Dear Investor,

Company: DECCAN CHRONICLE HOLDINGS LIMITED (DCHL):

The improving trend in the economic data of many developed countries and institutional buying interest have aided the markets to stay in the range of 15,000-16,200 over the past couple of months, in spite of some distinct negative developments, such as a weak monsoon and edgy Chinese markets.

Domestically, the leading indicators (automobile sales, cement production, freight traffic etc) continue to churn strong growth rates. Moreover, the spurt in industrial production and the reversal in the GDP growth trends reflect a much wider improving trend. The corporate performance during Q1FY2010 surprised the street on the upside after a gap of four quarters.   All these positives in the domestic growth story are attracting foreign inflows . It seems that the market would do well to consolidate within a narrow range or even pull back a bit before a likely year-end rally in the last quarter of 2009.

DECCAN CHRONICLE HOLDINGS LIMITED (DCHL):

CMP:	Rs.113
Book Value	Rs.49
EPS	Rs.6.38

Deccan Chronicle is the largest circulated English daily in South India . 
Print is the traditional segment for the company for over 71 years and continues to be the major revenue contributor for the company with about 88% of the total topline and ~97% of the total bottomline coming from it.

Last year the company launched its English daily in Bengaluru taking its daily circulation to 13.3 million copies, the highest among English dailies in the Southern region. The company also owns the winning team of IPL 2009 edition, Deccan Chargers. Deccan Chronicle also has a presence in retail with 46 books and eyewear stores across the country covering a total built up area of more than 2.6 lakh sq ft.

Deccan Chronicle   Holdings (DCHL) reported modest 12% yoy growth to Rs216.6cr   (Rs193.5cr in Q1FY09) in Q1FY10 ended June 2009 aided by higher Elections   spend. Net Profit for the   quarter registered a 26.3% yoy in Q1FY10 despite modest Top-line growth and flattish Margins, largely aided   by a 44% decline in Interest costs. EPS improved qoq from Rs. 0.33 in Q4FY09 to Rs.3.14 in Q1FY10.

Newsprint   costs remained flat (as a % of Net Sales), but increased 11.5% yoy in   absolute terms owing to higher Circulation. Full benefits of   falling newsprint prices (have declined from peak of US $950 to US $600)   has still not kicked in due to higher priced inventory.

Going ahead, DCHL is expected to benefit significantly from the decline in newsprint costs as full benefits of lower prices and Rupee appreciation kick in. One may enter at current levels and exit on ~30-35% upside with a price target of about Rs.145-150 over a period of 6-12 months.

 

Thanks & Regards,

PMS Department