dchl networth

7/30/2019 DCHL Networth

1/8

Deccan Chronicle Holdings Ltd.Reset to print growth

BUY

CMP Rs 191

1 Year Target Price Rs 275

Expected Appreciation 44%


2/8

Deccan Chronicle Holdings Ltd.

Investment PositiveInvestment Positive

Fastest growing print media company: expected to register a revenueCAGR growth of 37.1% over FY07-09

Highest EBITDA & PAT margins of 46.7% & 29.2% respectively as onFY07 backed by strong ad rates and lower operating cost & lowernewsprint cost.

Securitization of receivables & Cash rich company: Rs 7.2 bn cash &cash equivalents as on H1FY08.

Lower capex in coming years to boost profitability further

Value unlocking in subsidiaries: Odyssey India & Sieger Solutions Ltd.

At the CMP of Rs.191, DCHL trades at a P/E of 14.5x & 11.2x of its FY08and FY09 earnings. We initiate BUY recommendation with a 12 months

price target of Rs.275 (16x FY09E EPS).


3/8


IndustryIndustry

Indian entertainment & media sector is expected to report a CAGR

growth of 18% and reach Rs 1 tn in 2011 from current size of Rs 437bn in 2006.

Changing demographics & lifestyles , increasing literacy level and

potential for higher ad spends as a percentage of GDP are expected

to be the key growth drivers for Indian print sector. Indian print media is expected to grow at 13% CAGR during 2006-2011

& to reach a size of Rs 232 bn from its current size of Rs 128 bn.


4/8


Company BackgroundCompany Background

Leading English daily newspaper in Andhra Pradesh & Tamilnadu,

having a circulation of around 9,50,000 copies per day as on H107. DCHL entered Chennai region in 2005 in order to increase its spectrum &

was successful in breaking the monopoly of The Hindu in a short spanof one year.

Entered into retail with 100% acquisition of Odyssey India Ltd. in

sep2005, which is growing at a healthy pace and is expected to reach atotal space of 5.02 mn with 173 stores by the end of FY09

DCHL formed a 100% subsidiary Sieger Solutions Ltd. in 2006 with anobjective to become the sales agent for DCHL & to make a foray intonew media businesses like internet & online portals.

DCHL also holds 90% stake in Asian Age Holdings Ltd.


5/8


FinancialsFinancials

Revenues and net profit are expected to report CAGR growth of 37.1%& 61.3% respectively over FY07-09

EBITDA margins are expected to expand to 62.6% & 63.9% in FY08 &FY09 respectively backed by higher realization, lower newsprint cost &cost efficiencies.

PAT margin is expected to increase to 38.5% & 40.4% in FY08 andFY09 from the current level of 29.2% during FY07.

ROCE and ROE are expected to improve to 39% and 31% respectivelyin FY09 driven by lower capex in coming years and marginsexpansion.


6/8


Financials (Contd)Financials (Contd)

FY06 3,308.8 99.8 31.5 678.6 16.0% 11.3 12.4 3.0 64.5

FY07 5,527.8 67.1 46.7 1,613.6 22.7% 18.8 5.5 6.6 29.2

FY08E 8,454.6 52.9 62.6 3,252.2 34.8% 8.8 4.0 13.2 14.5

FY09E 10,388.9 22.9 63.9 4,197.7 39.0% 5.7 3.1 17.1 11.2

Year Net Sales

Sales%

Growth

EBITDA

margin % EPS (Rs) P/EPAT ROCE (%) EV/ EBITDA P/BV


7/8


Valuation MatrixValuation Matrix

39.034.826.922.552924.35ROCE%

31.032.522.119.5528.0521.65ROE%

11.214.522.530.325.835.0P/E x

191.4191.4209.2209.2675.1675.1CMP(as on 30/10/07)

17.113.29.36.926.1519.3EPS

40.4%38.5%14.4%12.6%16.3%14.7%PAT%

4197.73252.22187.51617.51576.651161.95PAT

63.9%62.6%22.5%20.5%26.9%24.2%EBITDA%

6638.15291.53422.92627.82601.41916.2EBITDA

10388.98454.615209.812794.29662.37905.4Revenues

FY09EFY08EFY09EFY08EFY09EFY08E

DCHLHT Media*Jagran*


8/8



BUY

Contact Persons :

Institutional Sales Retail Sales

Raj Bhandari / Rameshwar Singh Satish PasariD K Arora / Ninie Singh

Networth Stock Broking Ltd. Networth Stock Broking Ltd.

022-22633020/1/2 022-30286405

Email : [email protected] Email : [email protected]

(For full report visit : www.networthstock.com)

dchl networth

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