MOSL: D B CORP (Buy)-Quarter dragged by lower ad spend from key sectors, but sanguine print outlook provides comfort
D B Corp: Quarter dragged by lower ad spend from key sectors, but sanguine print outlook provides comfort
(DBCL IN, Mkt Cap USD1.0b, CMP INR355, TP INR420, 18% Upside, Buy)
- PAT declines 34% YoY on weak ad revenue: Consolidated revenue declined 4.6% YoY to INR6.0b (8% miss) due to subdued print ad revenue growth. Consequently, EBITDA fell 30% YoY to INR1.4b (32% miss). Excluding last year’s one-offs related to festival billing and private treaty, ad revenue grew in mid-single-digits. EBITDA margin shrunk sharply by 830bp to 23.3%. EBITDA disappointment boiled down to PAT, which fell 34% YoY to INR781m.
- Lower local advertiser spend pulls down print, radio ad revenue: Print ad revenue fell 6% YoY to INR3.8b, led by (i) lingering effects of GST and (ii) preponement of festive season to 2QFY18. Sector-wise, real estate ad revenue declined 40%, while education/electronic ad revenue fell 7%/20%. Circulation revenue grew 6% YoY to INR1.3b, with overall circulation copies growing 5.3% YoY to 5.64m. Radio ad revenue declined 7% YoY to INR336m due to weak ad spend from the real estate and government sectors.
- Recovery in sight: Management indicated that ad revenue grew in double digits in Dec’17, with the momentum continuing in Jan’18 as well. Further, the upcoming state elections in DBCL’s legacy markets in FY19, coupled with the crucial general election in 2019, bode well for ad growth. We expect revenue/PAT CAGR of 9%/21% over FY18-20. Management indicated a 40% rise in print readership based on IRS data, which may lead to healthy print ad growth.
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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