D B Corp Ltd Q2 FY2024 Concall Summary

Key Takeaways

• Eighth straight quarter of strong print performance: EBITDA margin expanded 1,000 bps YoY to 28%, fueled by a 16% drop in newsprint costs and sustained ad revenue growth.
• Ad growth is a market-share story: While the industry grows at single digits, D B Corp is growing ad revenue at 10–12%, implying significant value-share gains, though management stresses this requires a constant fight.
• Newsprint tailwind has further to run: Average costs fell to ₹51,500/MT and are expected to stay similar in Q3, with a potential further 5–6% decline in Q4, providing a clear near-term margin support.
• Radio is a high-margin, yield-driven business hitting its inventory ceiling: With all prime time fully occupied, future growth must come from yield improvements and non-airtime innovations, a shift that is still in its early stages.
• What to watch next quarter: The impact of the model code of conduct on government advertising during state elections, the trajectory of ad growth as the festive season shifts into Q3, and any firming up of digital revenue disclosures.

Print Advertising: Market-Share Gains in a Growing Pie

• Core verticals are healthy: Education grew ~10%, healthcare saw double-digit growth, and jewelry grew 5%, while traditional categories like real estate and government continue to prefer print as their primary medium.
• Auto sector is reactivating: After a 2–3 year hiatus due to chip and vehicle availability issues, auto advertisers have resumed spending, and management sees significant headroom for future growth from this category.
• New-age advertisers are sticking with print: Digital app-based companies and startups continued their preference for print this quarter, adding a new layer of demand beyond traditional verticals.
• FMCG is the notable weak spot: The FMCG category declined 10%, a counter-trend within an otherwise broad-based ad recovery.
• Market share is being taken, not given: Management confirmed the market is growing at single digits while D B Corp grows at 10–12%, and explicitly stated this involves "a lot of swing in terms of market share, in terms of value and everything in our favor."

Girish Agarwal: "It's not a given situation where we simply say, relax team can start relaxing and saying that 10-12% growth is given, nothing is given, we need to really fight for every percentage."

Cost Structure & Margin Sustainability

• Newsprint costs fell sharply: Average newsprint price dropped from ₹63,500/MT in Q2 FY23 to ₹51,500/MT in Q2 FY24, a 16% YoY reduction that was the single largest driver of the 1,000 bps margin expansion.
• The tailwind is not exhausted: Management expects Q3 newsprint costs to remain similar to Q2 levels, with a further 5–6% decline possible in Q4, suggesting the cost benefit will persist for at least two more quarters.
• Operating efficiencies are being layered on: The company is rolling out initiatives believed to help operating efficiencies in the long run, complementing the cyclical newsprint benefit with structural cost control.
• Margin band is now 26–30%: Management believes the current ~28% EBITDA margin is sustainable, with a possible variation of a couple of percentage points up or down, and attributes this to the efforts of 8,000–10,000 people working toward cost optimization.

Girish Agarwal: "So, sir we are right now at a 28% margin in this quarter. And as I mentioned to you earlier also that the entire team of 8000 - 10,000 people are working towards it, that we should be able to sustain this kind of margin, maybe a couple of percentage up and down."

Radio: High Margins, Hard Inventory Ceiling

• Industry-best margins are sustainable: The radio segment delivered the industry's best EBITDA margins, and management believes these are sustainable, supported by a government-led initiative allowing news broadcasts and an increase in DAVP rates.
• Inventory is structurally capped: Unlike print, which can add pages to accommodate more advertising (up 8–9% YoY this quarter), radio is limited to 60 minutes per hour with a maximum of 20–25 minutes of advertising, and all prime time across all channels is already fully occupied.
• Future growth must come from yield and innovation: With no ability to expand inventory, radio growth is now driven by yield improvements, activations, and non-airtime business improvements, though management is only "hopeful" of taking yield improvements in coming quarters.
• Government rate increase is pending: The final rate from the government for DAVP advertising has not yet been received; once it arrives, management believes the increase could be even higher than 40%, but the timeline remains uncertain.

Circulation & Digital: Steady Print, Opaque Digital

• Subscription growth is value-driven: The 4.2% subscription revenue growth came entirely from cover price increases, as circulation remained steady at approximately 42 lakh copies, with the current cover price of ₹4.86 considered decent and no further increases planned.
• Digital presence is growing but undisclosed: Dainik Bhaskar is the number one Hindi and Gujarati news app, and the company will continue to fuel omni-channel efforts, but management declined to disclose digital paid subscriber numbers, citing a prior agreement with analysts to withhold the figure for a few more quarters.
• Digital revenue disclosure is promised soon: Management stated that digital revenue numbers should "firm up more" in the next couple of quarters, at which point they should be able to provide more information.
• No new geographies or acquisitions: The company has no plans to enter new geographies beyond the 12 states where it is present, and no plans for any acquisition, remaining committed to its current path.

Election Impact & Near-Term Risks

• Model code of conduct is a known, unquantified drag: State elections in Madhya Pradesh, Chhattisgarh, and Rajasthan have triggered the model code of conduct for approximately 30–40 days, which will pause government advertising, a category that contributes slightly more than 14% of the ad pie.
• Management declined to quantify the impact: When asked for the financial impact of the government advertising standstill, management said, "I won't know the impact right now to give it to you the exact number," but characterized it as "not very substantial."
• Festive season shift adds noise: Last year, Navaratra fell partly in Q2, while this year it falls in Q3, causing some advertising shift between quarters, though management described the impact as not material.
• General election looms as a further variable: The 10–12% ad growth trajectory may take a dent from the general election's model code of conduct, though other categories like real estate and education are described as doing decent.

Girish Agarwal: "It is around 30 - 40 days overall. I won't know the impact right now to give it to you the exact number. But the impact is not very substantial because the government itself is around 10 - 14% of the total category for us."

Guidance & Commitments

Key Metrics