9 July 2014

Update | Sector: Media

D B Corp
BSE Sensex
25,445

S&P CNX
7,585

CMP: INR314

TP: INR410

Buy

Analyst meet takeaways: Radio and Digital focus

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.

Shobhit Khare (Shobhit.Khare@MotilalOswal.com); +91 22 3982 5428

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

2012
14,638
15.7
11,088
3,550
24.3
506
155
115
3,004
982
32.7
2,022
2
2,021
-12
0
2,021

2013
15,923
8.8
12,163
3,760
23.6
581
80
213
3,313
1,132
34.2
2,181
0
2,181
8
0
2,181

2014
18,598
16.8
13,595
5,003
26.9
643
75
239
4,524
1,606
35.5
2,917
0
2,917
34
149
3,066

2015E
21,108
13.5
15,213
5,895
27.9
677
73
186
5,331
1,813
34.0
3,519
0
3,519
21
0
3,519

2016E
23,774
12.6
17,022
6,752
28.4
701
73
329
6,307
2,144
34.0
4,163
0
4,163
18
0
4,163

2017E
26,710
12.3
19,068
7,642
28.6
725
73
474
7,318
2,488
34.0
4,830
0
4,830
16
0
4,830

2012
1,862
2,373
5,036
9,271
2,100
15
746
12,132

2013
1,863
2,373
6,056
10,291
1,574
11
834
12,709

2014
1,864
2,373
7,231
11,467
1,464
0
885
13,816

2015E
1,864
2,373
8,885
13,121
1,464
0
885
15,470

2016E
1,864
2,373
10,841
15,078
1,464
0
885
17,426

2017E
1,864
2,373
13,111
17,348
1,464
0
885
19,697

Gross Fixed Assets

Less: Depreciation
Net Fixed Assets
Capital WIP

9,487
2,235
7,252
681

10,299
2,816
7,483
900

11,054
3,458
7,596
929

11,454
4,136
7,319
929

11,854
4,837
7,018
929

12,254
5,562
6,692
929

Investments
Curr. Assets
Inventory
Debtors
Cash & Bank Balance
Loans & Advances
Current Liab. & Prov.
Creditors
Provisions & other liabilities

460
7,059
1,186
2,484
1,364
2,026
3,321
2,183
1,137

807
7,136
1,299
3,083
1,190
1,564
3,617
2,345
1,272

724
8,446
1,732
3,280
1,094
2,340
3,879
2,483
1,396

724
10,900
1,902
3,723
2,621
2,655
4,403
2,818
1,584

724
13,714
2,057
4,193
4,473
2,991
4,959
3,174
1,784

724
16,922
2,227
4,710
6,624
3,360
5,571
3,566
2,005

3,739
12,132

3,519
12,709

4,566
13,816

6,497
15,470

8,755
17,426

11,351
19,697

Balance Sheet (INR million)

Y/E March
Share Capital
Share Premium
Reserves
Net Worth
Loans
Minority Interest
Deffered Tax Liability
Capital Employed

Net Current Assets

Application of Funds
E: MOSL Estimates

9 July 2014

D B Corp

Financials and valuations

Ratios
Y/E March
Basic (INR)
Adjusted EPS
Growth (%)
Cash EPS
Book Value
DPS
Payout (incl.Div. Tax.,%)

2012

2013

2014

2015E

2016E

2017E

11.0
-12.3
13.8
50.7
5.0
53

11.9
7.9
15.1
56.2
5.5
53.7

15.9
33.7
19.4
62.5
7.3
53.3

19.2
20.6
22.9
71.5
8.7
53.0

22.7
18.3
26.5
82.2
10.3
53.0

26.3
16.0
30.3
94.5
11.9
53.0

19.7
16.2
11.6
3.1
5.0
2.3

16.4
13.7
9.6
2.7
4.4
2.8

13.8
11.8
8.1
2.3
3.8
3.3

11.9
10.4
6.9
2.0
3.3
3.8

Valuation
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE

23.0
18.1

22.3
18.0

26.8
23.5

28.6
24.3

29.5
25.6

29.8
26.3

Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)

62
30
72

71
30
70

64
34
67

64
33
68

64
32
68

64
30
68

Leverage Ratio
Debt/Equity (x)

0.2

0.2

0.1

0.1

0.1

0.1

2012
3,550
115
-155
-931
-242
2,337

2013
3,760
213
-80
-1,044
56
2,906

2014
5,003
239
-75
-1,406
-1,480
2,280

2015E
5,895
186
-73
-1,813
-404
3,792

2016E
6,752
329
-73
-2,144
-405
4,459

2017E
7,642
474
-73
-2,488
-444
5,111

(inc)/Dec in FA + CWIP
(Pur)/Sale of Investments
CF from Inv.Activity

-1,080
-297
-1,378

-1,030
-347
-1,378

-785
83
-702

-400
0
-400

-400
0
-400

-400
0
-400

Issue of Shares
Inc/(Dec) in Debt
Dividends Paid
Other Financing Activities
CF from Fin.Activity

0
-272
-1,065
10
-1,327

1
-526
-1,172
-5
-1,702

1
-110
-1,554
-11
-1,674

0
0
-1,865
0
-1,865

0
0
-2,206
0
-2,206

0
0
-2,560
0
-2,560

-368
1,731
1,363

-174
1,364
1,190

-96
1,190
1,094

1,527
1,094
2,621

1,853
2,621
4,473

2,151
4,473
6,624

Cash Flow Statement (INR million)

Y/E March
EBITDA
Other Income
Interest Paid
Direct Taxes Paid
(Inc)/Dec in Wkg. Cap.
CF from Op.Activity

Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
E: MOSL Estimates

9 July 2014

D B Corp

NOTES

9 July 2014

Disclosures

D B Corp

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D.B. CORP LTD

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9 July 2014

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