DB Corp Ltd
NSE:DBCORP
DB Corp Ltd
NSE:DBCORP
Price:
295 INR
3.29%
Market Closed
Updated:
Jun 7, 2024
Section:
Earnings Call Analysis
Summary
Q2-2024
Q2-2024
D.B. Corp Reports Robust H1 FY2024 Growth
D.B. Corp has demonstrated strong financial performance in the first half of FY2024, with consolidated advertising revenue up by 15% to INR 8,247 million. Total revenue increased by 12.2%, and EBITDA soared by 77% alongside a remarkable 124% surge in PAT. Q2 FY2024 also saw advertising revenue grow by 13% YoY, EBITDA up by 71.5%, and PAT by 106%. Newsprint costs declined by 16%, aiding margin expansion. The radio segment delivered industry-leading EBITDA margins, which are sustainable due to government initiatives. The digital business boasts over 13 million monthly active users, with the #1 Hindi and Gujarati news apps, while radio business revenue and EBITDA grew by 6% and 2% YoY, respectively.
You don't have any saved screeners yet
Ladies and gentlemen, good evening, and welcome to the D.B. Corp Limited Q2 and H1 FY 2024 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
We have with us today the senior management team of D.B. Corp Limited, Mr. Pawan Agarwal, Deputy Managing Director; Mr. Girish Agarwal, Non-Executive Director; Mr. Lalit Jain, Chief Financial Officer; Mr. Mushtaq Ali, Senior Vice President, F&A; and Mr. Prasoon Kumar Pandey, Head, Investor and Media Relations, who will represent D.B. Corp Limited on the call.
The management will be sharing the key operating and financial highlights for the quarter ended September 30, 2023, followed by a question-and-answer session. Please note that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to the company's financial performance have already been e-mailed to you and are available on the website of the stock exchanges and the company's Investors section. Trust you have been able to go through the same.
I now hand the conference over to Mr. Pawan Agarwal. Thank you, and over to you, sir.
Thank you very much, everyone, and a very good evening to everyone, and thank you for joining the Q2 FY 2024 D.B. Corp Earnings Conference Call. We will begin the call by highlighting the key financial parameters, performance for the quarter ended September 30, 2023, followed by key operational updates.
We are very happy to report that Dainik Bhaskar continues its track record of delivering strong operating results for 8 consecutive quarters, helped by strong growth of advertisement revenue, softening of newsprint prices, our circulation strategy and well-thought-out cost control and optimization measures. These all have helped in expanding our margins.
For first half of 2024, our console advertising revenue grew by 15% to INR 8,247 million, against INR 7,179 million. Total revenue grew by 12.2% to INR 11,755 million against INR 10,480 million. EBITDA grew by 77% to INR 3,035 million against INR 1,715 million. PAT grew by 124% to INR 1,790 million against INR 798 million.
In quarter 2 FY '24, consolidated advertising revenue registered a growth of 13% Y-o-Y to INR 4,301 million against INR 3,811 million, EBITDA grew by 71.5% Y-o-Y to INR 1,676 million against INR 977 million. EBITDA margin expanded by 1,000 basis points to 28% against 18%. Our average cost for newsprint has reduced from a high of INR 63,500 per metric ton in Q2 FY 2023 to INR 56,500 per metric ton in Q1 FY 2024 and now further down to INR 51,500 per metric ton in Q2 FY 2024, resulting in newsprint cost reduction of 16% Y-o-Y. And we expect newsprint purchase price to remain softened in the coming quarters.
Our PAT grew by 106% Y-o-Y to INR 1,003 million against INR 488 million. Radio segment has delivered industry's best EBITDA margins, which are sustainable. With government-led radio business initiative allowing news and increase of DAVP rate, Radio business is expected to accelerate its top line and bottom line.
Overall, it has been a very encouraging quarter, and we remain committed to delivering high-quality content and engaging experiences through our print publications, ensuring that our readers continue to find value in Dainik Bhaskar.
Moving on to our digital business. Our monthly active users are more than 13 million in August 2023, and Dainik Bhaskar is a digital leader with the #1 Hindi and Gujarati news apps.
Coming to the Radio business, revenue grew 6% Y-o-Y at INR 359 million versus INR 338 million, while EBITDA grew by 2% Y-o-Y to INR 108 million versus INR 106 million. Radio segment has delivered industry's best EBITDA margin, which are sustainable with government-led radio business initiative for allowing news and increase our DAVP rate. MY FM has been relentless in its efforts to connect with the audience and announced a listener engagement through groundbreaking content creation. We will continue to fuel these efforts to help our omnichannel presence grow.
With this, I would now request Mr. Girish Agarwal to update us on the operations. Over to you, Girish ji.
Thank you, Pawan, and good evening, everybody, and thank you for joining us on this call. We are pleased to conclude the first half of fiscal 2024, continuing our streak of bettering our performance. The Print Media segment has, over the past few quarters, cemented its place as the most trusted source of news. This positioning has helped create a virtuous cycle as advertisers continue to come to print and increase their sales and thereby increase their ad spends with us.
Traditional advertisers such as education, real estate, government, jewelry, health, they all continue to use print as their preferred medium. The auto sector is also seeing the increasing ad spends, and we see a lot of headroom for future growth here. As we've been highlighting, new-age digital sectors continue to see value in print media. And in this quarter also, digital app-based companies and start-up continued their print preference. As the leader in the print segment, Dainik Bhaskar has been outperforming the sector over the past 2 years, and our team -- and our teams continue to work hard to extend their performance.
And I would like to take a minute more on our teams. I must say all the 9,000 odd people working with us, they've been really, really doing their best, and which is very evident from our leadership, from our appreciation of the content, from our advertising, production, circulation, IT, finance, every possible department. So I just want to do a special mention of the great work done by our team.
And lastly, on the cost front. We have been benefiting from the downward trend of newsprint prices. We are also rolling out certain initiatives that we believe will help our operating efficiencies furthermore in the long run.
And this is all from our side to start with. And me and my colleagues would now be very happy to respond to your queries. Thank you very much.
[Operator Instructions] We have a first question from the line of Riya Mehta from Aequitas Investments.
Congratulation on good set of numbers. Sir, my first question is in regards with the advertisement. So I'm aware that coming forward in November, December, we have 3 major state elections coming. So what is the model code of conduct for state election? And why, when are they not allowed to advertise? And similarly for center elections, from when will that model code of conduct start?
The modeling code of conduct in all the 3 states of Madhya Pradesh, Chhattisgarh, Rajasthan already is in operation right now. And the reason why government does it -- the election commission does it was simple so that your -- no government should be able to influence any voter by offering them any kind of advantage or the promises or luring them away with the advertising. So I think that's the prime reason.
However, said and done, I think whatever government of these 3 states did in last many years, especially last 1 year, offering the benefits to the consumer to the millions of people, I think that increased the disposable income in the market and that is very much evident in our results also because more people have extra money, they go and spend out, advertisers feel happy about it, they sell their product via advertisement.
Right, right. But just from these 3 states, how much is the impact on the advertisement with the absence of these major 3 states?
Sorry, I couldn't get your question right.
With the absence of government advertisement from these 3 states for a period of, say, 1 month or so, what would be the kind of impact? And what duration is not allowed?
Is it around -- I think it's around 40 days, 30 days overall. I won't know the impact right now to give it to you the exact number. But the impact is not very substantial because government itself is around 10%, 14% of the total category for us.
The state government or central government?
Yes, altogether, state and the central.
Okay. And sir, center when the model code of conduct will start and for how long?
I think same 40, 45 days before the election date.
Okay. Coming forward to auto numbers, I read in your presentation that we have seen good auto numbers and you are very bullish on the growth going forward. So [indiscernible] demand might have started. So how is it so far for auto advertisement?
So I tell you, auto, as you remember, because last 2, 3 years, they had a major issue in the chip and the availability of vehicles so they were not advertising. Now they have started advertising. So we are seeing a good, good growth coming from there. Especially, one thing you'll have to remember, in the quarter 2 last year was a few days of Navratra. This year, the Navratra is not in the Q2, it's in Q3. So because of that, there is some shift in advertising here and there, but it doesn't make much of difference.
Got it. And in terms of -- so what are the kind of EVs right now in advertisement? Do you see any scope of EVs growing? And the second question would be what is the ad-to-edit ratio currently?
So you may be aware that in the newsprint -- newspaper business, the ad-to-edit ratio generally varies from 70, 30, 67, 33 but this is all under control for simple reason because we can increase number of pages if then the ads are more unlike radio or television, so ad-to-edit ratio is not a big concern for us. And the way the market looks like, things are looking good also going forward.
In terms of EVs, do we have any scope of increasing?
If you don't mind my saying you are on the fifth question already, so please come back in the queue so that we can pick the others.
[Operator Instructions] We have our next question from the line of Sampath Nayak from Tiger Assets.
Congratulations on good set of numbers. So my question is on margins sustaining in the future. So we saw really good EBITDA margins this quarter. So are these margins sustainable? And what is the margin outlook for coming 2 quarters?
So sir, we are right now at 28% margin in this quarter. And as I mentioned to you earlier also that the entire team, 8,000, 10,000 people are working towards it and that we should be able to sustain this kind of margin, maybe a couple of percentage up and down.
Okay. Coming to the newsprint prices. So how are they shaping up? Can we further see drop in the newsprint prices?
So frankly speaking, our newsprint prices, if you see the numbers, has already come down considerably overall from -- if you see the last year, the same quarter, about INR 63,500, which has come down to some INR 51,500 now. In Q3, I don't expect much of the newsprint prices coming down because of Diwali season, we are using much better newsprint quality for the advertisement also. So I don't see the -- because the newsprint mix will change in this quarter. We'll use more of imported and high-quality one. But going forward, I believe another 5%, 6%, 4% advantage should happen with us.
Great, sir. So coming to the digital side, so what is the contribution of digital revenue to our total revenue? And how is it to shape for like 2 to 3 years? And are we looking to do any acquisitions possibly?
So let me, first of all, start with your acquisition question. As of now, company has no plans to do any acquisition business because we already are on a particular path and we are committed to that, and we are working towards it, and we are seeing good results coming out of that. And as far the revenue is concerned, right now, the size is too small. And maybe in next couple of quarters, the numbers should come up more, and we should be able to give you some more information on that.
Great. Sir, final question on the election front. So obviously, like general elections coming in 6 to 8 months. So we will witness good demand. But how about like post elections, the demand, will we be able to sustain this demand?
I think this question you should be asking to the government of India.
We have our next question from the line of Himanshu Upadhyay from O3 PMS.
Congratulations on good set of numbers. I had a question on the 4.2% subscription growth effect. Can you give some idea of how much is value and volume? And is this...
Largely value because if you see our cover price has been increasing, circulation has been steady at 42 lakh copies roughly, and cover price has increased. So I think that is the impact on that.
And we have seen the price of paper [indiscernible] and the profitability improve. Would our focus be to again increase the circulation copies in newer geographies? Or do you think that is secondary currently? How are you thinking strategically here?
So we have no plan to get into a new geography. The market where we are present at 12 states, I think we have enough scope in these markets only to further grow more copies, which we are working on towards it. And we also don't want to increase the cover price going forward because we are already almost at average cover price of INR 4.86. I think that's a decent size. We don't want to take it more as a pinch to the pocket of the readers. So our focus would be to maintain this cover price and grow the circulation in these markets itself.
And one last question. Sir, radio ad revenue are -- sell more, they are still growing at a lower value terms versus the newsprint. Any specific reason and how far are we in the radio from what the potential is?
Radio growth is largely driven by innovations, activations, non-airtime business improvement as well as our yield improvement. And we are working very closely with our advertisers to drive better value to them, better programming. And that's the way for radio's growth. It has to grow on innovation. As you rightly said, it has no scope for adding more inventory. And for the last several quarters, we've been growing basically from our innovations and improvement in our -- a little bit of improvement in our yields as well.
Sir, my question was basically both newsprint and radio are much more local, I would say. Content of paper is pretty high. So should not radio also going at faster pace, like [indiscernible] of the growth in.
So what happened in a radio, there is a limitation of the inventory because they can't increase number of pages. For example, if you see my number of pages, last year, in the same quarter, I was at 20 pages. While this quarter, I'm at almost 21.7 pages, so I have increased almost 8%, 9% number of pages for accommodating more advertising. Radio can't do that because they have a limited 60 minutes of 60 minutes and they can only run 20, 25 minutes of advertising in that. They can't take it 35 minutes. So they have to grow through the yield and innovation.
So are the occupancy full for the radio is whatever we could get?
All the prime time for all the radio channels are already done. They are all running full.
We have our next question from the line of Pritesh Chheda from Lucy Investment.
Sir, I have two questions. One, in your press release, you mentioned this INR 51,500 newsprint price. So this price has flowed in, in your quarter 2 numbers completely or there is a lead lag there?
No, no, sir. This is the quarter 2 price, quarter 2 price. Quarter 3 would be almost similar. And quarter 4, maybe we'll see further going down.
Okay. So as of now for the full quarter, you had this particular price flowing in?
Yes, sir.
Okay. My second question is, sir, it's been a couple of quarters for which we are having a fairly strong double-digit ad growth. What kind of outlook do you see over the next 2 to 4 quarters would be helpful?
Frankly speaking, we believe that this kind of percentage growth should continue because it may take a little bit of a dent because of the code of conduct because government advertising has come to a standstill for these 40 days. And then again, the general election may happen. But otherwise, other categories are doing decent. Real estate, education, they all are doing decent.
So idea is that the market keeps to be so buoyant, and we need to ensure that advertiser comes to us. It's not a given situation where we simply say, relax, team can start relaxing and saying that 10%, 12% growth is given. Nothing is given. We need to really fight for every percentage.
Okay. And any swing in market shares do you think would have, have happened?
For Sure, because you will appreciate this kind of growth has not come in the market. So market is not growing at 10%, 12%. Market maybe growing at single digit. So this suddenly involves a lot of swing in terms of market share, in terms of value and everything in our favor.
Okay. And sir, my last question is in your key advertising sectors or customer sectors, if you could give the top 3 in the contribution to the ad pie?
So sir, if I look at the H1, which will give you a more robust picture, government has grown much bigger because last year, if you remember, we were not getting the government advertising. So this year, we are getting it. So that percentage growth is much higher. But in terms of contribution, they are at -- yes, they're still higher because of that thing.
14%.
Response is -- yes, slightly higher, actually. Response is one category, which has grown recently. Education has grown again in almost 10%, Real estate is slightly flat from last 1.5 to 2 months because of the election. So not much of things happening there. Automobile has grown in a single digit. Health care has grown in double digit. FMCG is one category which has slowed down, which is we see a decline of 10% in the FMCG category. And jewelry is again 5% growth. So yes, this is various segments which are some -- some of them are growing, some of them are not growing that much.
So barring government, all of these categories would be 5%, 7% contribution to the ad revenue?
No, no, no. So our response category is double digit. Education is in double digit. And real estate is also touching the double-digit.
We have our next question from the line of [Sakshee Chhabra] from Svan Investments.
Congratulations on a great set of numbers. Sir, I wanted to understand that this ad rate increase that has happened on the base rate for the Radio segment. So what is the kind of impact that we can on our ad revenues because of this?
So our radio revenue -- government revenue is a high single-digit in our total revenues. And as of now, we haven't received exact rates, but we should get anything [ about ] 43% improvement in our overall rates. So if the volume holds the same, we should -- that revenue should increase by about 40%, 45%.
No. But your covering contribution you said is high single-digit, but this 43%...
High single...
No, no, 9%, 10%. So for example, if 9% is the overall government advertising and government decides to increase it by 40%, so there will be a 4.5%, 4% growth coming because of the government have in provided the DB volume same.
Correct. So 4% to 5% is the kind of revenue growth that you will see because of this?
Possibly, if they keep the volume same because if tomorrow they start tracking the volume, then it may come down.
And we are yet to receive the final date from the government for us. Once we get that, we'll be in a better position to estimate. It could be even higher.
And in terms of the nongovernment side, is there -- do you see that any increase in yields that you can take on this radio ad revenue side?
We are doing our best with the mix of innovations and our activations and our non-airtime spots as well as delivering better products to improve their yields. And we are hopeful that in the coming quarters, we should be able to start taking some yield improvements as well.
Sure. Okay. And I wanted to check that is there any update that we have on the revenue share that we were supposed to receive from Google.
The matter is under CCI jurisdiction. They are working on it. We have not heard anything as of now.
Okay. But any number that you can mention as to what would be the kind of contribution?
It'll not be prudent to prejudge CCI decision outcome.
All right. Okay. And can you give any numbers on the digital paid subscribers?
Yes, things are -- we are doing certain experiments. But if you remember, we requested and you all kindly consented that we will not disclose the digital number for a few quarters more so that we are able to come back and do some work on that.
Okay. But on the quality perspective, you mentioned about how the traction is, is it as per your expectations, better than expectation?
Sorry, on what?
No specific number, but can you just give some sort of outlook as to has it been better than expectations, as per expectations? Or how has it been panning out so far? Or how has...
It's a mixed basket.
Okay. How are people then reacting to the fact that you are -- there is going to be more of paid? I mean you've made changes, right? A lot of content is not available for 3 years, which is...
As I mentioned to you, it's a mixed basket. It will be too premature to comment on that.
We have our next question from the line of Rishikesh Oza from RoboCapital.
Sir, my question is in respect to the radio. Sir, what is the listenership number for the radio channel for the quarter? And also, wanted to get some broad idea on how the listenership number is actually calculated?
So as you are aware that in our markets, the listenership activity, which used to be done earlier has not been conducted. So we are -- our metric in our market is the response that we deliver to our advertisers. We measure that very diligently. We ask advertisers to check the number of people who walk in and how many of them remember the ad or remember the radio station. And that's from the day 1 for the last 15, 16 years, that's been the metric that we've been using with advertisers, which is more authenticated and not depending on any listenership data, which is third party.
Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.
Thank you, everyone, for your participation and time on this earnings call today. I hope we have responded to your queries, and we will always be happy to be of assistance through our Investor Relations department, headed by Mr. Prasoon Kumar Pandey for all your further queries. Thank you, and have a great evening.
Thank you. On behalf of D.B. Corp Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.