02 IST | 10:32 SGT
Contributed by Angel Broking


DB Corp reported a subdued set of results for 1QFY2015, both on the top-line and bottom-line front. The top-line growth was slightly lower mainly due to modest growth in advertising revenue. The company’s performance was subdued on the profitability front owing to slightly lower operating performance and a higher depreciation cost (as per the new accounting guidelines of the new Companies Act, the company provided incremental depreciation of ~Rs.5cr). We maintain our Buy rating on the stock.

Subdued top-line performance due to modest growth in advertising revenue: For 1QFY2015, the company reported a 9% yoy growth in its top-line to Rs.489cr mainly due to a modest growth in advertising revenue of ~8% yoy to Rs.373cr. However, the company’s circulation revenue reported a decent top-line growth of 15.4% yoy to Rs.89cr, as against Rs.77cr in 1QFY2014.


News print and depreciation costs drag down earnings

For the quarter, DB Corp posted a subdued growth on the earnings front owing to slightly lower operating performance (operating margin contracted by 211bp yoy owing to higher news print costs). The company provided for an incremental depreciation of ~Rs.5cr to adhere to the new accounting guidelines as per new Companies Act.

Outlook and valuation We believe that the company would perform well, both on the top-line and bottom-line fronts, owing to focus on market expansion, multi-state leadership and with it gaining strong ground in emerging markets. Hence, we recommend a Buy rating on the stock with a target price of Rs.386, based on 18x FY2016E EPS.

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