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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to Music Broadcast Q3 FY '24 Earnings Conference Call.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Ashit Kukian, CEO of Music Broadcast Limited. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and thank you for joining the Q3 FY '24 earnings call for Music Broadcast Limited. Joining me on the call is Mr. Rajiv Shah from our IR team; and our Investor Relations partner, Strategic Growth Advisors. I'm pleased to share the financial outcomes of our company for Q3 and the 9 months FY '24 with you. These accomplishments are the result of dedication and hard work of our team and demonstrate our unwavering commitment to promoting growth and innovation in ever-changing fields of media and entertainment.
For Q3 FY '24 and 9-month period FY '24, revenue grew by 11% and 13%, respectively. EBITDA during the same period grew by 5% and 25%, respectively. During the quarter, we made certain investments in employees in the digital side of the business. Digital business has the potential to open new revenue streams, enhance operational efficiencies and enhance customer experiences in the long run.
For the quarter, our digital business has experienced a substantial 27% growth compared to the previous year, demonstrating our agility in meeting shifting preferences and audience demand. We believe our radio digital strategy has been successful, and a substantial portion of our digital revenue will translate into operating profits going forward.
On the growth in the advertising sector, notable advancements have come to the forefront. Notably, the jewelry industry saw a substantial growth of 44% year-on-year increase in the advertising spending. The pharmaceutical market grew by 15%, and the auto industry exhibited an impressive 26% growth compared to the previous year. The finance industry witnessed a growth of 9%. The government public service ad sector showed commandable growth at 22%. And real estate advertising increased by 17% year-on-year. These sector-specific insights empower us to adjust our strategies and customize our services to meet the evolving needs of our clients.
At Radio City, we have executed a range of strategies to expand our positioning in the radio industry. In the third quarter, we successfully retained the market share at 19% in our target markets. Additionally, our comprehensive omnichannel framework allows us to maximize the extensive reach of our network, ensuring the delivery of optimal value to our clients.
Radio City continues to attract a significant share of both our existing and new clients, with 40% of our clients on the radio platform choosing us for their advertising needs. Among new clients, 33% have selected Radio City as their advertising platform of choice, further establishing our position as a preferred choice in the advertising landscape.
We take great pride in our commitment to diversify revenue streams, with 31% of our revenue stemming from various sources such as properties, proactive pitches, digital ventures, sponsorships and special events. This diversified strategy plans the pivotal role in strengthening our overall financial resilience and stability. Furthermore, we have achieved the second largest client count share in the industry, reaching 40% in the 9 months FY '24 period. This stands as a testament to the strength of our client relationships and the value we consistently deliver.
In summary, our experience at Radio City is defined by progress, innovation and flexibility. We are dedicated to delivering top-notch content, broadening our market positioning and staying ahead in the dynamic landscape of the media and entertainment industry.
Now coming to the financial performance highlights for Q3 and 9-month period FY '24. For 9 months FY '24, revenue grew by 13% year-on-year to INR 165.9 crores. EBITDA grew by 25% year-on-year to INR 40.10 crores while EBITDA margin expanded by 235 bps to 24.2%. Adjusted profit after tax, which is adjusted for the interest on NCRPS to the tune of INR 5.8 crores, stood at INR 9.7 crores.
For Q3 FY '24, revenue grew by 11% year-on-year to INR 60.4 crores. EBITDA grew by 5% year-on-year to INR 15.3 crores while EBITDA margin stood at 25.3%. Adjusted profit after tax, which is adjusted for interest on NCRPS to the tune of INR 1.9 crores, stood at INR 4.5 crores.
In conclusion, I want to highlight that the way people in India consume media is changing. With lots of content choices, the radio industry can now use digital platform alongside traditional radio. At Radio City, we are staying updated with the latest trends by investing in digital technology to match what our audience likes.
With this, I would request the moderator to open up the floor for Q&A. Thank you.
[Operator Instructions] The first question is from the line of [ Sanika ] from [ Apparis Capital ].
Am I audible?
Your line could be just slightly louder, [ Sanika ].
Yes, yes. Am I audible?
Now you're audible, yes.
Yes. So I want to know what are going to be the main growth drivers for the company? And in like next 2, 3 years, what is the vision for your company, like where do we see your company?
So if you look at the way we have positioned our businesses, we have kind of extended ourselves beyond radio as you would have -- if you're closely watching us. So we have got various arenas through which we kind of generate our revenues. One is, of course, the pure-play radio, traditional radio that we have got. The other most important thing which we have been talking about, which we believe is a lot for the future and even currently is now significantly contributing, is the digital part of the business, which is making our presence felt in the digital world through our presence in social media platforms, through our own channels and through third-party platforms.
The other is, very clearly, because we are in the business where we need and engage brands to kind of experience consumers, we are also doing a lot of ongoing live events, which also is something which is contributing to now -- significantly now that it's almost 2 years post COVID and we are able to effectively a lot of events.
So for us, it is radio. It's ongoing events. It's digital and also building ourselves on content on third-party platform, which gives us the reach and distribution which brands look out for.
The next question is from the line of [ Payal Shah ] from Brilliant Securities.
I have 2 questions. Firstly, like what are the reasons that our EBITDA margin growth is slower than revenue growth in -- for this quarter?
Yes. So if you remember, in the last investor call also, we have said that in the middle of this year, we'll be investing in our digital play for the next 2 to 3 years. And largely, when we talk about that, it is investing on people and certain technology, which will allow us to kind of expand our horizons.
So when you look at it, the way I would want you to look at it is look at it for the 9-month period, but either way, I have to answer your question on Q3. Our investment in Q3 has been much more enhanced. The margin of growth between the top line and the EBITDA are shown differentially.
Okay. So just a follow-up on that, like what kind of EBITDA margins should we expect going forward?
See, we are already delivering 25% approximate margin. I would believe that very soon, we should be seeing the erstwhile 30% margin that we were operating before COVID, and that's the first point that we are talking about.
Beyond 30%, a lot will depend on the whole digital play that we are talking about. And we believe digital -- and I'm telling it time and again for us, digital will be the EBITDA booster. So going forward, our short-term goal is to reach the 30% margin and then, of course, try and build it up from that as our digital business increases.
[Operator Instructions] The next question is from the line of [ Pad Varsani ] from [ JK Advisors ].
Sir, I wanted to understand, have you seen any material increase in revenue due to this [ MTI ] event? And do we expect the Kannada event to contribute to a good advertisement revenue going forward?
So 2 reasons. Immediate because it has just happened in the current quarter, yes, there has been a marginal increase because we've been able to create properties using the whole fact that the world is looking at [indiscernible], and [indiscernible] is looking at a consumer increase in terms of the footfall that the city was getting. So that's my first answer. The second answer is purely the advertising is also very strongly related with the sentiment that the country carries and if the mood and the sentiment is celebratory. We believe that when the mood is celebratory, consumption increases. And if consumption increases, advertising increases.
So are we -- I look at it positively saying that if I hear the way it has started and if it continues to go the way it is, it will surely see -- we will surely a swell in advertising because of the mood being celebratory.
All right, sir. That is great, sir. Sir, my second question was, how are you seeing on government advertisement spending as the elections are coming?
Yes. So yes, if you see already the government spending has increased by about 22% at the industry level. We eventually increased much more than that. So I personally believe that 35% to 40% growth is what one should look at from now till the time the election -- I mean, the dates are announced.
The next question is from the line of [ Ravi Shah ] from Bright Securities.
I just had a question. What were the advertising rates during the quarter? And by when do we expect to see increase in advertisement rate?
See, the advertising rate has been more or less the same from a Q2 to Q3 because largely, the business has been increased from a volume perspective.
The next part, one that I want to say that our current level of utilization has reached about 85%. So now if it continues between now and -- it's always a story of once your saturation of inventory happens, that's [ when ] rates get increase because beyond a point, you can't take more -- beyond the -- in the number of minutes that you want to take.
So it still come on the way -- to give you an answer in a different form, our growth has largely come from volumes and not come so much so far away. So the positive side to look at it is that there is still room for us to get our revenues increased through the rate route if you have to look at it from a future perspective.
[Operator Instructions] The next question is from the line of [ Kerwin Shah ], an individual investor.
Congratulations on the good set of numbers. Sir, I just wanted to understand, since we are investing in digital, I would appreciate if you can elaborate more on the kind of technology which we are spending into and what kind of team we are building. Just to understand how this business will transform from radio to digital and what kind of revenue potential we can see coming up from digital in next 3 years or so. So just to understand on the overall picture.
Yes. So the play that we are talking about largely stems from the consumer behavior we are talking. So we -- when we look at media today, and the consumer, apart from listening to traditional mediums like radio, is also consuming a lot of content on social media platforms, on FB, on YouTube and so on and so forth. The brands see that the consumers are engaging with content.
So our investment is right now happening in -- from 2 levels. One is people who are well versed with the understanding of the behavior of the digital world in terms of how does the Gen Z, the millennials engage with various mediums, and also with the latest channels that they kind of engage in terms of content consumption. So that means understanding how the Insta world works out, how FB works or how YouTube works.
So we are looking at 2 levels. One is creation of content. Second is distribution of content on social media platform, on other third-party platform, which will allow brands who come to us to reach out to a larger set of audiences. So there is an increased reach that the brand gets, and [ rather ], we have a larger set of value because we are delivering far more beyond radio. Yes, that's the first answer that I'll give. The second answer is that in terms of investment, we are doing multiple level of things. We are doing content creation. We are actively engaging our [ adjacent ] influencers. We all know about the social network world and how influencer marketing is taking over the world. So we are current using all the internal resources at influencers when it comes to brands and engaging them with their consumer from the social media platform beyond radio and also, in our case, even [ on ground ].
So we are taking out our strength in terms of engagement with the business or consumers as well as brands are concerned and straddling multiple media papers, and that are giving brands multiple opportunities to engage with your brands -- sorry, with your consumers.
And sir, apart from us, our competition, I'm sure would also be looking at the same strategy? Or am I wrong in my understanding? And what is our differentiator from them, like...
So differentiator will be -- when you talk about the digital world, it's huge from an influencer marketing to advertising-funded programming, to distribution of content and so on and forth. So we have got multiple strategies, which is tracking each of those places where the consumers kind of like, for example, music discovery. Today, we are talking about our music discovery, currently is happening through radio. But with the indie music, as we call, the alternate music or indie music as we call, they don't really get a stage platform because Bollywood has taken center stage when it comes to music. Today, we are working closely with the indie artists for them to be discovered. And once when they are discovered by brands or even content creators, there is a whole lot of value and wealth created. And that will create -- when it goes to us, there is a rupture that happens.
So we are doing multiple things in the field of discovery of music, in the field of marketing ourselves. And largely, we're using our [ fan ] following, which is our RJ, which is that across these spaces, and that is what clients look out for.
So if you remember, while the world talks about independent music today, the Radio City Freedom Awards is the first platform we started about 12 years back, recognizing that there is an alternate world, which is getting registered from a consumer choice is concerned. And this is 12 years back I'm talking about. You might have seen the last 2 to 3 years, active increase of interest in independent, but we are transporters in that sense. And for the last 12 years, continuously recognized talent, awarded them, given them a platform because we recognized them 12 years back when the world didn't recognize them.
And today is the time we believe that we will now monetize by using them in latest platform, whether it is getting them to kind of view content, to our OTT platform and so on and so forth. So there are multiple things that we are doing.
So sir, is there an addressable market size for this? Or I'm wrong in understanding? It's a very...
Huge market size. If you look at only the influencer marketing platform, that influencer marketing platform in isolation will be 3x the radio revenues that we are talking about in terms of the opportunity, just the influencer marketing.
If you're looking at digital per se, it's already been 50% plus of the overall advertising market that we talk about. And moreover, it will talk to marketers. There was a McKinsey study done about a year back saying that while you do think that you'll be investing your marketing money, most of them spend that in influencer marketing, and social media marketing is [ all they'll invest ] 75% of the money.
So then if money is going to be allocated to these, maybe we're already getting ourselves engaged in some form or the other and creating more and more opportunities for brands to be present in these mediums.
And my last question, sir, just -- on a global -- in the global market or global industry in other countries or the developed nation, is there such transformation from radio to digital has some company done successfully? And has that grown from some x price to say, multiples of x in...
It's an evolution that is that [ right move ]. When you look at entertainment as a medium, it depends on how you're really looking at the medium. And one classic example I can give you is we all -- since you are an investor, you would always -- all of you will know about [indiscernible], right? He was only a television distribution and content creator company. That one fine day, he decided that he believes that movie is parallel to the entertainment medium, which is closely working with. And the rest is history, as we all know, right?
So while there are many global stories of brands transforming, and I think it is transformational. Transformation of people from the manufacturing industry through digital or the media industry to digital, it's a natural course of [indiscernible] that all of us will be following. The rest has followed possibly earlier. We will be following closely, and there is enough and more reasons to believe that.
The way I look at it, I always keep saying that I'm in the marketing solutions business. So if there are brands and if there are consumers, and if brands want to engage with consumers, we will provide them the choice of consumers in the platforms of the consumer's choice, and hence today, I'm creating content, which is there in multiple platforms. Today, my content is done on streaming platforms. My content is done on all special media platform, and most brands' consumers are [ relying ] there, and that's the way that they engage.
So we are creating a lot of content, which is straddling multiple media spaces for brands to engage with the consumer. And that is our world order right now, and we are only present in a small manner. As we increase the strengths that we have, we'll be more and more deeper and richer in this distribution part of the business when it comes to reach from a brand engagement.
[Operator Instructions] The next question is from the line of [ Anand Shah ], an Individual Investor.
My question is regarding the appeal which we have filed with the Supreme Court in the matter of [indiscernible], where they have told that all the [ digital ] provider has to pay INR 660 per needle hour. So from the decade 2010 to 2020. And in your notes, you have said that [indiscernible] in general assessment, you see -- don't see any [indiscernible] outcome out of economic resources. I would like to ask you, by any chance, the verdict is against the [ digital ] providers, then what can be the possible liability arising out [ this ] by the [indiscernible]?
See, this has been there for years now. And as an industry, we are quite positive that there will be no adverse judgment that will come against us. However, since right now, it is still in the court of law, and we believe that the industry has a very strong point to fight for. And over a period of time, the results will come in. So at this point in time, not just me, I think the entire industry is confident that there will be no liability because we are very clear that we are saying as much that is required, and if there's any liability, that has to be the third parties or people who are using either the singles or the [ logistics ] the way they are doing in generating their own business.
So in any case, like even the judgment is adversely against the company, there is no monetary outflow that can arise for the company, you mean to say?
Sorry, sorry.
Even in the case, there is an adverse judgment against the company, in that case also, there cannot be any monetary outflow from the company side, you mean to say?
No, if there is an adverse there, the entire industry will have to go through the exercise in time, what is the kind of output that one has to look at. But that is a situation that none of us are sure. All of us are sure that we'll not reach that because -- and sir, this has been going for a while. If the case has been so simple, it would have been addressed long time back. It is not addressed because of the complexity.
And we very strongly believe -- not just us. We also have a battery of all senior lawyers who believe that we have a case. And beyond that, honestly speaking, the [ RM ] is only speculation, and speculation is something which I can't really say much about.
I agree. The thing is actually the party has filed the case, and we lost in the Madras side, so Madras has, I suppose, given the judgment. In any case like the liability has to be assumed like if something comes up, then what can be the monetary liability the company can face off actually? That's my question, right, sir.
Madras High Court is the reason why we very strongly believe because the judgment was given on an understanding which we very strongly now know that once -- because it was done in -- and I don't want to talk about the way the judgment is given because it's subjudice, and any comment from mine will not be right. But Madras High Court judgment only give us more reasons to believe that we are on the right course.
[Operator Instructions] The next question is from the line of [ Ruchi Gupta ] from Value Consultancy. The next question is from the line of [ Kastu ], an individual investor.
Am I audible?
Yes, you are. Slightly louder will be better, but you're audible.
Congratulations on a great set of numbers. Sir, my first question to you was how much investments have we made in the digital business?
See, it's just a people business. Like I said, on an average, the kind investment that we'll do on our staff is about 8% to 9%, so that will go on an average. But depending on the quarter-to-quarter, depending on which quarter we are incubating some of the digital way forward integration that we're doing. So in some cases, it will be marginally 10% to 12%. But it's well within the management of our P&L at this point in time.
So to answer your question, is that substantial interest? No. But is that of interest that will affect our P&L? Yes, because we are working with a very tight P&L. So any additional interest -- sorry, investment will have a marginal outcome on our P&L.
Okay. And sir, second question was -- is there any -- there was an increase in the expenses, right? So any reason for the same?
So Q3 being the most important quarter, there are certain investments both from a marketing perspective and also from a creation of IP, which goes a little higher. And hence, we will find that, that the investments are a little more. And hence the costs have gone up a little higher [indiscernible] should have been in the previous quarter.
[Operator Instructions] The next question is from the line of [ Rajiv Shah ] from Bright Securities.
I just had a few questions. How is the advertisement spending market? And how does the festive season pan out? And is there any sectors you expect to see good traction?
So yes, the festive season has been good, and the sectors which have done well is the real estate, pharma, auto and to an extent now or even government for us. And I believe as we go forward, auto, real estate and pharma will continue to grow, and finance will grow this quarter. Usually, Q4 is the quarter where finance increases. So these are the sectors to grow for Q4. And going forward, I still believe real estate and pharma will continue to grow and to be followed by auto.
[Operator Instructions] As there are no further questions, I would like to hand the conference over to Mr. Ashit Kukian for closing comments. Please go ahead.
Thank you. We sincerely appreciate your participation in today's earnings call. We believe that the change in medium consumption happens of the Indian audience, driven by the availability of various content options, has created an opportunity for the radio industry to embrace digital platforms while maintaining radio at its core business function. Our focus continues to accelerate the digital future by leveraging resources and relationships to offer maximum value to our customers. The presentation, earnings release and results are all available on the corporate website and stock exchanges. If you have any further inquiries, please get in touch with any one of us or with Strategic Growth Advisors, our Investor Relations partner. Wishing everyone a very Happy New Year.
Thank you. On behalf of Music Broadcast, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.