Could This Media Stock Could Be A Multi-bagger?
The Indian indices have have corrected around 7 to 8 per cent from peak levels, as economic slowdown gathers momentum. There are many stocks that have fallen to attractive levels.
DB Corp is among the top media companies in the country with a dominant presence in print, digital and radio.
DB Corp owns Dainik Bhaskar, Divya Bhaskar, Divya Marathi and Saurashta Samachar. It ranks among the top Urban India read newspaper group, apart from the financial dailies.
As per the company, according to the last ABC circulation reported data, it continues to maintain No 1 Circulated newspaper of India as well as leadership in Madhya Pradesh-Chhattisgarh, Rajasthan, Gujarat, Haryana, Chandigarh, Punjab( 4 urban Cities), besides maintaining close no 2 formidable position in other markets.
Digital business too driving growth
The company’s digital business too has been driving stellar growth in the last few years. In fact, the business has seen 25 per cent, compounded annual growth in the last 5 years. Revenues in FY 2014, which were placed at Rs 16.1 crores were around Rs 48.7 crores in FY 2019.
As readers move away from print to digital, this is expected to drive revenues of the company in the years to come.
Radio business to continue to see growth
DB Corp owns 94.3 MY FM, which continues to be Number 1 in the key markets of Madhya Pradesh, Chhattisgarh and Rajasthan and largest network in Chandigarh, Punjab and Haryana.
The radio business like the digital business has seen growth. The last 5-years has seen a compounded annual growth rate of 14 per cent.
Revenues have shot up from Rs 80 crores in FY 2014 to Rs 154.9 crores in FY 2019. The EBIDTA margins in the radio business too have gone gradually higher.
Low debt exposure
DB Corp has low debt exposure, while the Return on Equity and Return on Networth has been rather healthy.
In FY 2018, the dividend payout ratio and the buybacks were to the tune of a staggering 103 per cent, while in FY 2019, it was 77 per cent.
The first quarter of FY 2019-20 saw net profits dip by 3.9 per cent to 9.37 crores from Rs 9.76 crores in the corresponding period of last year, largely on account of an economic slowdown. The shares have fallen from levels of near Rs 230, one year ago, to the current levels of Rs 237. The stock is trading at just under 10 times one year forward earnings, making it a good buy.
Having said that, it’s also important to remember that profit for the next few quarters could be under pressure, on account of the general slowdown in the economy. However, in the more long-term this stock looks to be a good buy at the current levels.
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