4QFY2012 Result Update | Media May 10, 2012

DB Corp
Performance Highlights
(` cr) Revenue EBITDA OPM (%) PAT
Source: Company, Angel Research

BUY
CMP Target Price
4QFY11 317 80 25.1 45 % yoy 13.6 (4.8) (407)bp 0.9 3QFY12 396 102 25.7 56 % qoq (8.8) (25.6) (472)bp (18.7)

`202 `269
12 Months

4QFY12 361 76 21.0 45

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Media 3,931 0.4 258/170 9,796 10 16,420 4,966 DBCL.BO DBCL@IN

DB Corp. (DBCL) reported weak performance on the earnings front, primarily due to sharp fall in operating margins despite moderate performance on the top-line front. Operating margins fell rather steeply during the quarter on account of pre-operative expenses for the new edition launched in Sholapur, operating losses on recent editions launched in Maharashtra and Jharkhand and impact of rupee depreciation on newsprint costs. Consequently, companys earning remained flat on a yoy basis. We maintain our Buy recommendation on the stock. Key highlights for the quarter: For 4QFY2012, the companys top line grew by 13.6% yoy to `361cr aided by moderate 5.4% yoy growth in ad revenue to `263cr and healthy 16.2% yoy growth in circulation revenues on account of new launches and selective increase in cover prices. Operating margin fell by 407bp yoy (472bp qoq) on account of pre-operative expense on account of Sholapur launch and operating losses on the new editions launched in Maharashtra and Jharkhand. Radio business turned PAT positive and registered EBIDTA of `5.2cr during the year. The company reported flat yoy growth in adjusted profit to `45cr due to aggressive launches during the year. Outlook and valuation: At the CMP, DBCL is trading at 12.6x FY2014E consolidated EPS of `16.1. We maintain our Buy view on the stock with a revised target price of `269, based on 17x FY2014E EPS, benchmarking it to our print media sector valuations (which are at ~15% premium to our sensex target valuation multiple). Downside risks to our estimates include 1) any further rise in newsprint prices, 2) competition becoming fierce and 3) higher-than-expected losses/increase in the breakeven period of the new launches.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 86.4 4.7 4.9 4.0

Abs. (%) Sensex DBCL

3m

1yr

3yr 38.2 -

(7.5) (11.3) (1.0) (16.8)

Key financials (Consolidated)

Y/E March (` cr) Net sales % chg Net profit (Adj.) % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2011 1,265 20.4 259 41.5 31.9 14.1 14.3 4.5 35.1 33.7 3.1 9.4

FY2012E 1,463 15.7 202 (22.0) 24.2 11.0 18.4 3.9 22.6 25.9 2.7 10.5

FY2013E 1,652 12.9 247 22.5 25.7 13.5 15.0 3.3 23.8 28.3 2.2 8.4

FY2014E 1,863 12.7 295 19.2 26.3 16.1 12.6 2.8 24.2 30.1 1.8 7.0
Amit Patil 022-39357800 Ext: 6503 amit.patil@angelbroking.com

Please refer to important disclosures at the end of this report

DB Corp | 4QFY2012 Result Update

Exhibit 1: Quarterly Performance

Y/E March (` cr) Net Sales Consumption of RM (% of Sales) Operating Expense (% of Sales) Staff Costs (% of Sales) SG&A Expense (% of Sales) Total Expenditure Operating Profit OPM (%) Interest Depreciation Other Income PBT (excl. Ext Items) Ext Income/(Expense) PBT (incl. Ext Items) (% of Sales) Provision for Taxation (% of PBT) Recurring PAT PATM Minority Interest Reported PAT Equity shares (cr) FDEPS (`) 4QFY12 4QFY11 361 130 36.1 94 26.0 61 16.9 285 76 21.0 (2) 13 3 68 68 18.9 23 33.6 45 13 0 45 18.3 2.5 317 104 32.8 84 26.6 49 15.5 238 80 25.1 3 (155.9) 11 4 69 69 21.6 24 34.3 45 14 (0) (240.7) 45 18.3 2.5 0.9 0.9 0.2 (2.9) 17.0 (5.4) (0.9) 19.8 (4.8) 24.0 11.0 % yoy 3QFY12 % qoq FY2012 FY2011 % chg 13.6 24.9 396 135 34.1 96 24.2 63 15.9 294 102 25.7 8 (123.7) 13 2 83 83 20.9 27 32.8 56 14 0 56 18.3 3.0 (18.7) (27.5) (18.7) (18.7) (15.7) (3.1) 38.8 (17.7) (3.0) (25.6) (3.3) (2.0) (8.8) (3.6) 1,464 508 34.7 358 24.4 243 16.6 1,109 355 24.3 16 51 12 300 300 20.5 98 32.7 202 14 (0) 202 18.3 11.0 1,265 383 30.3 294 23.2 185 14.6 862 31.9 15 43 1.5 16.8 28.7 404 (12.0) 31.6 21.8 15.7 32.5

14 (18.7) 359 (16.4) 359 28.4 100 (1.8) 27.8 259 (22.0) 20 (0) (39.8) 259 (22.0) 18.3 14.1 (22.0)

Source: Company, Angel Research

May 10, 2012

DB Corp | 4QFY2012 Result Update

Moderate top-line growth at 13.6% yoy

DBCL reported moderate top-line growth of 13.6% yoy to `361cr in the current quarter, driven by 5.4% yoy growth in ad revenue and 16% yoy growth in circulation revenue primarily aided by increased circulation due to new launches in Jharkhand and Maharashtra. During the quarter, DBCL maintained its strong foothold in Madhya Pradesh, Chandigarh, Punjab, Rajasthan, Haryana and Chhattisgarh. Among the other segments, the companys radio business reported steady growth of 9.4% yoy in revenues to `15cr.

Exhibit 2: Top-line continues double digit growth

450 400 350 300 (` cr) 250 200 150 100 50 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 257 299 301 348 361 354 354 396 361 25.0 20.0 15.0 10.0 5.0 (%) Top line (LHS) Source: Company, Angel Research yoy growth (RHS)

Advertising Revenue aided by retail advertising

Advertising revenue registered 5.4% yoy growth and stood at `263cr for the quarter mainly on account of increase in local advertising but decline in national advertising pulled down the advertising revenues. Maharashtra and Jharkhand have started getting local advertisements but it will take some time before they get national advertisements since readership data for these states is yet to come in.

Circulation Revenue continue double digit growth

Circulation revenue continued to grow by double-digits. It stood at `62cr, a 16% rise yoy basis due to DBCLs continued strong foothold in Madhya Pradesh, Chandigarh, Punjab, Rajasthan, Haryana and Chhattisgarh along with recent launches in Maharashtra and Jharkhand.

May 10, 2012

DB Corp | 4QFY2012 Result Update

Exhibit 3: Advertising Revenue

350 300 250 (` cr) 200 150 100 50 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 191 236 236 269 283 250 274 287 263 35.0 30.0 25.0

Exhibit 4: New launches inch up circulation revenue

64 62 60 58 (` cr) (%) 56 54 52 50 48 46 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 53 54 53 54 53 57 60 63 62 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 (2.0)

15.0 10.0 5.0 -

Advertising revenue (LHS)

yoy growth (RHS)

Circulation revenue (LHS)

yoy growth (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

OPM under pressure yoy on high start-up costs, newsprint prices and forex losses
At the operating level, DBCL faced margin pressure (margin contracted by 407bp yoy) on account of increased circulation volumes due to new edition launches and increased staff cost by 142bp yoy/97bp qoq due to higher number of employees because of new editions. Radio business reported EBIDTA of `5.2cr for the quarter. The company also incurred pre-operative expense on Sholapur launch and higher newsprint prices due to rupee depreciation.

Exhibit 5: OPMs contracts by 407bp yoy

40.0 35.0 30.0 25.0

Exhibit 6: Adjusted PAT ends up flat

90 80 70 60 (` cr) 50 40 30 20 10 35 45 40 72 64 78 61 56 45 (%) 15.0 10.0 5.0 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 30.0 25.0 20.0

(%)

20.0 15.0 10.0 5.0 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

Gross margins

OPM

Recurring PAT (LHS)

NPM (RHS)

Source: Company, Angel Research

Source: Company, Angel Research

Adjusted PAT flat due to aggressive launches

In terms of Profits, DBCL posted flat Adjusted PAT. It was primarily due to losses because of new edition launches and pre-operative expenses. The company reported a 23% qoq decline in its Adjusted PAT. Radio business achieved PAT of `2.5 cr which acted as a small boost in Q4 profits. For 4QFY2012, Adjusted PAT stood at `45cr.

May 10, 2012

(%)

20.0

DB Corp | 4QFY2012 Result Update

Investment rationale
Well-planned aggression in business edges DBCL over peers: DBCL, though a dominant No. 2 player in the overall regional print space (trailing behind Jagran Prakashan), enjoys a premium valuation to its peers Jagran Prakashan (flagship daily Dainik Jagran) and Hindustan Media Ventures (flagship daily Hindustan). We attribute the reason for this trend to DBCLs business model (which is primarily driven by ad revenue) and well thought-out launches in new markets. We believe the companys continuous endeavor to diversify its print business coupled with aggressive expansion into new markets (urban towns beyond metros) backed by exhaustive market research and focus on achieving leadership is the key differentiating factor compared to its peers. The company has been successful in executing its expansion plans with launches in Maharashtra and Jharkhand.

Outlook and valuation

At the CMP, DBCL is trading at 12.6x FY2014E consolidated EPS of `16.1. We maintain our Buy view on the stock with a revised target price of `269, based on 17x FY2014E EPS, benchmarking it to our print media sector valuations (which are at ~15% premium to our sensex target valuation multiple). Downside risks to our estimates include 1) any further rise in newsprint prices, 2) competition becoming fierce and 3) higher-than-expected losses/increase in the breakeven period of the new launches.

Exhibit 7: Change in estimates

Old estimates (` cr) Revenue OPM (%) EPS (`) FY2013E 1,656 26 14 FY2014E 1,869 26.8 16.1 New estimates FY2013E 1,652 25.7 13.5 FY2014E 1,863 26.3 16.1 % chg FY2013E (30bp) (3.7) FY2014E (50bp) -

Source: Company, Angel Research

May 10, 2012

DB Corp | 4QFY20 Result U p 012 Update

Exhibit 8: Peer valuation t

Compa any HT Me edia Jagran n DB Co orp Rec co Buy Buy Buy Mcap (` cr) 2785 2963 3931 CMP (`) 119 94 202 TP (`) 170 137 269 Upsi ide (%) ( 43 46 33 P/E (x) FY13E 13.9 12.6 15.0 FY14E 11.5 10.6 12.6 EV/Sales (x) E FY1 13E 1.5 2.1 2.2 FY14E 1.3 1.9 1.9 ROE(%) FY13E 14.7 34.6 24.1 FY Y14E 15.4 1 37.7 3 24.4 2 CAG # GR Sales 12.7 10.5 16.6 PAT 21.1 21.2 20.8

Source: Company, Ange Research Note denotes CA el e:# AGR for FY2012-14

Exhibit 9: Angel v consensu estimates t vs. us s

Top-lin (` cr) ne Angel estimates Consensus Diff (% %)
Source: Company, Ange Research el

FY2013E 1,652 1,643 0.6

FY2014 4E 1,86 63 1,84 45 1. .0

EPS (`) E Angel estimates A s Consensus C Diff (%) D

FY201 13E 13.5 13.5 0.2) (0

FY2 2014E 16.1 16.0 0.9

Exhibit 10: Return of DB Corp vs. Sensex t n p. x

140% 120% 100% 80% 60% 40% 20% 0% May-11 Nov-11 Apr-11 Jul-11 Oct-11 O 11 Dec 11 Dec-11 Mar-12 Mar-12 Aug-11 Aug-11 Sep-11 Oct-11 Dec-11 Feb-12 Apr-12 Apr 11 Apr-11 Jan-12 Jun-11 Jun-11 Sensex DB Co orp

Exhib 11: Onebit -year forward P/E band d

350 3 300 3 Share Price (`) 250 2 200 2 150 100 50 0 Nov-10 Nov-11 Sep-10 Sep-11 Mar-10 Mar-11 May-10 May-11 Mar-12 Jan-10 Jan-11 Jan-12 Jul-10 Jul 11 Jul-11 12x 15x 18x 1 21x x

Source: Company, Ange Research el

Source Company, An e: ngel Research

May 10 2012 0,

DB Corp | 4QFY2012 Result Update

Profit and loss Statement (Consolidated)

Y/E March (` cr) Gross sales Less: Excise duty Net Sales Total operating income % chg Total Expenditure Cost of Materials SG&A Expenses Personnel Others EBITDA % chg (% of Net Sales) Depreciation & Amortisation EBIT % chg (% of Net Sales) Interest & other Charges Other Income (% of PBT) Share in profit of Associates Recurring PBT % chg Prior Period & Extra Exp/(Inc.) PBT (reported) Tax (% of PBT) PAT (reported) Add: Share of earn of assoc Less: Minority interest (MI) PAT after MI (reported) ADJ. PAT % chg (% of Net Sales) Basic EPS (`) Fully Diluted EPS (`) % chg FY2009 FY2010 FY2011 FY2012E FY2013E FY2014E 949 949 949 11.6 814 407 266 133 7 135 (20.8) 14.3 29 106 (28.5) 11.2 40 12 15.3 78 (41.1) 0 78 42 54.1 36 (12) 48 48 (37.1) 5.0 2.8 2.6 (37.3) 1,051 1,051 1,051 10.7 720 328 249 132 12 331 144.2 31.5 38 293 175.2 27.9 25 12 4.4 281 258.9 0 280 106 37.6 175 (8) 183 183 283.5 17.4 10.1 10.0 283.9 1,265 1,265 1,265 20.4 862 384 284 185 10 403 22.0 31.9 43 360 22.9 28.4 15 14 4.0 359 27.8 359 100 27.9 259 (0.3) 259 259 41.6 20.5 14.1 14.1 41.7 1,463 1,463 1,463 15.7 1,109 508 329 243 29 355 (12.0) 24.2 51 304 (15.5) 20.8 16 12 3.8 300 (16.4) 300 98 32.7 202 (0) 202 202 (22.0) 13.8 11.0 11.0 (22.0) 1,652 1,652 1,652 12.9 1,227 478 444 289 16 425 19.8 25.7 59 365 20.2 22.1 18 21 5.8 369 23.0 369 122 33.0 247 (0) 247 247 22.5 15.0 13.5 13.5 22.4 1,863 1,863 1,863 12.7 1,372 538 501 317 16 491 15.5 26.3 59 432 18.2 23.2 19 26 5.9 440 19.2 440 145 33.0 295 295 295 19.1 15.8 16.1 16.1 19.2

May 10, 2012

DB Corp | 4QFY2012 Result Update

Balance Sheet (Consolidated)

Y/E March (` cr) SOURCES OF FUNDS Equity Share Capital Share Cap. suspense account Reserves& Surplus Shareholders Funds Minority Interest Total Loans Deferred Tax Liability Total Liabilities APPLICATION OF FUNDS Net FA (includes CWIP) Investments Current Assets Cash Loans & Advances Other Current liabilities Net Current Assets Mis. Exp. not written off Total Assets 647 24 399 45 105 248 219 180 22 872 647 21 561 193 103 266 207 354 13 1,035 709 16 621 173 133 315 255 366 10 1,101 793 46 696 188 139 368 296 400 9 1,248 801 46 803 291 139 373 323 479 11 1,338 834 46 994 413 156 424 348 646 11 1,537 169 89 258 12 563 39 872 182 1 466 649 4 321 61 1,035 183 646 829 0 201 70 1,101 183 776 959 2 213 75 1,248 183 921 1,104 0 164 69 1,338 183 1,130 1,313 0 154 69 1,537 FY2009 FY2010 FY2011 FY2012E FY2013E FY2014E

Cash flow
Y/E March (` cr) Profit before tax Depreciation Change in Working Cap. Interest / Dividend (Net) Direct taxes paid Others Cash Flow from Operations (Inc.)/ Dec. in Fixed Assets (Inc.)/ Dec. in Investments Cash Flow from Investing Issue of Equity Inc./(Dec.) in loans Dividend Paid (Incl. Tax) Interest / Dividend (Net) Cash Flow from Financing Inc./(Dec.) in Cash Opening Cash balances Closing Cash balances FY2009 78 29 13 30 36 (16) 98 (295) (18) (313) (1) 219 10 29 180 (36) 81 45 FY2010E FY2011 FY2012E F Y2013E FY2014E 281 38 (14) 25 101 2 229 (38) 3 (34) 251 (242) 42 13 (48) 147 45 193 359 43 (37) 15 100 19 299 (105) 4 (101) 2 (120) 85 15 (217) (19) 193 173 300 51 (46) 16 98 9 232 (84) (30) (114) (12) 75 16 (103) 15 173 188 369 59 (32) 18 122 31 323 (67) (67) (49) 86 18 (132) 103 188 291 440 59 (46) 19 145 1 327 (91) (91) (10) 86 19 (114) 122 291 413

May 10, 2012

DB Corp | 4QFY2012 Result Update

Key Ratios
Y/E March Valuation Ratio (x) P/E (on FDEPS) P/CEPS P/BV Dividend yield (%) EV/Sales EV/EBITDA EV / Total Assets Per Share Data (`) EPS (Basic) EPS (fully diluted) Cash EPS DPS Book Value Dupont Analysis EBIT margin Tax retention ratio Asset turnover (x) ROIC (Post-tax) Cost of Debt (Post Tax) Leverage (x) Operating ROE Returns (%) ROCE Angel ROIC (Pre-tax) ROE Turnover ratios (x) Asset Turnover (Gross Block) Inventory / Sales (days) Receivables (days) Payables (days) Working capital cycle (ex-cash) (days) Solvency ratios (x) Net debt to equity Net debt to EBITDA Interest Coverage (EBIT / Interest) 1.9 3.7 2.6 0.2 0.3 11.9 0.1 0.1 24.0 (0.0) (0.0) 19.0 (0.1) (0.3) 20.2 (0.2) (0.6) 23.4 2.3 27 68 70 52 1.6 25 67 59 56 1.6 21 69 48 58 1.6 24 65 57 49 1.7 26 63 56 48 1.8 26 63 54 52 14.2 12.9 20.0 30.7 34.8 40.3 33.7 37.4 35.1 25.9 29.4 22.6 28.7 34.9 24.1 30.0 38.4 24.4 11.2 0.5 1.4 7.1 0.1 1.5 18.1 27.9 0.6 1.3 21.9 0.0 1.0 44.6 29.5 0.7 1.4 30.0 0.0 0.1 33.4 22.2 0.7 1.5 21.8 0.1 0.0 22.3 22.1 0.7 1.6 23.7 0.1 (0.1) 22.0 23.2 0.7 1.7 26.7 0.1 (0.2) 22.1 2.8 2.6 4.5 0.5 15.3 10.1 10.0 12.2 2.0 35.7 14.1 14.1 16.5 4.0 45.2 11.0 11.0 14.2 3.5 52.3 13.5 13.5 16.7 4.0 60.3 16.1 16.1 19.3 4.0 71.7 78.0 44.7 13.3 0.2 4.5 31.3 4.9 20.3 16.7 5.7 1.0 3.7 11.6 3.7 14.3 12.3 4.5 2.0 3.1 9.4 3.4 18.4 14.3 3.9 1.7 2.7 10.5 3.0 15.0 12.1 3.4 2.0 2.2 8.4 2.7 12.6 10.5 2.8 2.0 1.9 7.0 2.2 FY2009 FY2010 FY2011 FY2012E FY2013E FY2014E

May 10, 2012

DB Corp | 4QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

DB Corp. No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

May 10, 2012

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