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D B Corp Ltd – Subscribe for Medium Term

December 11, 2009

dainik bhaskar ipo in-depth reviewD B Corp is a leading print media company in India with 7 newspaper, 48 newspaper editions and 128 sub editions in 3 languages (Hindi, Gujarati and English) in 11 sates in India. They have 2 subsidiaries, Synergy Media Entertainment [radio business] under the brand name MY FM and I Media Corp for internet and SMS portals.

D B Corp – Dainik Bhaskar and Divya Bhaskar have Strong brand recognition and wide geographical reach in Hindi Heartland – North, Central and Western India.

Print Media in India:
Readership and circulation is directly correlated with literacy levels that have increased from 62.5% in 2002 to over 73% in 2007. Moreover, 69% of India’s populations is rural. With faster literacy growth in rural areas, print media circulation is likely to grow faster in regional print. The industry is projected to grow at a CAGR of 9% over the next five years and reach around RS 266 bn in size by 2013.

D B Corp Ltd IPO Details:
Fresh Issue 127.25
Offer for sale 54.50
Fully Diluted Equity Capital after the Issue – 18.15 cr shares of Face Value Rs 10.
Price Band – Rs 185 – 212
Retail Issue Size – Rs 100 cr to Rs 115 cr
Date – Dec-11 to 15th

Financials:
During H1FY10, D B Corp reported an EPS of Rs 5.26 taking into account the expanded equity base. Expect company to report strong performance during H2FY10 owing to better advertising spend due to festive seasons and annualizing the same it will yield an EPS of Rs 10.52

Kindly note that PAT growth is not uniform in the past 4 FYs with the company however, it has managed to remain profitable, unlike your IndiaBulls Powerless and Cash-flow-less company.

Peer Comparison of News Paper Media Companies:
On FY10EPS expectations – Deccan Chronicle is trading at a P/E of 16, Jagran Prakashan is trading at a P/E of 21 and HT Media is trading at a P/E of 28. D B Corp / Dainik Bhaskar is offered at a P/E of 20 at the upper band, thus leaving little scope for immediate appreciation / short term gains.

Review and Recommendation: I Thank You for punishing erring and arrogant promoters like Godrej [Properties] and Jindals [JSW Energy] by not committing your hard earned money. Long / Medium Term Only investors can subscribe to D B Corp Ltd IPO as potential for gains on listing are limited [We do not follow Grey Market nor advise you to].

All Brokerage Reviews of D B Corp IPO will be Posted on the Forum to make you understand how one can be biased in their opinion [including any critic on us]. Worth the read 🙂

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