Angel Broking neutral on Deccan Chronicle

Angel Broking has maintained neutral rating on Deccan Chronicle in its July 02, 2008 report. "We remain negative on DCHL owing to concerns regards its poor quality of growth (funding working capital requirements through Balance Sheet), scalability issues (too much dependence on single region), poor corporate governance (management not delivering on promises made – buyback, un-locking in subsidiaries) and unsustainable Margins (60% OPM as against peer average of 20%). While management has addressed some of these concerns – reduced debtor days to 90 days by securitisation with ICICI for a 12% discount, and initiated talks with NYT to unlock value in Sieger, we still await more clarity on the same and would peruse the Balance Sheet before taking a final call on the stock. At Rs106, the stock is trading at dirt-cheap valuations of 7.2x FY2010E standalone Earnings, not factoring in upsides from the Sieger Solutions deal with NYT and IPL’s good performance. Hence, a pullback from current levels cannot be ruled out. However, we believe DCHL’s core business of Print Media is in for tough times owing to stiffer competition from players like Times of India (TOI) and unfavourable raw material scenario (rising newsprint prices coupled with depreciating Rupee). Hence, we maintain our Neutral view on the stock" says Angel Broking report.