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Deccan Chronicle: An overview - Views on News from Equitymaster
 
 
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  • Apr 3, 2007

    Deccan Chronicle: An overview

    About the company: Deccan Chronicle Holdings Ltd was initially formed as a partnership firm in 1938 and went public in 2003. Deccan Chronicle, the flagship newspaper of the Company is the leading English daily in Hyderabad and Chennai. Besides Deccan Chronicle, the Company also publishes Andhra Bhoomi in Telugu. The circulation and readership is growing at a steady pace. In the 'All India English Category', Deccan Chronicle's readership has, however, slipped from top 10 positions over the years.

    Product Analysis: Alongwith Deccan Chronicle, the company publishes several supplements like Hyderabad Chronicle, Lifestyle, Vizag Chronicle, Teen Chronicle, School Chronicle, DC Estate which are targeted at specific readership segments. It publishes seven editions of the Deccan Chronicle in Andhra Pradesh. Andhra Bhoomi, a Telugu weekly caters to the youth, children, women and men containing various serials on subjects like romance, mythological, teenage love story, crime, and all of these are run as serials. Despite competition from leading English newspapers, Deccan Chronicle has been able to maintain its leadership position in Hyderabad. As per its IPO prospectus, Deccan Chronicle boasted of one of the lowest costs per thousand ("CPT") reader's English newspaper. The company does not wish to foray into fast growing broadcasting business and wants to focus on its core competency.

    Financial Performance: Between FY03 and FY06, the topline has grown at a CAGR of 147%. Keeping operating and financial costs under control, the company has managed to increase bottomline at 165% CAGR. Operating profit margins and net profit margins have been maintained at impressive levels and currently stood at 32% and 19% respectively in FY06. The company has debt to equity ratio of 1.74 and has an interest coverage ratio of 6.6, thus leaving it in good position to cover its financial expenses.

    For the nine months ended December 2006, the company recorded a 68% YoY growth in topline and 142% YoY growth in bottomline

    (Rs mn) FY03 FY04 FY05 FY06 CAGR (%)
    Net Sales 219.20 1169.4 1656.5 3308.80 147.1%
    Operating Profit 64.6 293.5 595.3 1067 154.7%
    OPM (%) 29.46% 25.09% 35.94% 32.24%  
    Interest 5.2 28.5 81.5 193.5  
    PBT 56.6 280.2 498.9 963.1  
    Tax 20.1 100.9 172.3 283.0  
    PAT 36.5 179.3 326.5 680.1 165.1%
    NPM (%) 16.46% 14.27% 18.81% 19.26%  

    Future outlook: The company has incurred huge capital expenditure and has set up modern printing facility. Backed by its capacity and ability, Deccan's plans of going global will give a new dimension to its growth. The change in the demographics of the Tier-2 cities like Visakhapatnam, Vijayawada, Trichy, will also help propel growth. To maintain pace with the changing tastes and the preferences of readers, the company has altered the presentation of content from time to time. High GDP growth rate and literacy rate are the factors that have added 7 million newspaper readers (NRS 06) over the last year and shall ensure growth of the newspaper industry and the company as well. The company is also creating synergies through strategic acquisitions.

     

     

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