PINC Visit Note - D B Corp Ltd.

PINC Research Team visited D B Corp's Ranchi printing plant so as to get ground level idea of D B Corp's performance in the new market – Ranchi and the print market in entirety.

'The Dhoni Effect' continues

As per the meetings with various local advertisers, major key takeaway is that their business is growing at +20% and is expecting similar kind of robust growth going forward (both from same store growth and through expansion). Proportionately the ad spend allocation has also increased, they expect ad spend to further rise for the business. The most preferred mode of advertising is Print (more than 50% of the ad budget goes to print) followed by Radio and Outdoor advertising.

Intense competition

Jharkhand (JHK) market has experienced severe competition after the launch of Dainik Bhaskar. JHK is a Rs1.5bn ad market with four main print players - Prabhat Khabar, the leader with ~40% ad market share followed by Hindustan, Dainik Jagran and Dainik Bhaskar. D B Corp, an eight month old entrant, is gaining its ground on the back of lucrative ad rates to advertisers and compelling content to readers.

Ranchi's largest circulated daily

D B Corp's aggressive pricing play has consistently rewarded the group. Dainik Bhaskar, within eight months of its launch, is already the largest circulated newspaper in Ranchi (main city and in land area) with 146,000 copies against Prabhat Khabar with125,000 copies and Hindustan with 130,000 copies. Renewal of annual subscription of Ranchi edition would be a key factor to gauge for.

VALUATIONS AND RECOMMENDATION

DBCL's strategic penetration into high-growth markets, optimum exploitation of readership base and a uniformly distributed business model make us positive about the company's growth prospects. Attractive growth opportunities in Hindi/regional print dailies make a strong case for DBCL, as the business model is skewed towards ad revenue (76% of total revenue). At CMP, the stock is trading at 16x FY12E earnings. We reiterate our 'BUY' recommendation with 12 month target price of Rs315 (21x FY12E EPS).

Source : Equity Bulls

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