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Deccan Chronicle Holding Q1 net up 18 pc

17-August-2010
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Deccan Chronicle Holding Q1 net up 18 pc

Deccan Chronicle Holdings Ltd (DCHL) has reported an 18 per cent growth in net profit and 7 per cent increase in revenues for Q1 of FY10-11. Revenues of the company in Q1FY11 stood at Rs 2,318 million as compared to Rs 2,166 million in first quarter last fiscal, while PAT stood at Rs 912 million from Rs 77 million in the corresponding quarter last year.

The increase is revenue was aided by advertisement growth which, according to the management, was completely value driven as rate hike (~ 20 per cent taken in Q1 FY10) got absorbed and the gap between effective rate and card rate narrowed. Operating margins of the company expanded due to the benefits from low newsprint prices.

“The company continued to benefit from benign newsprint prices (DCHL’s average newsprint cost stands at $600-615 per tonne) with the raw material cost, this quarter, showing a decline of 713bp yoy/ 667bp qoq to Rs74.9 crore (Rs 85.5 crore/ Rs 74.7 crore). However, the company’s staff cost and other expenditure increased by 136bp yoy and 296bp yoy (low base effect) to Rs 18.2 crore and Rs 18.8 crore, respectively, limiting further margin expansion,” noted Anand Shah, Senior Research Analyst - FMCG & Media, Angel Securities.

For FY11, DCHL’s IPL team Deccan Charges is likely to avail central revenues of Rs 500 million and around Rs 360 million from the franchise/ ticket sales. It may be noted that the team reported a loss of Rs 300 million in FY10 as DCHL did not receive the claims for the loss of revenue due to the change in venue of IPL 2 to South Africa. Shah expected an upside in the revenues from next IPL on account of increased number of matches post the addition of two new IPL teams (Pune and Kochi).

“We believe DCHL might renew its interest to dilute stake in its IPL team. We remain optimistic on IPL’s money-making prospects and reiterate that any news flow on the stake sale front will trigger a re-rating in the DCHL stock. With the addition of two new teams, we expect: 1) Media telecast rights with Sony to be revised upwards (higher central revenues for IPL teams), and 2) Number of matches to increase from 59 to 94 (higher gate/ sponsorship revenues),” Shah noted in his results update for DCHL.

DCHL registered a total average daily circulation of 1.39 million during January-June 2010 following the launch of its Bangalore edition earlier this year.

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