CMP 310.00

Target Price 340.00

ISIN: INE950I01011

JANUARY 17th

2014

D B CORP. LTD.

STANDALONE Result Update: Q3 FY14

BUYBUYBUYBUY

Index Details

Stock Data

Sector Publishing-Media

BSE Code 533151

Face Value 10.00

52wk. High / Low (Rs.) 321.50/210.05

Volume (2wk. Avg.) 6901

Market Cap (Rs. mn.) 56862.68

Annual Estimated Results (A*: Actual / E*: Estimated)

YEARS FY13A FY14E FY15E

Net Sales 15788.60 18702.01 21507.31

EBITDA 4090.28 5592.45 6512.79

Net Profit 2306.06 3173.19 3787.05

EPS 12.58 17.30 20.65

P/E 24.65 17.92 15.02

Shareholding Pattern (%)

1 Year Comparative Graph

D B CORP LTD S&P BSE SENSEX

SYNOPSIS

D B Corp Ltd. is engaged in printing and publication

of Newspaper in four languages across 13 states, in

Radio Business with "My FM" Radio station in 7

states and 17 cities along with strong web presence

in India.

The company’s net profit registered 30.71%

increase and stood at a record Rs. 948.31 million

from Rs. 725.51 million over the corresponding

quarter last year.

EBIDTA margin stands at 31.3% on a stand-alone

basis.

D B Corp Ltd. is set to launch in Patna- State of

Bihar on 18th January ‘2014 which is of strategic

importance for DBCL.

Dainik Bhaskar’s digital business has registered an

unprecedented upsurge with 13 million unique

visitors and 395 million page views for the quarter

under review.

Radio Advertising revenues have expanded by

24.85% YOY to Rs. 238.23 mn in Q3 of current

period, against Rs. 190.81 mn in Q3 of last fiscal.

DB Group and Bhaskar Champs Club have been

awarded the ‘WAN IFRA: India Award - World

Young Reader Country of the Year 2013’ award.

D B Corp Ltd. relaunched DB Star in an all-new

avatar in 9 markets of India offering content in

collaboration with Daily Mirror, London for English

content.

Net Sales and PAT of the company are expected to

grow at a CAGR of 14% and 22% over 2012 to

2015E respectively.

PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND

Company Name (Rs.) Rs. mn. (Rs.) Ratio Ratio (%)

D B Corp Ltd 310.00 56862.68 12.58 24.65 5.29 55.00

Jagran Prakashan Ltd 88.00 29208.20 6.35 13.86 3.18 175.00

Just Dial Ltd 1583.65 110675.60 13.42 117.70 26.00 0.00

Hindustan Media Ventures Ltd 124.15 9111.80 13.45 9.23 1.79 12.00

QUARTERLY HIGHLIGHTS (STANDALONE)

Results updates- Q3 FY14,

Months DEC-13 DEC-12 % Change

Net Sales 5129.43 4345.87 18.03%

PAT 948.31 725.51 30.71%

EPS 5.17 3.96 30.66%

EBITDA 1627.53 1244.60 30.77%

D B Corp Ltd achieved a turnover of Rs. 5129.43 million for the 3rd quarter of the current year 2013-14 as against

Rs. 4345.87 millions in the corresponding quarter of the previous year. The company has reported an EBITDA of

Rs. 1627.53 millions and a net profit of Rs. 948.31 million against Rs. 725.51 million reported respectively in the

corresponding quarter of the previous year. The company has reported an EPS of Rs. 5.17 for the 3rd quarter as

against an EPS of Rs. 3.96 in the corresponding quarter of the previous year. This quarter the company has

strongly focused on brands of FMCG, apparels, real estate, automobiles & government that have ramped up their

respective marketing thrusts in these regions.

Break up of Expenditure

Particulars

Rs. Millions

Q3 FY14 Q3 FY13

Raw Materials consumed 1724.10 1441.28

Depreciation 159.77 149.16

Employees Benefit Expenses 726.67 694.97

Other Expenditure 1126.35 1004.75

Latest Updates

• D B Corp Ltd. is set to launch in Patna- State of Bihar on 18th January ‘2014 which is of strategic importance

for DBCL – the region being one of India’s most dynamic and developing states with 64% literacy levels.

• Radio business: Advertising revenues have expanded by ~25% YOY to Rs. 238.23 million in Q3 of current

period, against Rs. 190.81 million in Q3 of last fiscal.

• Printing and Publishing of Newspaper and Periodicals business registered 17.22% increase and stood at a

record Rs. 4886.33 million from Rs. 4168.31 million over the corresponding quarter last year.

• The Company has relaunched DB Star in an all-new avatar in 9 markets of Bhopal, Indore, Gwalior, Raipur,

Aurangabad, Jodhpur, Ranchi, Jamshedpur and Dhanbad offering content in collaboration with Daily Mirror,

London for English content.

• Dainik Bhaskar’s digital business has registered an unprecedented upsurge with 13 million unique visitors

and 395 million page views for the quarter under review.

• DB Group and Bhaskar Champs Club has been awarded the ‘WAN IFRA: India Award - World Young Reader

Country of the Year 2013’ award, conferred by the prestigious ‘The World Association of Newspapers and

News Publishers’ (WAN-IFRA) at the Youth Engagement Summit in Europe.

COMPANY PROFILE

D B Corp Ltd. is engaged in printing and publication of Newspaper in four languages across 13 states, in Radio

Business with "My FM" Radio station in 7 states and 17 cities along with strong web presence in India. 'Dainik

Bhaskar', the flagship Newspaper brand is established since 1958. Dainik Bhaskar continues to be the largest

read newspaper of urban India, retaining its market position in legacy markets while also strengthening

presence in emerging regions.

Coverage Area

38% of Indian urban Population resides in D B Corp Market across 13 states with 66 editions and 199 district

editions. The Hindi daily Dainik Bhaskar is present in 11 states with 36 editions. Its Gujarati Newspaper Divya

Bhaskar is present in Gujarat and Maharashtra with 7 editions. Its Marathi Newspaper Dainik Divya Marathi is

present in Maharashtra with 7 editions. The company also has presence in Business Daily (Business Bhaskar)

and English Daily through franchisee model of DNA.

D B Corp Limited recently extended its presence to 7th language Marathi with launch of its 66th edition Dainik

Divya Marathi newspaper in Amravati, Maharashtra on 11th August, 2013. Since in last 2 Years DB Corp has

launched 6 more editions from Nasik, Jalgaon, Ahmednagar, Solapur, Akola and Amravati of its Marathi

newspaper Dainik Divya Marathi, increasing our strength to 7 editions in Maharashtra.

Newspaper and Magazines Brands

� Dainik Bhaskar

'Dainik Bhaskar', the flagship Newspaper brand is established since 1958. This newspaper spreads in 11

states with 36 editions and 163 district editions.

� Divya Bhaskar

Divya Bhaskar became No.1 from Day 1 of it’s launch in June 2003, out placing more than 50 year old local

Gujarati newspaper in Ahmedabad city and became a case study at IIM Ahmedabad. This newspaper has its

presence in Gujarat and Mumbai with 7 editions and 28 district editions.

� Dainik Divya Marathi

D B Corp Ltd has begun its journey in Maharashtra with the launch of Marathi language newspaper Dainik

Divya Marathi newspaper in Amravati, Maharashtra on 11th August, 2013. The newspaper has emerged as the

most popular paper in the city from day 1 of its launch. This newspaper has its presence in 1 state with 7

editions, Aurangabad, Nashik, Jalgaon , Ahmednagar, Solapur, Akola and Amravati.

� MYFM

MYFM launched in 2006 and has span the radio segment through the brand "My FM" Radio station with

presence in 7 states and 17 cities, and a strong online presence in internet portals.

� Magazines

� Aha Zindagi!

� Bal Bhaskar

� Lakshya

� Young Bhaskar

FINANCIAL HIGHLIGHT (STANDALONE) (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as at March31, 2012 -2015E

FY12A FY13A FY14E FY15E

EQUITY AND LIABILITIES:

Shareholders’ Funds:

Share Capital 1833.09 1833.75 1834.28 1834.28

Reserves and Surplus 7765.27 8910.10 12083.29 15870.34

a) Net worth 9598.36 10743.85 13917.57 17704.62

Non-Current Liabilities:

Long-term borrowings 1028.58 878.02 921.92 963.41

Deferred Tax Liabilities [Net] 745.79 833.74 892.10 945.63

Other Long Term Liabilities 292.42 322.97 348.81 373.22

b) Long term liabilities 2066.79 2034.73 2162.83 2282.26

Current Liabilities:

Short-term borrowings 772.25 495.85 476.02 490.30

Trade Payables 1073.95 958.48 1496.35 1952.81

Other Current Liabilities 1376.86 1552.36 1785.21 2035.14

Short Term Provisions 837.48 941.35 1073.14 132.00

c) Current Liabilities 4060.54 3948.04 4830.72 4610.25

Total (a+b+c) 15725.69 16726.62 20911.12 24597.13

ASSETS:

Non-Current Assets:

Fixed Assets 7896.70 7960.02 8942.00 9864.97

Other non-current assets 89.99 64.39 67.61 70.99

Non Current Investments 827.67 1584.09 1663.29 1746.46

Long Term Loans and Advances 872.70 983.80 2459.50 3443.30

d) Non-Current Assets 9687.06 10592.30 13132.41 15125.72

Current Assets:

Inventories 1183.84 1298.19 2077.10 2700.24

Trade Receivables 2446.28 3038.93 3981.00 5016.06

Cash and Bank Balances 1867.90 1247.28 1197.39 1257.26

Short Term Loans and Advances 524.74 534.05 507.35 481.98

Other Current Assets 15.87 15.87 15.87 15.87

e) Current Assets 6038.63 6134.32 7778.71 9471.40

Total (d+e) 15725.69 16726.62 20911.12 24597.13

Annual Profit & Loss Statement for the period of 2012 to 2015E

Value(Rs. mn) FY12A FY13A FY14E FY15E

Description 12m 12m 12m 12m

Net Sales 14418.11 15788.60 18702.01 21507.31

Other Income 230.52 247.33 260.07 275.67

Total Income 14648.63 16035.93 18962.08 21782.99

Expenditure -11006.82 -11945.65 -13369.63 -15270.19

Operating Profit 3641.81 4090.28 5592.45 6512.79

Interest -76.35 -79.78 -75.97 -78.25

Gross profit 3565.46 4010.50 5516.48 6434.54

Depreciation -500.02 -573.07 -637.31 -696.58

Profit Before Tax 3065.44 3437.43 4879.17 5737.96

Tax -980.70 -1131.37 -1705.98 -1950.91

Net Profit 2084.74 2306.06 3173.19 3787.05

Equity capital 1833.08 1833.74 1834.28 1834.28

Reserves 7765.27 8910.10 12083.29 15870.34

Face value 10.00 10.00 10.00 10.00

EPS 11.37 12.58 17.30 20.65

Quarterly Profit & Loss Statement for the period of 30 JUNE, 2013 to 31 MARCH, 2014E

Value(Rs. mn) 30-June-13 30-Sep-13 31-Dec-13 31-Mar-14E

Description 3m 3m 3m 3m

Net sales 4461.47 4340.74 5129.43 4770.37

Other income 44.24 38.83 73.75 103.25

Total Income 4505.71 4379.57 5203.18 4873.62

Expenditure -3103.78 -3245.99 -3575.65 -3444.21

Operating profit 1401.93 1133.58 1627.53 1429.41

Interest -24.81 -23.18 -13.20 -14.78

Gross profit 1377.12 1110.40 1614.33 1414.63

Depreciation -155.34 -157.00 -159.77 -165.20

Profit Before Tax 1221.78 953.40 1454.56 1249.43

Tax -430.26 -332.17 -506.25 -437.30

Net Profit 791.52 621.23 948.31 812.13

Equity capital 1833.95 1834.03 1834.28 1834.28

Face value 10.00 10.00 10.00 10.00

EPS 4.32 3.39 5.17 4.43

Ratio Analysis

Particulars FY12A FY13A FY14E FY15E

EPS (Rs.) 11.37 12.58 17.30 20.65

EBITDA Margin (%) 25.26% 25.91% 29.90% 30.28%

PBT Margin (%) 21.26% 21.77% 26.09% 26.68%

PAT Margin (%) 14.46% 14.61% 16.97% 17.61%

P/E Ratio (x) 27.26 24.65 17.92 15.02

ROE (%) 21.72% 21.46% 22.80% 21.39%

ROCE (%) 36.33% 38.48% 40.68% 37.63%

EV/EBITDA (x) 15.60 13.90 10.17 8.73

Book Value (Rs.) 52.36 58.59 75.87 96.52

P/BV 5.92 5.29 4.09 3.21

Charts

OUTLOOK AND CONCLUSION

� At the current market price of Rs. 310.00, the stock P/E ratio is at 17.92 x FY14E and 15.02 x FY15E

respectively.

� Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.17.30 and

Rs.20.65 respectively.

� Net Sales and PAT of the company are expected to grow at a CAGR of 14% and 22% over 2012 to 2015E

respectively.

� On the basis of EV/EBITDA, the stock trades at 10.17 x for FY14E and 8.73 x for FY15E.

� Price to Book Value of the stock is expected to be at 4.09 x and 3.21 x respectively for FY14E and FY15E.

� We expect that the company surplus scenario is likely to continue for the next three years, will keep its

growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.340.00 for Medium to Long term investment.

INDUSTRY OVERVIEW

India's media and entertainment (M&E) industry registered an overall growth of 12.6 per cent, from Rs 728

billion (US$ 11.74 billion) in 2011 to Rs 821 billion (US$ 13.24 billion) in 2012, according to a joint report by the

Federation of Indian Chambers of Commerce and Industry (FICCI) and KPMG.

India has a population of over 1.2 billion. The sheer numbers give the M&E industry in the country a tremendous

opportunity for growth. Some time back, the thought of reaching and engaging with such a vast and diverse

population seemed improbable. However, today, the industry is armed with digital technologies, state-of-the-art

mobile devices, penetration of broadband and digital cinema, and a government that fully backs the sector.

Increasing digitisation along with higher internet usage has galvanised the sector over the last decade. The

Internet has almost become the top media for entertainment for most of the people. Some recent statistics and

developments related to the sector are discussed in the following segments.

Market Dynamics

The Indian print industry is the second largest in the world and is continuing to grow at a good rate. The segment

has enjoyed a compound annual growth rate (CAGR) of 7 per cent in recent years. There are over 82,000

newspapers in India with a daily circulation of over 100 million copies.

The industry is projected to grow at 11.8 per cent in 2013 to reach Rs 917 billion (US$ 14.79 billion). The sector

is also expected to achieve a CAGR of 15.2 per cent to touch Rs 1661 billion (US$ 26.79 billion) by 2017.

Total advertising expenditure across media was Rs 327.4 billion (US$ 5.28 billion) in 2012, contributing to 40

per cent of M&E sector revenues.

Advertising, Online and Mobile Entertainment

Times Internet (TIL), has signed a partnership with Ziff Davis Inc., an American publisher and Internet company

that attracts 120 million in-market buyers monthly. As part of the partnership, Times Internet will have exclusive

rights to the IGN and AskMen brands – the premium gaming and men's lifestyle sites respectively– and their

content in the country. This partnership will further enhance TIL's growth as a digital community for Indian

consumers who are avid followers of games, entertainment and lifestyle.

The Indian M&E industry is expected to grow 11.8 per cent to touch Rs 91,700 crore (US$ 14.78 billion) in 2013,

according to an industry report. Even though traditional media such as television and print are still the preferred

medium, other segments such as animation, visual effects, films and music are slowly establishing themselves in

the market.

Television and newspapers remain the people's preferred choice for entertainment, accounting for over four-

fifths of the advertising revenue. However, the online media is gaining ground. Expenditure on digital media

which was about 1 per cent of the total advertising spend in 2005 touched 7 per cent in 2012.

Investments

Indian consumers can now avail International news channel France 24 as a free-to-air channel on Doordarshan's

DTH platform, DD Direct + and Dish TV, after signing new distribution agreements in the country. The company

revealed that the deal will enable it to reach nearly 38 million TV households, from the earlier 7 million.

India is the world's fastest growing market for audio visual (AV) equipment, according to an industry study by

InfoComm. The AV market in India is projected to enjoy a CAGR of 25 per cent and reach US$ 5.1 billion by 2015,

driven by expenditures in sectors such as education, infrastructure and corporate information technology. By

2015, India could become the third largest AV market in the Asia–Pacific region, according to Richard Tan,

General Manager of InfoComm's Asia subsidiary.

ICICI Venture, one of India's biggest equity firms, with assets of around US$ 2 billion, plans to invest about Rs 150

crore (US$ 24.18 million) in Adlabs Imagica, a theme park operated by Adlabs Entertainment Limited, on the

Mumbai–Pune expressway. This will be the equity firm's first investment in this field. Adlabs Imagica started in

April, 2013. It is a Rs 1,600-crore (258.09 million) theme park spread over 300 acres. It accommodates as many

as 20,000 visitors every day and aims to achieve 3 million visitors in its first year of running.

The M&E industry in South India could grow at a CAGR of 16 per cent and touch Rs 43,600 crore (US$ 7.04

billion) by 2016–17 from Rs 23,900 crore (US$ 3.85 billion) in 2012–13, as per a report by consulting firm

Deloitte and FICCI. This growth will be driven by the popularity of vernacular content and the efforts by media

vehicles to expand their presence. The South Indian M&E market is led by television (56 per cent), followed by

print (28 per cent) and films (11 per cent). Segments such as new media and radio are also expected to grow at a

better rate than the media average.

The online portal for the Bharat Nirman Campaign has been launched. The portal offers an interactive digital

platform for the creative campaign on several schemes and programmes. The portal allows the user to get

information about the schemes at a single place, apart from providing live integration with social media

platforms such as Facebook, Twitter and YouTube.

Government Initiatives

The Indian government's push towards digitalisation and cable television by 2014, is expected to drive DTH and

digital cable growth. Also, sophisticated digital production and postproduction complemented by the willingness

of big corporate houses to invest in the film value chain is influencing the film segment in India. This is further

aided by the development of digital distribution and exhibition through the growth of multiplexes.

As part of ‘Friendly Exchanges' between the two Asian giants, India and China will mutually promote high level

media co-operation. There will be specific projects and proposals under the media domain to mark the

commemoration of ‘Friendly Exchanges' celebrations. India and China have strong M&E sectors. Sharing

experiences can only benefit both economies.

On a similar note, India and Senegal have enhanced their commitment to promote sustained cultural exchanges

by signing ‘Executive Programme for Cultural Cooperation' for the period 2013–15.

Road Ahead

The increase in mobile and wireless connections continues to push internet penetration in India. Customers now

have better access, cheaper and smarter devices and they (especially the youth) are consuming more content.

Also, in a reflection of India's growing influence, domestic television channels are increasing their networks

internationally. Channels such as Colors, Star Plus, SET and Zee TV are available in approximately 50, 70, 77 and

169 countries respectively. In the previous financial year, the growth of the overall print industry was largely due

to the Hindi and the vernacular print markets.

The Hindi print market grew from Rs 62 billion (US$ 1.00 billion) in 2011 to Rs 68 billion (US$ 1.09 billion) in

2012; the vernacular print medium witnessed a growth from Rs 63 billion (US$ 1.01 billion) in 2011 to Rs 69

billion (US$ 1.11 billion) in 2012.

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale

of any financial instrument or as an official confirmation of any transaction. The information contained herein is

from publicly available data or other sources believed to be reliable but do not represent that it is accurate or

complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall

not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. This document is provide for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision.

Firstcall India Equity Research: Email – info@firstcallindia.com

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