Ladies and gentlemen, good evening and welcome to the D. B. Corp Limited Q1 FY 2025 earnings conference call. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone phone. 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 represent D. B. Corp . on the call.
The management will be sharing the key operating and financial highlights for the quarter ending 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 emailed to you and are available on the website of the stock exchanges and the company's investor 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, 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 ending June 30th, 2024, followed by key operational updates. In Q1 FY 2025, we were operating on a relatively higher base, both YoY and QoQ. Despite this, our advertising revenue grew by 8.4% YoY, reaching INR 4,277 million in Q1 FY 2025, which reflects the strength of our brand and the trust our advertisers place in us.
Our average newsprint cost has reduced to INR 46,900 per metric ton, representing a substantial 17.2% YoY reduction in rates. This has played a crucial role in boosting our profitability, with EBITDA growing 40.4% YoY to INR 1,909 million and expanded our EBITDA margins by 700 basis points, taking it to a robust 31%. Profit after tax increased by 49.7% YoY to INR 1,179 million. Now let me touch upon some operational highlights across our key segments. In our core print media business, our strong brand equity continues to drive growth, especially in our key non-metro markets.
We reinforce our credibility as a trusted news source, as evidenced by the accuracy of our recent election result predictions. Coming to our radio segment, I am proud to say that we have maintained our industry-leading EBITDA margins. 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 app. This success 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, over to you.
Thank you, Pawan, and good evening, everybody. Thank you for joining us for today's call. I would like to build on the overview you 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 election-led consumption growth, as well as softening of the newsprint prices.
We have had a promising start to the year, wherein our print business has seen promising growth, reflecting the resilience of our offering in attracting both traditional and newer 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. Now we are open to take your questions.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw your request, you may press star and two. An operator will take your name and announce your turn in the question queue. Participants are requested to only use hand raise while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Riya Mehta from Aequitas. Please go ahead.
Thank you so much for giving me the opportunity, and congratulations on good Q1.
Thank you.
My first question is in terms of what was the government revenue percentage this time around? What was the growth, both state and central?
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. In terms of auto, we were very big almost two years back. Are we seeing the similar kind of traction because of two-wheelers and all is back?
Yes. 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. Previously when we were seeing peak of auto demand, what kind of contribution was coming from auto?
8%, because that time government was not that high, it would go down, so this percentage will go up accordingly. Real estate, education. These contribution keeps changing quarter-by-quarter.
Quarter-by-quarter. Yeah. Sure. I understand. Also in terms of freight rate increase, since I think 40%-50% of our newspaper is imported, so how is it impacting and are we seeing any availability challenges?
There are no availability challenges. Only thing, as you know, in the newsprint, our rate last year was almost INR 56,600 number, which has gone down to INR 47,000 this year in this quarter. Because of the international factor, the freight has again started going up. So maybe in the next quarter, we may see a couple of percentages increase in the newsprint price.
Okay, got it. That will be just in imported paper, right?
What happens, Indian mills generally work on the parity. If the imported landed price is INR 100, accordingly, they adjust their prices.
Okay. Got it. Also, last question is in terms of digital. Are we looking to publish the numbers separately or there are few quarters more for us to actually publish the results separately?
I guess few more quarters.
Okay. Thank you. That's it from my side.
Thank you.
Thank you. Next question is from the line of Himanshu Upadhyay from BugleRock . Please go ahead.
Yeah. Hi. Good evening. And congrats on good set of numbers. My question was about a comment what we made last quarter. You stated that historically pre-COVID, we used to do a lot of events to drive readership and more copies in particular markets. But for increasing our circulation. But what we are seeing is the prices have come up, but the circulation has still not picked up for us.
I think, Himanshu, what you are saying is just bang on, and I am appreciating your thinking in the direction where the management is already thinking. We also believe that since the newsprint prices are down, revenue is up. This is the time for us to go to the market and start pushing all efforts into circulation.
And I am 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 readership 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.
One more thing. The profitability of competition is also very unique, good. Are we focusing even on getting market share or just penetration and getting newer people to the newspapers?
See, what happens when you go into 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. Just the thought was that because the competition will also get stronger and in bad times, they don't give up that much market share. Okay.
Don't worry about that, it is also about the product quality.
And one more thing. What led to the circulation revenue being flattish? What you are saying, has that started in this quarter or we started in previous quarter and the impact of that has been that circulation revenue-
Frankly speaking, what has happened in certain market, we have taken the price increase in last six, eight months time. That impact, annualization impact also came in. I think the real impact of circulation we will start seeing in post September only.
Okay. You are saying the circulation copies improvement will start from-
Yes, that is what the focus is.
Okay. In terms of advertising revenue, that 8% growth we are seeing, can you give some volume value mix or how much has been the volume growth versus-
Largely, it's on the both. I'm 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.
Any thought on page? Which average number of pages currently are you-
We are at 20.88 pages. Last year in the same quarter, we were at 20.8, so almost same, 0.3% growth.
How much was the average number of pages at the peak of paper prices or newsprint prices?
Again, pages cannot go down below. It can only go up, like in season festival time, this goes up to 24, 26 pages also. But lowest, you cannot go below 19 pages as such.
Okay, thanks. I will join back in the queue for further queries.
Thank you. We have our next question from the line of Falguni Dutta from Mansarovar Financials. Please go ahead.
Yeah. Good evening, sir. Sir, I just had one clarification. When you mentioned auto as a percentage of overall revenue being 8% and government revenue being 20%, are these percentages a total of ad revenue or a total of overall percentages?
Ad revenue.
Ad revenue, right. Okay. Thank you, sir. That's all from my side.
Thank you. Next question is from the line of Pranav Shrimal from PINC Wealth Advisory. Please go ahead.
Yeah. Hello?
Yes, sir.
Yeah. Good evening, sir, and congrats on the numbers you presented.
Thank you.
Just had a couple of questions. I just wanted to understand your outlook on the radio segment. Where do you see the radio going from where it is right now, and what sort of margins and what sort of growth are you expecting in the radio sector alone?
Radio has a margin of 34% this quarter. Even last year, same margin was there, 34%. Top line grew by 6%. See, this segment largely will stay in the same size, same percentages, unless and until Government of India opens up the news and current affairs in this. Once news and current affairs get opened up, then suddenly the whole listening ability of viewers for this segment will go up much, much more. Interest will go up. You can do many things then. Right now, we simply play the music, and how much R.J. will keep talking? I think there is no great differentiation also. But the day they open the news and current affairs, then you will see the whole advantage of this sector.
Okay, sir. In terms of our ad revenue outlook, what sort of growth are we expecting now that the elections are over? Which will be the top sectors that are coming ahead, you see? I know it differs quarter-to-quarter, but overall, at a year level.
We are looking forward for an excellent budget going forward, because I am sure government will ensure that the economy of country further take a growth and all the sectors do well. If that happens, then I am sure automobile, education, real estate, jewelry, which are my main segments, will start acquiring in the market and I will have the advantage of the same.
Okay, sir. Thank you so much. That's all from my side.
Thank you.
Thank you. Before we take the next question, would like to remind participants to press star and one to ask a question. Next question is from the line of Anuj Sharma from M3 Investments. Please go ahead.
Yeah, thank you. Thank you for this opportunity, and congratulations.
Thank you.
If I look at the raw material cost, which is basically newsprint, it is now down to 26% of total cost. If I take a long-term average, it used to be around 33%-35%. Assuming this cost will revert to mean, which is from 26% to maybe 33%-35%, are there ways we can help protect margin beyond the newsprint, which has benefited us tremendously?
I think you just mentioned that newsprint is 26% of total cost. Correct? That's what you mentioned?
Yeah, I think currently, this quarter.
I think no, because if you see my total cost is around INR 4,254. Correct? In INR 4,254, the newsprint is INR 1,569. I think it is not 26% what you just mentioned. You may have to relook at the number, please.
Okay. Maybe I assumed it wrong, but even as a proportion to total cost, it has come down significantly, right? If it were to mean revert, would that proportionally impact our margins, or you think we have mitigation strategies beyond the material cost or raw material cost?
As of now, newsprint is 37% of my overall cost.
Okay.
Why it has come down, because overall cost has come down. I am hoping that this stays around this or maybe 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 still, what then 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, you can't, because see, it is not about the newsprint alone. There's a freight cost also. Freight cost, you can't hedge. My newsprint is not entirely imported. I have an Indian newsprint also. So that Indian newsprint, you can't hedge the price because nobody takes the cost for more than three months, four months, five months time maximum. That we already done with all the mills.
All right. 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, sir.
Okay. All right. Thank you so much.
Thank you.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phones now. Our next question is from the line of Himanshu from Dolat Capital. Please go ahead.
Hello?
Yes, sir.
[inaudible]
I'm sorry, sir, you're sounding muffled. Can you use your handset mode, please?
[inaudible]
No, sir, you're not audible.
You can take the next question, please.
Sure. Thank you. Participants who wish to ask a question may please press star and one on your phone. Next question is from the line of Mohit Saini, an individual investor. Please go ahead.
Hello.
Mr. Saini, good evening to you. Please tell me. Ask me your question.
Congratulations on wonderful set of numbers, sir.
Thank you, sir.
I just have a small question. You are having almost around INR 1,000 crore in your bank, and you are giving a dividend of INR 7, which almost amounts to INR 125 odd crore.
Yes, sir.
Are you looking for any investment opportunity or buyback? Because I think there must be something going on in your head. There is so much cash.
I can certainly take your point to the Board, and whatever Board decide, we shall communicate to you, sir.
Yeah. Thank you so much. And once again, congratulations.
Thank you very much.
Thank you. Participants who wish to ask a question are requested to press star and one on their phone now. Next question is from the line of Mohammed Patel from Care Portfolio Managers. Please go ahead.
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 same. For example, education, this is one of the biggest quarter for education, remains there only, contributing almost 20%+ 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%. Since it's a quarter-to-quarter comparison, the mix remains largely the same, except the government, because of the elections and all government was lagging.
What is the circulation volume of Q1 versus last year?
We are doing around 40 lakh copies as of now, sir. As we discussed, our efforts going forward will be that we need to increase the copies from here on.
Sir, are we planning to increase the dividend?
Mr. Patel, sorry, can you use your handset mode, please? Your voice is echoing.
I just had a question that, are we going to increase the dividend payout ratio considering we don't have investments?
Sir, Board has decided and declared a INR 7 interim dividend for this quarter. I am sure considering the overall growth of the business and the cash, Board will take a very arrived and thoughtful call going forward also.
No, but we 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. My last question is, how much margin impact we are expecting because of the newsprint in the near term, increasing newsprint prices?
Sir, in this quarter, we have an EBITDA margin of 31%. Last year it was 24%. We believe next quarter there will be some increase in the newsprint cost, but advertising should be able to take care of that.
Okay. Thank you.
Thank you, sir.
Thank you. Before we take the next question, would like to remind participants to press star and one to ask a question. Next question is from the line of Sagar Parekh from One Up Financial Consultants. Please go ahead.
Yes, sir. Thank you, and congrats on a good set of numbers. My question was on the digital business. I know you don't share any quantitative numbers, but if you can share qualitative aspects of where you are. 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?
For the 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 18 million, which is a very positive sign. And we got huge appreciation to our editorial team for our coverage in the general election this year. I think overall, we are gaining more traction and our leadership on digital also increasing. And we are doing certain experiment here and there about the paywall, how people would like to pay for it, how much going forward. 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 couple of quarters from now?
Yes, sir. Hopefully. 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%+ is from print and radio, maybe 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.
Sure. No worries. Thanks.
Thank you, sir.
Thank you. We'll take our next question from the line of Himanshu Upadhyay from BugleRock . Please go ahead.
Yeah. Hi. It's a follow-up from the previous participant only. You started this payment or a subscription fee, subscription, for digital subscribers, around three quarters back? So where are we in that cycle, and what have been the key learnings from that whole experiment? Are we running in line with our target, behind? How is the market reacting? Have you started advertising revenue also on that product, or you have still kept it closed for the advertising?
Himanshu , 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. 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 few very limited areas for advertising on the app and want to gauge the response from that, and response from the advertisers and as well as readers, that how does reader feel about those ads they should not be including in their reading experience and all that. Yes, that's what we are doing.
Okay. Thanks so much, sir.
Thank you, sir.
Thank you. Ladies and gentlemen, due to time constraints, we will 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 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. Good evening.
Thank you, sir. On behalf of D. B. Corp Limited, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.