X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
DB Corp: Cost control aids profits - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

MidCapSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

DB Corp: Cost control aids profits
Oct 22, 2012

DB Corp announced the second quarter results of financial year 2012-2013 (2QFY13). The company has reported a 7.8% YoY a 20.6% YoY increase in topline and net profits respectively. Here is our analysis of the results.

Performance summary
  • Top line increased by 7.8% YoY during the quarter. For the half year, there was 7.4% YoY growth in revenues.
  • Advertising revenues registered marginal growth of 3% YoY due to a slowing economy while subscriptions grew by a healthy 16.5% YoY during the same period.
  • DB Corp was able to control its operating expenditure which went up by only 4% YoY.
  • Operating profits thus increased by 23.8% YoY during the quarter. The same witnessed a fall of 3.4% YoY for the 6 month period ended September 2012.Operating margins expanded by nearly 3% during the September quarter.
  • Net profits of the company were up by 20.6% YoY during the quarter while those were down by 9.1% YoY during the half year. Net profit margins expanded by 1.4% during the quarter

Financial performance snapshot
(Rs m) 2QFY12 2QFY13 Change 1HFY12 1HFY13 Change
Net sales 3,509 3,784 7.8% 7,034 7,553 7.4%
Expenditure 2,814 2,923 3.9% 5,348 5,924 10.8%
Operating profit (EBDITA) 695 861 23.8% 1,686 1,629 -3.4%
EBDITA margin (%) 19.8% 22.7% 2.9% 24.0% 21.6% -2.4%
Other income 49 38 -23.6% 99 83 -15.6%
Interest 20 19 -7.3% 48 40 -17.0%
Depreciation & amortisation 124 143 15.9% 241 279 15.6%
Profit before tax 600 736 22.7% 1,496 1,394 -6.8%
Profit before tax margin (%) 17.1% 19.5%   21.3% 18.5%  
Tax 197 251 26.9% 482 473 -1.9%
Profit after tax before minority 403 486 20.6% 1,014 922 -9.1%
Share of minority - -   - -  
Profit after tax 403 486 20.6% 1,014 922 -9.1%
Net profit margin (%) 11.5% 12.8% 1.4% 14.4% 12.2%  
No. of shares (m)           183.34
Diluted earnings per share (Rs)*           10.50
P/E (x)           20.47
(*trailing twelve month earnings)

What has driven performance in 2QFY13?
  • Top line increased by 7.8% YoY during the quarter. For the half year, there was 7.4% YoY growth in revenues.

  • Advertising revenues registered marginal growth of 3% YoY due to a slowing economy. The company saw improvement across advertising categories of lifestyle, auto, real estate and FMCG. However, education was flat and healthcare witnessed slight fall as compared to the same quarter last year.

  • Subscriptions grew by a healthy 16.5% YoY during the same period. Growth in subscriptions was largely due to newer launches and hike in cover prices in some markets including Madhya Pradesh and Chhattisgarh.

  • DB Corp's effort to reduce operating expenditure has started paying off. The company was able to control its operating expenditure which went up by only 4% YoY during the quarter. Apart from the company's efficiency, lower newsprint prices were also responsible for the drop in operating expenditure.

    Cost break-up
    (% of sales) 2QFY12 2QFY13 Change 1HFY12 1HFY13 Change
    Raw materials consumed 1,245 1,330 6.9% 2,428 2,662 9.6%
    % sales 35.5% 35.2%   34.5% 35.2%  
    Staff cost 613 697 13.6% 1,188 1,379 16.1%
    % sales 17.5% 18.4%   16.9% 18.3%  
    Other expenses 956 896 -6.3% 1,731 1,883 8.8%
    % sales 27.2% 23.7%   24.6% 24.9%  
    Total expenditure 2,814 2,923   5,348 5,924  

  • Operating profits thus increased by 23.8% YoY during the quarter. The same witnessed a fall of 3.4% YoY for the 6 month period ended September 2012.Operating margins expanded by nearly 3% during the September quarter and contracted by 2.4% during the half year.

  • Net profits of the company were up by 20.6% YoY during the quarter while those were down by 9.1% YoY during the half year. Net profit margins expanded by 1.4% during the quarter

What to expect?
DB Corp has started focusing on consolidating its existing businesses rather than launching into newer markets and exploring additional language publications. This has helped the company in containing its operating expenditure over the last two quarters. The print media company was also able to increase the cover prices in specific markets resulting in higher circulation revenues. However, looking at the economic scenario which determines DB Corp's advertising revenues, there seems to be a lot of uncertainty with regards the growth in revenues. At the current price of Rs 215, the stock is trading at a multiple of 20 times its trailing twelve month earnings. The stock is currently down by 15% since our last recommendation on the stock which was a Sell. We maintain our Sell view on the stock.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

D. B. CORP SHARE PRICE


Sep 25, 2018 (Close)

TRACK D. B. CORP

  • Track your investment in D. B. CORP with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

D. B. CORP 8-QTR ANALYSIS

COMPARE D. B. CORP WITH

MARKET STATS