D B Corp Ltd Q1 FY2024 Concall Summary

Key Takeaways

• All-around robust ad growth: Ad revenue grew 15%+, driven by state elections and broad-based volume increases, with only a small yield contribution.
• Cost tailwinds persist: Newsprint prices fell further to ~₹56,600/ton and are expected to keep declining, while most COVID-era operational savings have become permanent.
• Digital strategy remains a black box: Management repeatedly declined to disclose digital revenue, user metrics, or strategy specifics, citing competitive sensitivity and asking investors for "more time."
• Yield recovery nearing its ceiling: Management has largely taken discounts back and believes it is "not too far from the pre-COVID yield," making further yield-driven growth difficult.
• What to watch next quarter: Whether the 15%+ ad growth trajectory holds as government spending annualizes, and if newsprint costs deliver the further decline management expects.

Advertising Revenue: Volume-Driven Surge

• Election tailwind: State assembly elections in Madhya Pradesh, Rajasthan, and Chhattisgarh (November 2023) drove state government advertising and capex-related activity, pushing ad revenue growth above 15%.
• Volume, not price: 80-90% of the ad revenue growth came from volume increases, with only 10% from yield improvement; average page count rose from 18.84 to 20.82 as higher volumes made more pages viable.
• Government concentration risk: Government revenue grew much faster than other segments because certain states that did not advertise last year are now spending; management expects this to annualize from next quarter, implying the growth differential will narrow.
• Auto rebound has room: Auto segment advertising grew ~30% on new launches but still has a long way to go to reach pre-COVID levels, and management expects the momentum to continue.
• FMCG softness: FMCG advertising remains slightly soft and is not improving, which management attributed to weakness in the rural sector.
• Yield ambition collides with reality: Management aims to focus more on yield going forward and is working to improve radio yield, but also stated it is hard to see how ad yield can cross the pre-COVID level, suggesting limited upside.

Girish Agarwal: "We are very, very, very ambitious to grow the circulation. And our entire circulation sales team is reputed day in and day out for that only. And I promise you, in the coming quarters, you will see some advantages."

Cost Structure: Newsprint Tailwind and Permanent Savings

• Newsprint cost decline: Average newsprint cost decreased from ₹63,500/ton in Q2 FY23 to ~₹56,600/ton in Q1 FY24, and management expects the downward trend to continue, with further declines possible next quarter.
• Structural reasons for optimism: Management cited potential further benefits from lower consumption in other countries, new mill capacity coming online, and mills shifting from brown paper to white paper production.
• Permanent cost savings: Most operational cost savings implemented during COVID have become permanent rather than short-term measures, a structural improvement to the cost base.
• Employee cost stability: Employee costs dipped slightly from ₹103 cr to ₹100 cr, attributed to technology utilization, though management called the change insignificant and noted it may reflect special incentives in the prior quarter.
• Margin trajectory: When asked if margins should only go up for the rest of the year given falling newsprint prices, management responded that "each and every person working for the company is working towards it," a non-committal but optimistic framing.

Girish Agarwal: "I'm very glad to say that most of the cost savings, what we did during COVID has almost kind of became permanent. Nothing was done as a knee-jerk reaction or a short term as such. Most of them is a permanent cost saving."

Digital Business: Intentional Opacity

• MAU decline explained away: The decline in digital monthly active users was attributed to monetization experiments across various pockets and a deliberate decision to run no promotions, ensuring 100% organic growth during the test phase.
• No cannibalization claim: Management stated there is no cannibalization between print and digital, describing a complementary usage pattern where readers consume print in the morning and use the app during the day for updates.
• Strategy revealed only in outline: The digital strategy is to acquire customers who start their day with the company, stay through the day for news updates, and eventually be willing to pay, but management declined to elaborate on specific tactics.
• Financials withheld: Management repeatedly declined to disclose digital revenue, per-unit realization, or non-financial milestones, asking investors for "more time" and citing competitive reasons. Revenue from platforms like Google was described only as "some kind of revenue" from experiments.
• Regulatory catalyst uncertain: An industry petition with the Competition Commission of India seeks to compel social platforms to pay for content; management expects positive results "soon" but the timeline is vague and the matter is subjudice.

Girish Agarwal: "Sir, our strategy in digital is to acquire more and more customers, those who can come start their day with us, stay with us during the whole day, get the entire news update from us. And at some appropriate time, they should also willing to pay for it."

Radio & Other Segments

• Radio growth from occupancy: Radio revenue growth came largely from occupancy improvement; yield has not improved yet, though management is working on it for the coming quarter.
• Other income is incidental: The ₹19 cr other income includes FD income, paper waste sales, event income, and printing plant job work; management explicitly stated it is not a significant or recurring revenue source, with waste sales dependent on opportunistic market rates.

Capital Allocation

• Interim dividend: The board announced an interim dividend of ₹3 per share.
• Payout trajectory maintained: Management noted the 63% payout ratio and said they will continue on the same trajectory.
• Buyback possibility: When asked about a potential buyback, management said they will pass the observation to the board, offering no commitment.

Guidance & Commitments

Key Metrics