MOSL: D B Corp (Buy)-Softening newsprint price benefits to reflect going forward
D B Corp: Softening newsprint price benefits to reflect going forward
(DBCL IN, Mkt Cap USD0.5b, CMP INR183, TP INR215, 17% Upside, Buy)
- Increase in RM cost starts subsiding: 4QFY19 was characterized by EBITDA margin expansion as against the steep 880bp/210bp YoY drop witnessed in 2QFY19/3QFY19. Consol. EBITDA at INR1b grew 6% YoY (5% beat), while margin expanded 20bp to 17.7%. This was due to a modest 5% YoY increase in cons. revenue to INR5.9b (in-line) coupled with a deceleration in YoY increase in RM cost, up 14% YoY (as against steep 30-35% YoY increase witnessed in 2QFY19/3QFY19). Also on QoQ basis, RM cost declined 12%, indicating a reversion of newsprint prices to normal levels (despite an increase in circulation copies). Yet, PAT declined 5% YoY to INR545m (3% miss) as growth in EBITDA was outweighed by drop in other income (-65% YoY) and higher taxes. For FY19, revenue/EBITDA/PAT grew 6%/-11%/-15%.
- Concall highlights: (1) Expect newsprint prices to decline to INR40/kg in 1QFY20, and decline further in ensuing quarters (from INR44.5/kg in 4QFY19). (2) Expect full benefit of drop in newsprint prices to reflect from 2QFY20/3QFY20. (3) No significant increase in circulation copies is expected in FY20.
DB Corp Limited. D. B. Corp Limited is a print media company, which is engaged in the sale of newspapers and magazines, and advertisement revenue. The Company also has a presence in radio and digital sectors. Its segments include Printing/Publishing, Radio, Event, Internet and Power. Its Printing/Publishing segment includes newspaper, magazines and printing job work. Its Radio segment includes broadcasting of radio. Its Event segment includes event management. Its Internet segment includes integrated Internet and mobile interactive services. Its brands in publishing business include Dainik Bhaskar (Hindi daily), Divya Bhaskar and Saurashtra Samachar (Gujarati dailies), Divya Marathi (Marathi daily), DNA and DB Post (English dailies), and monthly magazines, such as Aha Zindagi and Bal Bhaskar. Its Internet business includes the Websites of Dainik Bhaskar, Divya Bhaskar and Divya Marathi having newspapers in e-paper category and dainikbhaskar.com, divyabhaskar.com, dailybhaskar.com and divyamarathi.com.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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