D B Corp Ltd Q3 FY2024 Concall Summary

Key Takeaways

• 10th straight strong quarter: Revenue growth sustained on a higher base, driven by broad-based ad recovery and a sharp newsprint cost tailwind that lifted margins.
• Ad revenue firing across categories: Auto (+47%), jewellery (+26%), government (+36%) and real estate (~20%) led double-digit gains, while education and classifieds lagged.
• Newsprint costs fell further: Average cost dropped to ~₹50,000 per metric ton from ₹63,500 a year ago, with management expecting another 2–5% decline over the next two quarters.
• Radio and digital are scaling profitably: Radio EBITDA grew 56% YoY on 28% revenue growth; digital users reached ~1.3 crore with the #1 Hindi and Gujarati news apps.
• What to watch next quarter: The size of the Lok Sabha election ad spend captured in Q4, the trajectory of newsprint prices amid Red Sea freight risk, and any progress on digital monetization.

Advertising Revenue: Broad-Based Growth, Election Upside Ahead

• Category-level strength: Auto advertising surged 47% YoY, real estate grew ~20%, jewellery rose 26%, and government spending (state elections) climbed 36%. Healthcare and BFSI/IPOs each added ~20% and ~16% respectively.
• FMCG grew but remains small: The category expanded 20–25% but its absolute size is not large enough to move the needle materially.
• Pockets of weakness: Education ad spend declined 10% and response/classified obituary advertising contracted ~3–4%, reflecting selective pressure in traditional print verticals.
• Rate increases are selective: Management raised ad rates only on categories performing well, not on struggling ones like auto, so the revenue lift is volume-led in several verticals.
• Election tailwind is front-loaded: With the Lok Sabha elections scheduled for April/May and the model code of conduct in effect until March, the major chunk of central election advertising revenue is expected to land in Q4 FY24.
• Tier 2/3 cities remain the engine: Strong local economic growth in D B Corp’s key markets continues to underpin advertising momentum, reinforcing the geographic focus on existing states.

Girish Agarwal: “I think that makes us in a very happy situation. Number two, since you raised this question, I also believe this is the right time for all the newspaper organization and especially at D B Corp, we are doing it and we are investing more in the content because we believe that we all were able to come out of the storm of COVID and all based on the content.”

Newsprint: The Margin Tailwind Has Further to Run

• Cost decline delivered margin expansion: Average newsprint cost fell from ₹63,500 per metric ton in Q2 FY23 to approximately ₹50,000 in Q3 FY24, a drop of over 20% that directly improved gross margins.
• Near-term outlook is still soft: Management expects newsprint prices to remain soft for the next 1–2 quarters, with a strong possibility of a further 2–3% decline.
• Red Sea freight is the wildcard: Geopolitical disruption to shipping routes affects the ~30% of paper that D B Corp imports, potentially offsetting some of the raw material price decline.
• A structural floor exists: Management does not believe prices can fall to ₹40,000 because newsprint manufacturers can switch production to packing and writing paper if the segment becomes unviable.

Girish Agarwal: “I'm hoping for that, as you mentioned, I would like to see. But frankly speaking, it can never go down to INR 40,000 for 2 reasons. Number one, the newsprint manufacturers are now also have the ability to switch it over into the packing, writing and other paper.”

Circulation & Content: Quality Over Discounts

• Circulation grew 3–4% organically: The company prints approximately 41–42 lakh copies daily, with growth driven entirely by content quality rather than freebies or trade schemes that reduce the effective cover price.
• No new geography entry planned: D B Corp will continue to focus on its existing 12 states where management sees remaining potential, rather than expanding into new markets.
• Content investment is rising: Management believes the trust factor and credibility of newspapers are rising post-COVID and that now is the right time to invest more in content to deepen reader engagement.

Girish Agarwal: “We want to increase circulation based on the quality of content.”

Radio & Digital: Scaling With Discipline

• Radio delivered industry-leading margins: Revenue grew 28% YoY and EBITDA jumped 56% YoY, driven by D B Corp’s strong position in Tier 2 and Tier 3 markets where advertiser dependence on radio is higher and delivery remains effective.
• Local programming is the moat: All 30 stations run local programming with no RJs leaving the network, building local connection through music and jock talk that keeps stations healthy.
• Digital audience is large but unmonetized: The digital business reached ~1.3 crore users as of December 2023, with the number one Hindi and Gujarati news apps. Management asks for patience on monetization, offering no timeline or strategy details.
• Digital expenses are trending down: The expense line in the digital segment is on a downward daily trend, and the major part of digital investment has already been completed.

Girish Agarwal: “I think app is doing very well in terms of involvement of the reader. We have got a large chunk of people coming in giving their time to us and all that. We are expanding in all that. So I think monetization will happen. I think we all need to have patience on the monetization front.”

Balance Sheet & Capital Allocation

• Net cash, zero debt: Cash and bank balances stood at ₹825 crore, with ROCE at 24% and RONW at 18%.
• Dividend-first philosophy: Management’s stated capital allocation strategy is to retain cash only if the company needs it, otherwise distribute it as a dividend. No cash or investments are being earmarked for digital, as the major investment phase there is complete.

Girish Agarwal: “If company needs some money, keep it in the balance sheet, otherwise give out as a dividend. That's what we've been doing it.”

Guidance & Commitments

Key Metrics