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DB Corp Ltd
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Ladies and gentlemen, good evening, and welcome to the D. B. Corp Limited Q1 FY 2025 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; and Mr. Prasoon Kumar Pandey, Head, Investor and Media Relations, who will present D. B. Corp Limited on the call.
The management will be sharing the key operating and financial highlights for the quarter ended June 30, 2024, 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 scene. I now hand the conference over to Mr. Pawan Agarwal. Thank you, and over to you, sir.
Thank you very much, and very good evening to everyone, and thank you for joining the Q1 FY 2025 D. B. Corp Earnings Conference Call. We will begin the call by highlighting the key financial performance for the quarter ended June 30, 2024, followed by key operational updates.
In Q1 FY 2025, we were operating on a relatively higher pace, both Y-o-Y and Q-o-Q. Despite this, our advertising revenue grew by 8.4% Y-o-Y, reaching INR 4,277 million in Q1 FY 2025, which reflects the strength of our brand and the trust of our advertisers plays in us. Our average newsprint cost has reduced to INR 46,900 per metric ton, representing a substantial 17.2% Y-o-Y [indiscernible].
This has played a crucial role in boosting our profitability with EBITDA growing 40.4% Y-o-Y to INR 1,909 million and expanded our EBITDA margin by 700 basis points, taking it to a robust 31%. Profit after tax increased by 49.7% Y-o-Y to INR 1,179 million.
Now let me touch upon some operational highlights across the key segments. In our core print media business, our strong brand equity continues to drive growth, especially in our key nonmetro market. We reinforced our credibility of our trusted new stores as evidenced by the accuracy of our recent election result predictions.
Turning to our Radio segment, I'm proud to say that we have maintained our industry-leading EBITDA margin. We are focusing on strategic investment, content excellence and audience engagement to build a sustainable stream of revenue growth in this segment.
Our digital presence continues to flourish. As of May 2024, we have over 18 million monthly active users, cementing our position as the leading Hindi and Gujarati News Apps. This sector is driven by a commitment to top-notch content, an excellent user interface and a robust technology. I will now hand over to Mr. Girish Agarwal, who will provide you with an operational update. Girish Ji, over to you.
Thank you, Pawan, and good evening, everybody. Thank you for joining us for today's call. And I would like to build on the overview we have just heard from Pawan and provide some additional inputs into our performance this quarter.
Last year, we witnessed impressive revenue and earnings growth, well supported by our key state elections, led consumption growth as well as softening of the newsprint prices. We had a promising start to the year, where in our print business has been promising growth, reflecting the resilience of our offering in attracting both traditional and new age advertisers across various segments.
We continue to work on our circulation and we are very optimistic about our strategies to enhance distribution and engage with our emerging markets, especially urban nuclear families, high-rise communities, offices and hotels. Looking ahead, we are committed to strengthening our market position through enhancing circulation, optimizing cost structure and expanding our digital footprint. These efforts will complement our focus on content and engagement, ensuring we maintain our leadership position in the evolving media landscape. Thank you very much. And now we are open to take your questions.
[Operator Instructions] We have a first question from the line of Riya Mehta from Equitas.
My first question is in terms of what is the government revenue percentage [indiscernible]? What was the growth both state and central?
So government grew at almost 20% over last year, and the contribution was in the range of around 20%.
20%. This is both state as well as center?
Overall.
Okay. And in terms of auto, we were very big almost 2 years back. Are we seeing a similar kind of traction because of 2-wheelers and all is that?
This quarter, we have shown a growth of almost 35% in the auto category. And auto is now contributing almost 8% in the overall revenue.
Okay. And previously, when we were seeing peak of auto demand, what kind of contribution was coming from auto?
8%. Because at that time, government was not that high, it would go down. So this percentage will go up accordingly. Real estate education. See these contribution keeps changing quarter-by-quarter.
Yes, sure, sure. I understand. Also from [indiscernible] rate increase since I think 40% to 50% of our newspaper is imported. So how is it impacting? And are seeing any availability challenges?
There are no availability challenges. Only thing, as you know, in the newsprint, our rate last year was almost 56,600 number, which has gone down to 47,000 this year in this quarter. Because of the international sector, the freight has again started going up. So maybe in the next quarter, we may see a couple of percentages increase in the investment price.
Okay. That was just an important paper, right?
What happens -- Indians will generally work on the parity. So if the imported landed price is INR 100, accordingly, they adjust their prices.
Okay. Okay. Got it. Also last question is in terms of digital. Are we looking to publish the numbers separately? Or is there are a few quarters more for us to actually publish their results separately?
I guess, a few more quarters.
Next question is from the line of Himanshu Upadhyay from Buglerock.
Congrats on good set of numbers. My question was -- about a comment [indiscernible] last quarter. You stated that historically pre-COVID, we used to do a lot of events to drive leadership and more copies in particular market but -- for increasing our circulation asset. But what we are seeing is the prices have come up, but the circulation has still not picked up for us, okay?
I think Himanshu Ji, what you're saying is just bang on, and I'm appreciating your thinking in the direction where the management is already thinking. We ourself believe that the new print prices are down. Revenue is up. This is a time for us to go to the market and start pushing all effort in the circulation. And I'm happy to share with you, we already started the exercise. We are running various schemes for our distribution agents to encourage them. We are running certain scheme for our readers, so that they are motivated more to read, buy more copies and all that. So I think we have started a lot of things. And in the coming months, you will see much more effort from our side.
And one more thing, is the profitability of competition is also very -- remains good? And are we focusing even on getting market share or just penetration and getting newer [indiscernible] the newspapers?
When you go to the market, you look for increasing your number. And in turn, you get more market share and you get new penetration, both. You can't segregate the two.
Okay. So just the [indiscernible] because the competition will also get stronger and in the bad times, we don't give up that much market share. [indiscernible]
It is also about the product quality.
And one more thing. Sir, what led to the calculation revenue being flatted. So what you are saying is, has that started in this quarter or we started in previous quarter and impact of that is in the circulation..
What has happened in certain markets, we have taken the price increase in the last 6, 8 months' time. That impact annualization in fact, also came in. So I think the real impact of circulation will start seeing in post September only.
So you're saying the circulation copies improvement will start [indiscernible].
Yes, that's what the focus is.
Okay. And in terms of advertising revenue [indiscernible] what growth we are seeing, can you give some volume, value mix or how much has been volume growth versus...
It's only on the board. We are happy to share that we've been able to increase some of the, what do you call it, the margin a little bit of yield, but nothing substantial. It's more on the front of volume only.
And any thoughts on page -- is the average number of pages currently...
We are at 20.88 pages. Last year, in the same quarter, we were at 20.8. So almost 0.3% growth.
And in the peak of paper prices or newsprint prices, how much was the average number of pages?
They just can't go down below. It can only go up. Like in season festival times, it goes up to 24, 26 pages also. But the lowest, you can go below 19 pages as such.
Okay. I'll join back in the queue for further questions.
We have our next question from the line of Falguni Datta from Manasarovar Financials.
I just had one clarification. When you mentioned auto as a percentage of overall revenue being 8% and government revenue being 20%. So is it -- are these percentages a total of ad revenue or total of overall percentages?
Ad revenue.
Next question is from the line of Pranav Shrimal from PINC Wealth Advisory.
Congrats on the numbers presented. I just have couple of question. I just wanted to understand the outlook on the Radio segment. Where do you see the Radio growing from where it is right now? And what sort of margins and what sort of growth do you expect in Radio sector alone?
Radio has a margin of 34% this quarter. Even last year, same margin was there 34%. Top line grew by 6%. So this segment largely will stay in the same size, same percentages, unless until government of India opens up these news and current affairs in this. Once news and current affairs get opened up, then suddenly the whole listening ability of [indiscernible] segment will go up much, much more. Interest will go up. And we can do many things then. Right now, we simply play some music and how much RJ will keep talking? So I think there's no great differentiation also. But the day they open the news and current affair, then you see the whole advantage of this sector.
Okay. Okay. And in terms of order revenue outlook, what sort of goals are we expecting and now that the elections are over, which should be the top sector that [indiscernible]. I don't want the first quarter to quarter, but overall level.
We are looking forward for an excellent budget going forward because I'm sure government will ensure that the economy of country further take a growth and all the sectors do well. If that happens, then I'm sure automobile, education, real estate, jewelry which are my main segment, [indiscernible] firing in the market and are all have good advantage of the thing.
[Operator Instructions] Next question is from the line of Anuj Sharma from M3 Investment.
Congratulations. If I look at the raw material cost, which is basically newsprint, it is now down to 26% of total cost. And if I take a long-term average, it appears to be around 33% to 35%. Now assuming this cost will revert to me, which is from 26% to maybe 33% to 35%, are there -- you can help protect margin beyond the newsprint, which has benefited us tremendously?
I think you just mentioned that newsprint is a 30 -- 26% of total cost, correct? That's what you mentioned.
Yes, it is currently in this quarter.
I think no, because if you see my total cost is around 4,254, correct? And in 4,254, the newsprint is 1,569. So I think it is not 26%, what you just mentioned. You may have to relook at the number, please.
Okay. Okay. Maybe maybe I took it -- I assumed it wrong, but even as a proportion to total cost, it has come down significantly, right? And if it were to mean revert, would that proportionally impact our margins? Or do you think we have a mitigation strategy beyond the material cost -- raw material cost?
As of now, newsprint is 37% of my overall cost. Why it has come down? Because overall cost has come down. Now I'm hoping that this stays around this or maybe a couple of percentages going up and down here and there. At the same time, ad revenue has to go up so that my overall profitability continues to grow.
Okay. Just extending on this skill, what can we hedge or possibly extend this cost? Or you think this will move in line with the market? Are there ways we can hold on to this cost, newsprint?
No, no, you can't. Because it's not about the newsprint alone. it's a freight cost also. Freight cost, you can't hedge. And my newsprint is not entirely imported. I have our Indian newsprint also. So that Indian newsprint, you can't hedge the price because nobody takes the cost for more than 3 months, 4 months and 5 months time maximum. We've already done with all the bills.
All right. All right. And just a little bit on the yields. Do you think that it's time that the yields will start improving? Or the market is still not ready to accept higher yields?
We already started working on it. In some areas, we are getting the benefit of that.
[Operator Instructions] Next question is from the line of Mohit Saini, an individual investor.
Mr. Saini, good evening to you. Please tell me.
Congratulations on a wonderful set of numbers. I just have a small question. You are having almost around INR 1,000 crores in your bank, and you're giving a dividend of [indiscernible] which almost amounts to INR 125-odd crores. Are you looking for any investment opportunity or buyback. Because I think there must be something going on in your head, there is too much cash.
I can certainly take your point to the board and whatever board decide, we shall communicate to you.
[Operator Instructions] Next question is from the line of Mohammed Patel from Care Portfolio Managers.
What is the advertiser mix for Q1 versus last year Q1?
The advertising mix, if you see the last year and this year, almost is the same. For example, education, this is one of the biggest quarter for our education, remains there only, contributing almost 20% plus even last year and same year. Real Estate as a category contributed around 7%, 8%, Automobile 8%. FMCG continues to be at 4%. Jewelry at same 4%. So since the quarter-to-quarter comparison, the mix remains largely the same, except the government because of the elections and all government what like we have.
Okay. What is circulation volume Q1 versus last year?
We are doing around 40 lakh copies as of now sir. And as we discussed that our efforts going forward will be that we need to increase the copies from hereon.
Sir, are we planning to invest increase the dividend?
Mr. Patel, sorry, can you use your handset mode, please? Your voice is echoing.
I just had a question that are you going to increase the dividend payout ratio, considering you don't have investments?
Board has decided and declared our INR 7 interim dividend for this quarter. And I'm sure considering the overall growth of the business and the cash, Board will take very arrived and thoughtful call going forward also.
You increased the dividend payout for this current quarter. So I was just wondering if we are increasing the payout ratio?
I'll take your point to the board, sir, and I'm sure they will consider it.
Okay. And my last question is, how much margin impact we are expecting because of the news trend in the -- increasing newsprint?
Sir, in this quarter, we have an EBITDA margin of 31,000. Last year, it was 24%. And we believe next quarter, there will be some increase in the newsprint cost. But advertising should be able to take care of that.
[Operator Instructions] Next question is from the line of Sagar Parekh from One Up Financial Consultants.
Congrats on good set of numbers. My question was on the digital business. So I know you don't share any quantitative numbers, but if you can share qualitative aspects of where you and if you can share what is the outlook on the digital front? And where do you see -- and how are you looking at growth in this business?
Digital, as Mr. Pawan in his speech mentioned that we have shown a good growth and our monthly active user in the month of June has crossed [indiscernible] million, which is a very, very positive sign. And we've got huge appreciation of our editorial team for our coverage in the general election this year. So I think overall, we are gearing more traction and our leadership on digital also increasing. And we are doing certain experiments here and there about the pay wall, how people would like to pay for it, how much is going forward? So we are doing certain experiments. And overall, it looks good. The overall indication looks good.
Right. So broadly, in terms of sharing key operational data, except for the monthly active users, we can expect that maybe in a couple of quarters from now?
Yes, sir. Hopefully. And see, once again, as you know, we are a very transparent company, the only reason why we are not showcasing too much of digital because first of all the size of this business is not very substantial. As you know, our overall balance sheet if you see, the 95% plus is from print and radio, may be more. So that's one of the reasons. Second thing, since the market is very competitive, and we don't want unnecessary to send out any information. That's the reason we are holding it back.
We'll take our next question from the line of Himanshu Upadhyay from Bugle Rock.
Just a follow-up from the previous participant. You started this payment or a subscription fee -- subscription for digital subscribers around 3 quarters back. So where are we in that cycle? And what are the key learnings from that whole experiment? And are you running in line with our target behind? And how is the market reacting? And have we started advertising revenue also and that or we still kept it close for the advertiser?
Can you please mute your line if your question is done.
We are doing certain experiments on the digital paywalls, e-paper and all that. And so far, the results are good. We have not set any targets as of now because we are still in the experimentation stage. Coming to the advertising, again, on that front from this quarter, we are opening up a few very limited areas for advertising on the app and want to give the response on that and response from the advertisers and as well as readers that how does readers feel about those ads. They should not be including in their reading experience and all that. So yes, that's what we are doing.
Due to time constraints, we'll take that as last question for today. I now hand the conference over to management for closing comments. Over to you, sir.
Thank you, everyone, for your participation and time on this earnings call today. I hope we responded to your queries and we'll always be happy to be of assistance through our Investor Relations department, headed by Mr. Prasoon Kumar Pandey for all your other queries. Thank you, and have a great evening.
Thank you. Good evening.
Thank you, sir. On behalf D. B. Corp Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.