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Strong growth on washout base…

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

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

Q2FY22 Results: DB Corp reported strong performance on a depressed base

* Revenues at | 446.8 crore, were up ~29% on depressed base (Q2FY21 revenues were down ~35%). Print & digital ad revenue was up ~32% YoY on base of 38% decline while subscription revenues remained resilient and were up 12.1% YoY driven by cover price hike. Radio ad revenue registered growth of 58% YoY (base had ~42% decline)

* EBITDA was at | 100.9 crore, up ~42% with margins at 22.6%, up 207 bps

* Reported PAT was at | 53.8 crore was up ~89% YoY

What should investors do? DB Corp’s share price has declined by ~74% over the past five years, owing to print/radio sector weakness.

* We maintain our HOLD rating as growth trajectory of print post normalisation is does not have the visibility while higher newsprint prices risks on margins remain

Target Price and Valuation: We value DB Corp at | 100 i.e. 6x FY23E P/E

Key triggers for future price performance:

* Newsprint prices trajectory, which is key to margins trajectory

* Recovery in print and radio ad

* Return of government ad, which forms key for news segme

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

* A play on reopening and improving market share of multiplexes

* BUY with a target price of | 495

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