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Growth Prospects

27- Dec- 09 | Business India

Last fortnight DB Corp, which publishes Dainik Bhaskar, entered the capital market with an initial public offering of 1.81 crore shares at a price band of Rs 185-212. The issue constitutes about 10 per cent of fully-diluted post-issue capital of the company; about 7 per cent is a fresh offering, while the remaining 3 per cent is an open offer by Cliffrose Investment, an affiliate of private equity firm Warburg Pincus. Warburg had bought at a 7.14 per cent stake in the company in 2006 for the consideration of Rs 150 crore.

At the higher end of the price band, with earnings per share of Rs4.06, if DB Corp is listed at Rs212 (with Rs2 discount for the retail investor), it will mean a price-to-earnings ratio (P/E) of 51.72. That’s higher than peers HT Media, Deccan Chronicle and Jagran Prakashan, which trade on the stock market at P/E multiples of 29.1, 17.5 and 27.5, respectively. These are high P/E multiples since the Sensex 30 trade at a P/E of 20, though media is seen as a high growth sector.

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