D B Corp Ltd., informally known as the Dainik Bhaskar Group, is India’s largest newspaper group with 66+ editions published in 4+ languages, read by 4.4+ crore readers across 12+ states. The major newspapers published by the group are Dainik Bhaskar (Hindi daily), Divya Bhaskar (Gujarati daily), Dainik Divya Marathi (Marathi daily), Saurashtra Samachar, DB Post (English daily) and DB Star.
The company’s shares have 52 weeks price band of INR 202-69 and a total market capitalization of INR 14.68 billion which makes it a Small-Cap company. The shares have a P/E ratio of 4.89 and a dividend yield of 11.90%
Now, let’s take a deep dive into the fundamentals of the company.
The company will be evaluated on 10 categories and each would be given a rating out of 5 stars. From this, we will arrive at a combined stock rating for the company. As the ratings are based on long term past performance, they are relevant for at least 3 years in the future until FY 2022. The categories are as follows.
- Economic Moat
- Business Model and Management
- Growth Ratios
- Profitability Ratios
- Cash Flow Ratios
- Liquidity and Solvency Ratios
- Efficiency Ratios
- Valuation Ratios
- ROE (Du Pont Analysis)
- Future Prospects
(All units are INR Millions except ratios and per share data)
You can get the complete excel model used for this analysis from below:
1.Economic Moat (★ ★ ★ ★ ☆)
The company operates in the print media and broadcasting industry where market dominance comes from the workforce, distribution, customer base and reach. DB Corp is present in 11+ states in the Hindi Market, along with 2 states in Gujarati language and 1 state in the Marathi language. Dainik Bhaskar newspaper continues to be the Nation’s largest circulated multi-edition Daily, as per Press In India Report. The company also has the widest Local News Coverage in more than 2500+ cities across India across the Hindi, Gujarati and Marathi markets.
The company also has radio business with name MY FM. Under this, it consolidates a network of 30 radio stations in 7 states, across India. With its digital business arm, DB Corp offers news through their Apps, Websites & other platforms – Dainik Bhaskar, Divya Bhaskar, Divya Marathi and are among the top news products in each of those segments. This overall gives a good economic moat to the company. Therefore this category gets 4 stars in Jagran Prakashan fundamental analysis.
2. Business Model and Management (★ ★ ★ ★ ★)
D B Corp has presence in 12 states with 65 editions in 3 different languages namely Hindi, Gujarati and Marathi. Their flagship newspapers Dainik Bhaskar (in Hindi) established in 1958, Divya Bhaskar and Saurashtra Samachar (in Gujarati) and Divya Marathi (in Marathi) have a total readership of 6.62 crores as per IRS 2019 Q4. The flagship brand ‘Dainik Bhaskar’ also continues to be the No.1 newspaper of NCCS A and NCCS AB segments of Urban India with a widening lead.
The company was also awarded licenses for 17 radio stations by Ministry of Information Broadcasting in 2005-06 and additionally acquired 13 frequencies successfully in the Phase III auctions in 2015-16. This consolidated its presence in line with its strategy to be the market leader in ‘Unmetro’ geographies where the company has a significant print media footprint. This overall shows a well-diversified business model for the company.
Mr Sudhir Agarwal is the Managing Director of DB Corp Ltd. He has been on the Board of Company since inception. He has approximately 29 years of experience in the printing & publishing of newspaper business and has been part of the organization for the same number of years. Mr Pawan Agarwal is the Dy. Managing Director of the company. Overall the management has been stable but has not been able to create shareholder’s wealth. Therefore this category gets 5 stars in Jagran Prakashan fundamental analysis.
3. Growth Ratios (★ ★ ★ ★ ☆)
The revenue has shown a growth of 6.05% CAGR over the last 10 years. The operating income and net income has also grown at 2.96% and 3.43% CAGR respectively. This shows declining efficiency and profitability for the company. The working capital is also positive and has shown a linear growth. Capital expenditure has declined over the years which indicates moderate upcoming expansion in the near future. Therefore this category gets 4 stars in DB Corp fundamental analysis.
4. Profitability Ratios (★ ★ ★ ☆ ☆)
The gross margin has declined over the years even due to increasing costs and competition. The other margins along with return on assets have been decreasing slightly. Overall the company has seen reduced profitability over the years which is not likely to improve in the future. Therefore this category gets 3 stars in DB Corp fundamental analysis.
5. Cash Flow Ratios (★ ★ ☆ ☆ ☆)
The net income margin has seen a decline over the years and the Cap-Ex as a percentage of sales has declined considerably. The free cash flow as a percentage of net income has been positive and stable over the years. The free and operating cash flow growth has been declining but this is the nature of the business. Overall the company has shown a weak cash flow position. Therefore this category gets 2 stars in DB Corp fundamental analysis.
6.Liquidity and Solvency Ratios (★ ★ ★ ★ ★)
The company does not have any significnat long term debt in its capital structure therefore the financial leverage and debt to equity ratio is flat. The profitability margins have also been declining over the years but this is not a significant concern to the solvency of the company. The current and quick ratio has increased over the years and is way above the minimum threshold which shows a good liquidity position. Therefore this category gets 5 stars in DB Corp fundamental analysis.
7. Efficiency Ratios (★ ★ ★ ★ ☆)
The table in the excel model is colour formatted so the worst performance over the period is highlighted in red colour and the best performance is highlighted by green.
Overall the business efficiency has seen some changes over the years. The payables period has increased from 58 to 114 days along with the receivables days from 70 days to 93 days. The cash conversion cycle has also seen a significant decline over the recent years and this is a good indicator for the cashflow and working capital of the company. Therefore this category gets 4 stars in DB Corp fundamental analysis.
8. Valuation Ratios (★ ★ ★ ☆ ☆)
The shares have been trading at lower multiples due to the expected market size shrinkage as the new generation moves away from traditional mediums and regional entertainment. The company is adapting to the new ways in the industry but any successful increase in valuation multiples is not expected in the near future. Therefore this category gets 3 stars in DB Corp fundamental analysis.
9. ROE 5 way Du Pont Analysis (★ ★ ★ ☆ ☆)
The leverage ratio along with asset turnover has almost remained flat over the years. The interest burden ratio has remained at near 100% due to low interest-bearing debt in the capital structure of the company. The operating margin has seen a slight decline and the tax efficiency has been stable. Overall the Return on Equity has declined a little due to lower profitability. Therefore this category gets 3 stars in DB Corp fundamental analysis.
10. Future Prospects (★ ★ ★ ☆ ☆)
Some insights for the coming years from the analysis, management discussions and con calls are as follows.
- The company has reported recovery from the weak performance of June 20 but it still has a long way to go before scaling the heights of sales and profitability touched during September 2019.
- The weak demand and the income shock among consumers amidst the Covid-19 related lockdown may result in a delayed recovery for the company.
- There can be a strong movement towards another form of news sources like papers and FM due to the declining quality of journalism of the TV news channels. The company is well placed to take the advantage of the situation
Overall the company has seen declining financial conditions and have not seen any strong indicators of recovery. The shares have already hit bottom and any good growth prospect is not on the horizon. Therefore this category gets 3 stars in DB Corp fundamental analysis.
The overall rating is arrived by taking the average of the above 10 parameter ratings and rounded up if it is above 0.5 and rounded down if it is below 0.5.
Overall Fundamental Rating:
DB CORP SHARES (3.6/5)
Therefore it is a 4-star stock
★ ★ ★ ★ ☆
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|DB Corp Shares|
|Economic Moat||★ ★ ★ ★ ☆|
|Business & Management||★ ★ ★ ★ ★|
|Growth Ratios||★ ★ ★ ★ ☆|
|Profitability Ratios||★ ★ ★ ☆ ☆|
|Cash Flow Ratios||★ ★ ☆ ☆ ☆|
|Liquidity & Solvency||★ ★ ★ ★ ★|
|Efficiency Ratios||★ ★ ★ ★ ☆|
|Valuation Ratios||★ ★ ★ ☆ ☆|
|ROE (Du Pont Analysis)||★ ★ ★ ☆ ☆|
|Future Prospects||★ ★ ★ ☆ ☆|
|Overall Fundamental Rating||★ ★ ★ ★ ☆|
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