10th December 2009

DB Corp, (Brand names – Dainik Bhaskar, Divya Bhaskar, Saurashtra Samachar and MY FM) , would tap the capital market next week to raise about Rs 450 crore through an initial public offer.

Promotor said that out of the 10% stake dilution, Cliffrose Investments Ltd, which holds 7.14% in the company, would offload 3% equity and the rest would be fresh issue.

The Company would use the funds for entering new markets and for repaying some of the debts with existing loans (48-55% of issue size).

DB Corp is planning to expand to new markets in the next two years and would focus on Tier II and Tier III cities.

The company publishes 7 newspapers, 48 newspaper editions and 128 sub-editions in three languages (Hindi, Gujarati and English) across 11 states.

The Director said the company is looking at anchor investors, but did not specify the names. The company had filed the draft red herring prospectus with the SEBI in August.

 The shares of DBCL are available at a P/E of 17.6x and 20.1x on the lower and upper band of the issue price respectively of its FY10E EPS of Rs 10.5. This is one on the lower side in the peer groups, leaving enough room for the investors.

Considering the strong brand goodwill enjoyed by the company’s flagship newspapers, a long-term investment in issue may fetch good returns for investors.Investors with high risk profile can invest in IPO for the immediate listing gains.