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Weak performance!

About the stock: DB Corp is India’s largest print media company that publishes five newspapers in three languages (Hindi, Gujarati and Marathi) across 12 states in India.

* Other segments of the company include radio (MY FM) with a presence in seven states and 30 cities and digital business.

Q1FY22 Results: DB Corp reported a weak sequential performance.

* Revenues at | 304.3 crore were up 45% on a depressed base but down 33% QoQ. Print & digital ad revenue was up 57% YoY (down 45% QoQ) on the base of 76% decline while subscription revenues remained resilient and were up 19.3% YoY and flattish QoQ at | 110.6 crore. Radio ad revenue registered growth of 95% YoY (de-growth of 44% QoQ)

* EBITDA was at | 1.4 crore while margins at 0.5% vs. loss in base quarter

* Reported losses were at | 22.3 crore.

What should investors do?

DB Corp’s share price has declined by ~78% over the past five years, owing to print/radio sector weakness.

* We maintain our HOLD rating as we believe that print growth recovery could be slow and higher newsprint prices could pose further risks on margins

Target Price and Valuation: We value DB Corp at | 90 i.e. 6x FY23E P/E.

Key triggers for future price performance:

* Lowering of newsprint prices which is key to recovery of margins

* Recovery in print and radio ad

* Return of government ad, which forms key for news segment.

Alternate Stock Idea: Besides DB Corp, we like PVR in the media space.

* A play on reopening and improving market share of multiplexes

* BUY with a target price of | 1610

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