Ladies and gentlemen, good evening and welcome to the D B Corp Limited Q2 and H1 FY 2024 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 touch-tone 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, Mr. Mushtaq Ali, Senior Vice President, Finance and Accounts, 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 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, 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 eight 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 consolidated 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 two FY 2024, consolidated advertising revenue registered growth of 13% YoY to INR 4,301 million against INR 3,811 million. EBITDA grew by 71.5% YoY 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 the 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% YoY. We expect newsprint purchase price to remain softened in the coming quarters. Our PAT grew by 106% YoY 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 rates, 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 number one Hindi and Gujarati news apps. Coming to the radio business, revenue grew 6% YoY at INR 359 million versus INR 338 million, while EBITDA grew by 2% YoY 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 allowing news and increase of DAVP rates.
MY FM has been relentless in its efforts to connect with the audience and enhance listener engagement through groundbreaking content creation. We will continue to fuel these efforts to help our omni-channel presence grow. With this, I would now request Mr. Girish Agarwal to update us on the operations. Over to you, Girish.
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 virtual 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. In this quarter also, digital ad-based companies and startups continued their print reference. As the leader in the print segment, Dainik Bhaskar has been outperforming the sector over the past two years, and our teams continue to work hard to extend their performance. 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, which is very evident from our readership, from our appreciation of the content, from our advertising, production, circulation, IT, finance, every possible department. I just want to do a special mention of the great work done by our team. 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. 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.
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 touch-tone telephone. An operator will take your name and announce your turn in the question queue. Participants are requested to only use handsets 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 Investments. Please go ahead.
Congratulations on this set of numbers.
Thank you.
My first question is in regards with the advertisements. I am aware that, going forward in November, December, we have three major state elections coming. What is the model code of conduct for state election and why, when are they not allowed to advertise? Similarly for the entire election, from when will that model code of conduct start?
The model code of conduct in all the three states of Madhya Pradesh, Chhattisgarh, Rajasthan already is in operation right now. The reason why government does it, the election commission does it, for simple, so that 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. I think that is the prime reason. How was that done? I think whatever governments of these three states did in last many years, especially last one 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, they advertise better.
Right. Just from these three states, how much will be the impact on the advertisement with the absence of these major three states?
Sorry, I couldn't get your question right.
With the absence of government advertisement from these three states for a period of, say, one month or so, what will be the kind of impact and what duration is it not allowed?
I think it's around 40 days, 30 days overall. I won't know the impact right now to give it to you 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 total government? Sorry.
Yeah, all put together, state and the central.
Okay. For 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 are seeing good auto numbers and you are very bullish on the growth going forward. When the consumer effective demand might have started, how is it so far for auto advertisement?
I tell you, auto, as you remember, because last two to three years, they had a major issue in the chip and the availability of vehicles.
Yes.
They were not advertising. Now they have started advertising. We are seeing a good growth coming from there. Especially one thing you will have to remember, in the quarter two last year was a few days of Navratri. This year, the Navratri is not in the Q2, it is in Q3. Because of that, there is some shifting advertising here and there, but it does not make much of a difference.
Got it. What are the kind of innings right now in advertising? Do you see any scope of innings growing? The second question would be what is the ad-to-edit ratio currently?
You may be aware that in the newsprint newspaper business, the ad-to-edit ratio generally varies from 70/30, 67/33. This is all under control for a simple reason, because you can increase number of pages if then the ads are more, unlike radio or television.
Right.
EBITDA ratio is not a big concern for us. That is number one.
Okay.
The way market looks like, things looking good also going forward.
In terms of innings, do we have any scope of increasing?
If you don't mind my saying, you are on the fifth question already, so can you come back?
Sorry. I will get back in the queue.
You can take the other turn. Yeah. Thank you.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. We have our next question from the line of Sampat Naik from Tiger Assets. Please go ahead.
Yeah. Hi. Good evening, sir. Congratulations on good set of numbers.
Thank you.
My question is on margin sustainability, sir. We saw really good EBITDA margins this quarter. Are these margins sustainable, and what is the margin outlook for coming two quarters?
Sir, we are right now at a 28% margin in this quarter. As I mentioned to you earlier also, the entire team, 8,000, 10,000 people are working towards it, that we should be able to sustain this kind of margin. Maybe couple of percentage up and down.
Okay. Sir, coming to the newsprint prices. How are they shaping up? Can we further see drop in the newsprint prices?
Frankly speaking, our newsprint prices, if you see the numbers, has already come down considerably overall. 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 do not expect much of the newsprint prices coming down because of the Diwali season. We are using much better newsprint quality for the advertisements also because the newsprint mix will change in this quarter. We will use more of important and high quality one. Going forward, I believe another 5%, 6%, 4% advantage should happen with us.
Great, sir. Coming to the digital side. What is the contribution of digital revenue to our total revenue? How is it shaped for next two to three years? Are we looking to do any acquisitions or something?
Let me first of all start with your acquisition question. As of now, company has no plan 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 a good result coming out of that. As for the revenue is concerned, right now the size is too small, and maybe in next couple of quarters, 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. Obviously, general elections coming in six to eight months, so we will witness good demand. How about 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.
Okay. Okay, sir. Thank you, and all the best.
Thank you. We have our next question from the line of Himanshu Upadhyay from o3 Securities . Please go ahead.
Yeah. Hi. Congratulations on good set of numbers. I had a question on the 4.2% subscription growth. Can you give some idea of how much is value and volume? And is it—
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. I think that is the impact on that.
We have seen the price of paper come off and the profitability improve. Would our focus be to again increase the circulation copies and newer geographies, or you think—
That is secondary currently.
How are you thinking strategically? Yeah.
We have no plan to get into a new geography. The markets where we are present, the 12 states, I think we have enough scope in these markets only to further grow more copies, which we are working on towards it. 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 paise. I think that's a decent size. We don't want to take it more as a pinch to the pocket of the readers. Our focus would be to maintain this cover price and grow the circulation in these market sectors.
One last question. The radio ad revenue are still more. They're still doing at a lower value terms versus the newsprint. Any specific reason and how far away can radio be or is from what the potential is?
The radio's growth is largely driven by innovations, activations, non-airtime business improvement, as well as our yield improvement. We are working very closely with our advertisers to drive better value to them, better programming. 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. For the last several quarters, we've been growing basically from our innovations and our little bit of improvement in our yields as well.
My question was, basically both newsprint and radio are much more local market. Content of local is pretty high here. Should not radio be also growing at a much faster pace, like 50%, 20% type of growth in—
No. What happened in our radio, there is a limitation of the inventory because they cannot 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 am at almost 21.7 pages. So I have increased almost 8%-9% number of pages for accommodating more advertising. Radio cannot do that because they have a limited 60 minutes and they can only run 20, 25 minutes of advertising in that. They cannot take it 35 minutes. So they have to grow through the yield and the innovation side.
Are the occupancies full for the radio? It is whatever we could get.
All the prime time for all the radio channels are already done. They are all running since.
Okay. Thanks.
Thank you, sir.
Best of luck for it.
Thank you, sir.
Thank you. We have our next question from the line of Pritesh Chheda from Lucky Investment. Please go ahead.
Yes, sir, I have two questions. One, in your press release, you mentioned this INR 51,500 newsprint price. This price has flowed in in your quarter two numbers completely, or there is a lead lag there?
No, sir. This is the quarter two price.
Okay.
Quarter three would be almost similar and quarter four, maybe we will see a further going down.
Okay. As of now, for the full quarter, you had this particular price flowing in?
Yes, sir.
My second question is, sir, it has 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 two to four quarters would be helpful?
Frankly speaking, we believe that this kind of percentage growth should continue because it may take a little bit of dent because of the code of conduct, because government advertising has come to a standstill for this 40 days, and then again in the general election, it may happen. But otherwise, other categories are doing decent. Real estate, education, they all are doing decent. So idea is that the market keep to be so buoyant and we need to ensure that advertiser comes to us.
Okay.
It is not a given situation where we simply say, relax, team can start relaxing and saying that 10%-11% growth is given. Nothing is given. We need to really fight for every percentage.
Okay. Any swing in market shares do you think would have happened?
For sure, because you will appreciate this kind of growth has not come in the market. The market is not growing at 10%-11%, the market may be growing at single digits. This suddenly involves a lot of swing in terms of market share, in terms of value and everything in our favor.
Okay. My last question is, in your key advertising sectors or customer sectors, if you could give the top three and the contribution to the ad pie.
Sir, if I look at the H1, which will give you a more robust picture.
Yeah.
Government has grown much bigger because last year, if you remember, we were not getting the government advertising. This year we are getting it, so the percentage growth is much higher. But in terms of contribution, they are still higher because of that thing.
14%.
Yeah, slightly higher, actually. Response is one category which has grown decently. Education has grown again in almost 10%. Real estate is slightly flat from last one and a half, two months because of the election, so not much of anything happening there. Automobile has grown in a single digit. Healthcare 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. Yeah, this is various segments which some of them are growing, some of them are not growing that good.
Barring government, all of these categories would be 5%-7% contribution to the ad revenue?
No. Our response category is in double digit. Education is in double digit.
Yeah. Real estate is also touching the double digit.
Okay. Thank you very much, sir.
Thank you. We have our next question from the line of Sakshi Chhabra from Swan Investments. Please go ahead.
Hello, sir. Congratulations on a great set of numbers. Sir, wanted to understand that this ad rate increase that has happened on the base rate for the radio segment. What is the kind of impact that we can see on our ad revenues because of this?
Our radio revenue, government revenue is a high single digit in our total revenues. As of now, we haven't received exact rates, but we should get anything upward of 43% improvement in our overall rates. If the volume holds the same, that revenue should increase by about 40%-45%.
No, but your government contribution you said is high single digits, but this 43%.
No.
9%-10%.
For example, if 9% is the overall government advertising.
Right.
Government decides to increase it by 40%.
There will be a 4.5%, 4% growth coming because of the government advertising, provided we keep the volume same.
Correct. 4%-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 tinkering with the volume.
Then it may come down. We are yet to receive the final rates from the government for us. Once we get that, we will be in a better position to estimate.
Okay.
It could be even higher.
In terms of the non-government side, do you see any increase in yields that you can take on this radio ad revenue side?
We are doing our best with a mix of innovations, our activations, our non-air time spots, as well as delivering better product to improve the yield. We are hopeful that in the coming quarters, we should be able to start taking some yield improvements as well.
Sure. Okay. I wanted to check that, is there any update that we have on the revenue share that you 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 that kind of contribution?
It will not be prudent to prejudge CCI decision outcome.
All right. Okay. Can you give any numbers on the digital paid subscribers?
Yeah. 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 few quarters more, so that we are able to come back and do some work on that.
Okay. But on the qualitative side, can you mention about how the traction is as per your expectations, better than expectations?
Sorry. Sorry, one more.
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 have people been reacting to the fact that there is going to be more of paid. You've made changes, right? Now a lot of content is not available for free as much as it was earlier.
As I mentioned to you, it's a mixed basket.
Okay.
It will be too premature to comment on that.
Okay, sure. Thank you.
Thank you.
Thank you. We have our next question from the line of Rishikesh Oza from Robo Capital. Please go ahead.
Hi. Thank you for the opportunity. My question is related to the radio. Sir, what is the listenership number for radio channel for the quarter? I also wanted to get some broad idea on how the listenership number is actually calculated.
As you are aware that in our markets, the listenership activity which used to be done earlier has not been conducted. Our metric in our markets 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. From day one for the last 15, 16 years, that has been the metric that we have been using with our advertisers, which is more authenticated and not depending on any listenership data which is third party.
Okay. Thank you.
Thank you. 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.