D B Corp Ltd Q3 FY2023 Concall Summary

Key Takeaways

• Profit hit by newsprint and digital bets: EBITDA fell 31% YoY to ₹100.7 crore, driven by a ~39% newsprint cost surge and deliberate digital investments, though management calls the worst on input prices over.
• Ad revenue grew, but modestly: Advertising revenue rose 2.6% YoY, with double-digit growth on a like-to-like festive basis; broad-based category recovery is underway, led by automobile and jewelry.
• Digital audience is scaling, monetization is not: Monthly active users have grown over 7x to 1.5 crore, but management is keeping digital revenue and investment figures under wraps, citing competitive sensitivity.
• Newsprint relief is the core margin story: With domestic prices softening and imported rates past their peak, management expects a sequential 4% cost decline in Q4 and a path to ₹50–₹55/kilo in 2–3 quarters.
• What to watch next quarter: The pace of newsprint cost decline, whether the January automobile ad run rate holds, and any quantified update on the digital subscription pilots.

Advertising Revenue & Category Recovery

• Festive season was strong, then COVID fears hit: The festive period performed very well, but rumors and apprehension of a COVID resurgence washed out a large portion of November, making markets cautious and losing some time.
• Automobile is the comeback story: The category has started growing again, with a January run rate of ~₹10 crore; at that pace, management expects a return to the earlier ~₹100 crore+ annual level soon.
• Jewelry is a standout: The category grew ~15%, while education is growing to some extent, real estate sustained its trajectory, and FMCG remained nearly flat.
• Government advertising resumed: Growth in Q3 largely came because government advertising in certain markets, stopped last year, has now resumed flowing back.
• Yield vs volume trade-off: Increasing advertisement yield is the top wish-list item, but right now the operational focus is squarely on driving volume.
• E-commerce and start-ups are on hold: Most have paused spending because of the overall market slowdown and investors not providing enough expansion capital, though management is hopeful some are finding their footing.

Girish Agarwal: "when the election happens in a particular state, the state government goes all out to ensure that the people by large, are happy. So they will be spending lot of money in the infrastructure. They will be offering certain benefits to the farmers. They will be offering certain benefits to the government employees and all that. And that will increase the disposable income of these individuals. And then these individuals will come out in the market and start buying up automobiles and real estate and other things. Those advertisers will advertise more with me because of this traction."

Newsprint: The Margin Reset

• The cost shock: Newsprint cost rose ~60% in the first nine months and ~39% in Q3, driven by an ~8% dollar appreciation impact and imported prices climbing from ~$400/ton in FY22 to $630/ton in Q3 FY23.
• The turn: Management believes the worst is behind them, with domestic newsprint prices expected to soften further on weak demand and sequential corrections continuing into Q4.
• The glide path: A further ~4% decline is expected in Q4, with additional relief each quarter, reaching a target of ₹50–₹55/kilo hopefully within the next 2–3 quarters.

Girish Agarwal: "But fortunately, it looks like that the worst is behind us because we are seeing some trend of the decline of the newsprint prices already. And we are hopeful that in the Q4 also, it will further soften down by another 4%. And every quarter, there will be further relief coming in."

Digital: Audience Without Disclosure

• User base has scaled: Monthly active users across all apps increased over 7x from 0.2 crore in January 2020 to more than 1.5 crore in November 2022.
• Subscription pilots are live: Experiments are running in various pockets across the country, and the response is described as very encouraging, with a broader rollout expected in the next couple of quarters.
• Monetization details are deliberately hidden: Management refuses to disclose digital revenue or investment quantum in detail, citing a highly competitive market, and asks for a couple of quarters before sharing a full rundown.
• Google revenue share is negligible: The company, alongside the Indian Newspaper Society and digital publishers, has approached the Competition Commission of India, arguing that Indian publishers do not get their due share of revenue. Management states the current take is "not even a share."
• Advisory firepower: Mr. Mark Thompson, former CEO of the New York Times, has been engaged as an advisor, and the team is actively working with international partners and consultants to build digital knowledge.

Girish Agarwal: "Currently, what we are getting is not even a share, I would say."

Circulation & Cover Price Strategy

• Copies declined minimally: Circulation copies fell YoY, but the decline was very miniscule, while average realization per copy moved from ₹3 to ₹3.10.
• Growth without freebies: Management is clear that it wants to grow copies without offering any freebies or price reductions, calling the path slightly tough but achievable, with strategies being driven in Rajasthan, Gujarat, Madhya Pradesh, and Bihar.
• Institutional push: The company is increasing market presence by liaising with corporates, hotels, restaurants, hospitals, and corporate offices to place institutional copies, citing an example of a 400-bed hospital in Indore.
• Cover price hikes are on hold: Scope for further incremental cover price exists, but management does not want to increase unnecessarily, believing an average price of ~₹5 is decent enough and that focus should now shift to advertising growth.

Girish Agarwal: "we are very clear that we want to grow copies without offering any freebies or offering any price reduction and all that. So it's slightly tough because we are not offering any freebies and all that, but we are getting there."

Radio Business

• Strong recovery underway: Nine-month FY23 revenue grew 24.6% YoY and EBITDA grew 37.3% YoY with a 31% margin, driven by strong brand visibility through key tie-ups and innovative content.
• Closing in on pre-COVID base: The business is YTD minus 4% on the FY19–20 base despite a loss of rates, which are now recovering; management is very hopeful of crossing that original pre-COVID benchmark.

Guidance & Commitments

Key Metrics