D B Corp Ltd / Dainik - Brokerake Views

[chetan]

ENAM is a Book Running Lead Manager to the issue and has opted to remain Ethical by not recommending anything to the IPO. Good Job.

HSBC says,

At the upper end of the price band of Rs 212, the issue is available at PE of 20x FY10E on fully diluted equity capital of Rs 1815.1 mn. This is comparable to valuations commanded by peer group (Ref: Table1). We believe DBC’s strong business model, steady expansion strategy combined with improving economic outlook should translate into strong bottom-line growth for the company over next 2-3 years.

Though we don’t expect substantial listing gains over short term but we remain positive on the growth prospects of the company over medium term. Hence we recommend Subscribe to DBC IPO issue from a medium term perspective.

Anand Rathi says, [Research Team headed by Ex-Citi fellows]

The valuations of the stock on ‘09 earnings basis looks expensive but considering high growth and increased bottom line due to repayment of debt from IPO proceeds, will make it attractive. Better outlook for advertisement revenues is positive for company. SUBSCRIBE.

More will follow, stay tuned... You can post your questions comments or opinion of other brokerages.

[chetan]

Angel Broking Said,

DBCL posted consolidated revenues of Rs949cr and Rs517cr, with Earnings of Rs47.7cr and Rs95.5cr, in FY2009 and 1HFY2010, respectively, driven by a strong Margin expansion (14.3% in FY2009 and 32.9% in 1HFY2010).

At the upper price band of Rs212, DBCL is trading at 18.1x FY2011E EPS of Rs11.7 which we believe is reasonable, given its higher Earnings growth, strong position in the faster growing print markets and proven execution skills. We have valued the stock at 20x FY2011E EPS (peers trading between ~18-22x P/E) and have arrived at a fair value of Rs234, indicating a 10% upside to the upper price band. Hence, we recommend a Subscribe view to the issue. Key risks to our recommendation include: 1) Slowdown in GDP growth, 2) volatility in newsprint prices, 3) Rupee depreciation, and 4) Increase in competitive intensity.

KR Choksey said,

At higher band of Rs 212, company is trading at forward post IPO multiple of 19.3x FY10 EPS of Rs 11.0 and P/BV of 4.7 FY10 BV of Rs 45. However, Jagran Prakashan nearest listed peers is trading forward multiple of 20x and P/BV of 5.6. We believe that IPO is fairly valued; expect single digit gains on listing and advise investors to SUBSCRIBE the IPO only for long term investment.

[apharkya]

There were mixed opinions from experts and brokerages on the issue. Investment Advisor, SP Tulsian said it looked attractive at lower end of price band. But added that the IPO did not leave anything on the table for the prospective investors at Rs 212.

However, Deven Choksey of KR Choksey Securities said he would probably apply into this company and accumulate more if the market gave an opportunity on the downside.

http://www.moneycontrol.com/news/ipo..._430416-0.html


Peer Comon 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.


http://india.dalalstreet.biz/ipo/200...dium-term.html


Valuation

DB Corp has set a price band of Rs 185 to Rs 212 per equity share of Rs 10 face value. At the lower band of Rs 185 per share, the P/E is 17.6 times the annualised consolidated EPS of Rs 10.5 for the half-year ended September 2010 and 70.4 times the consolidated EPS of Rs 2.6 for the fiscal ended March 2009 (FY 2009). At the upper price band of Rs 212 per share, the P/E will be 20.1 times the annualised EPS for the half-year ended September 2010 and 80.7 time the EPS for FY 2009. Considering the past track record, the first half performance looks to be exceptional. The first half operating profit margin (OPM) of 32.9% is way above the OPM of 12.7% to 20.1% achieved in the last four years. The high OPM is mainly due to the sharp fall in newsprint costs due to exceptional fall in newsprint prices. As newsprint prices have already gone up and this kind of margin is not sustainable. Hence, it is not proper to annualise the first half EPS and arrive at P/E. Comparable player Jagran Prakashan is currently trading at P/E of 39 times FY 2009 EPS as against which DB Corp is offering its shares at P/E of 70.4-80.7 times.

http://www.capitalmarket.com/

[chetan]

Unicon Wealth Research Said,

The price band for this issue is INR 185 - 212. At the upper end of the price band viz. Rs 212, the stock is valued at 20.1x its annualised FY10 EPS (on post dilution basis). As compared to its peers (Jagran Prakashan, HT Media and Deccan Chronicle valued at 18.5x, 28x & 10.6x their annualised FY10 EPS), the valuations appear to be fair & hence recommend investors to subscribe even at the higher levels in the price band of INR 185 – 212 for long term value unlocking.

[rskumar62]

hai it will be helpful if u can indicate the share structure for the
retail investor viz., no of shares and amount payable considering the discount
thanks

[komal]

hai it will be helpful if u can indicate the share structure for the
retail investor viz., no of shares and amount payable considering the discount
thanks

They don't have any discount for retail investors in this issue. All Retail Investors must invest at CUT-OFF and pay Higher Price Band Amount * No of Shares Applied. All details on retail Size and Financial are always posted on the Blog. Only Views of other Brokerage Houses will be posted here.

[komal]

HDFC Sec says,

All the media companies have done well in H1FY10 as compared to FY09. This is the case even for DBCL. Fall in raw material costs (primarily due to the softening of newsprint prices in both the domestic and international newsprint markets as well as reduction in raw material consumed due to reduction in print orders and modifications in paginations), fall in operating expenses (due to decrease in the prices of ink and plates and other inputs as well as due to reduction in print orders and modified paginations) and a rise in Advertisement income (due to growth in ad-spends led by election, IPL 20-20 and ICC 20-20 World Cup 2009) all led to a better H1FY10 for DBCL. Whether these triggers will continue going forward is a moot issue.

The issue is priced at par with Jagran Prakashan on P/E basis and cheaper than HT Media. On a P/BV basis the IPO seems expensive compared to peers.
The issue is priced fairly and leaves little on the table for short-term investors. Medium/Long Term investors could expect appreciation if the reasons for improvement in H1FY10 results continue going forward.