Elara Capital downgrades DB Corp to 'Accumulate', cuts target on Q3 miss

Elara Capital has downgraded DB Corp to ‘Accumulate’ from ‘Buy’ and cut its target price to ₹280 from ₹300 after the company’s Q3 performance was hit by a high base effect, lower government and political advertising, and operating deleverage that weighed on margins.

 

DB Corp’s print advertising revenue declined 6.9 per cent year-on-year (Y-o-Y) in Q3, largely due to the absence of state election-related advertising that had boosted revenues in the year-ago period. Government and political advertising fell 24 per cent Y-o-Y, with its contribution to overall revenue dropping sharply from 24 per cent in 9MFY25 to 17 per cent in 9MFY26. The quarter was further impacted by a shift in festival advertising, as part of the Navratri period moved into Q2, diverting festive ad spending away from Q3.

 

 

Key advertising categories also saw weakness during the quarter, analysts noted. Automobile advertising declined 12 per cent Y-o-Y, while jewellery advertising fell 7 per cent. FMCG advertising remained soft, and real estate advertising slowed following recent price hikes. However, Elara noted that excluding election-led revenues, advertising grew by around 6 per cent on a like-to-like basis, indicating underlying resilience in the business. The brokerage expects the recently announced 26 per cent government-led price hike in print advertising to support growth from Q4FY26 onwards, though it now expects overall FY26 advertising revenue growth to remain flat.

 

Circulation revenue remained flat in Q3 despite a challenging print environment. Average circulation stood steady at around 4 million copies as of December 2025, with no decline reported over the first nine months of FY26. DB Corp continues to prioritise volume over yield, keeping cover prices unchanged Y-o-Y to protect readership and reinforce its market leadership. The company is also rolling out new leadership and circulation initiatives to drive growth. In addition, government initiatives in Rajasthan and Uttar Pradesh mandating newspaper reading could provide incremental support to circulation volumes.  ALSO READ | Bharat Coking Coal Share Price LIVE Updates

 

Radio revenue declined marginally by 1.2 per cent Y-o-Y to ₹486 million in Q3. Elara expects the circulation and radio businesses to deliver revenue CAGRs of 2.0 per cent and 4.2 per cent, respectively, over FY25-28E. Meanwhile, revenue from other and digital verticals declined 16 per cent Y-o-Y during the quarter. DB Corp aims to scale its digital business by focusing on user acquisition and targeted offerings, with a medium-term goal of achieving a 10-15 per cent revenue mix and an Ebitda turnaround in the coming years.

 

Profitability was pressured by operating deleverage in the quarter. Ebitda margin contracted sharply to 22.3 per cent, down 524 basis points Y-o-Y, driven by weaker advertising revenue and a slight decline in gross margins. Print margins, however, expanded by 100 basis points to 29 per cent, supported by cost control measures, lower newsprint prices, and like-to-like growth. Radio margins remained healthy, with new stations expected to mature over the next two to three years.

 

Following the Q3 miss, Elara has cut its revenue and EPS estimates by 3.3-10 per cent over FY25-28E. While upcoming state elections in Uttar Pradesh, West Bengal, Tamil Nadu, and Assam could support government advertising volumes, the brokerage believes near-term growth visibility remains muted. 

 

DB Corp currently trades at 9.7x FY28E earnings, and Elara values the stock at 12x December 2027E earnings, supporting its revised target price.    Disclaimer: The views or investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.