D B Corp Ltd Q1 FY2025 Concall Summary

Key Takeaways

• Print advertising drives a strong quarter: Advertising revenue grew 8.4% YoY to ₹427.7 crore, while a 17.2% drop in newsprint costs helped EBITDA surge 40.4% YoY with margins expanding 700 bps to 31%.
• Circulation revenue is flat for now: Price increases taken in the last 6-8 months are still annualizing, so the real impact of circulation initiatives is not expected until post-September.
• Digital remains a black box: Management declined to share quantitative digital numbers, citing the business's small size and competitive sensitivity, though paywall and advertising experiments are underway.
• Newsprint tailwind may moderate: Newsprint costs fell to ₹46,900 per metric ton, but management expects a couple of percentage points of increase next quarter as international freight costs rise.
• What to watch next quarter: Whether circulation copies begin to improve from September as guided, the magnitude of the newsprint cost increase, and any signal on digital monetization progress.

Print Advertising: Volume-Led Growth on a Stable Base

• Broad-based advertiser demand: The 8.4% YoY growth came on a relatively higher base, with management emphasizing brand strength and advertiser trust as key drivers.
• Volume over yield: Growth is largely on both volume and value fronts, but yield improvement is only marginal; the primary focus remains on increasing volume rather than pushing rates.
• Stable advertiser mix: Education remains the largest vertical at 20% plus of the mix, followed by real estate (7-8%), automobile (8%), FMCG (4%), and jewelry (4%), with the mix almost identical to last year.
• Page count steady: Average pages were 20.88 versus 20.8 in the same quarter last year, a 0.3% increase; the floor is around 19 pages, rising to 24-26 during festival seasons.
• Outlook tied to macro: Management is looking forward to an excellent budget, noting that if the government ensures economy growth, key sectors like automobile, education, real estate, and jewelry will start firing.

Circulation: Flat Now, Improvement Expected Post-September

• Price hike annualization masked progress: Circulation revenue was flattish because price increases taken in certain markets over the last 6-8 months are still annualizing, muting the reported impact.
• Distribution push underway: The company has started running various schemes for distribution agents to encourage more reading and buying of copies, with copies improvement expected to begin from September.

Girish Agarwal: "Frankly speaking, what has happened in certain markets, we have taken the price increase in last six, eight months' time, that annualization impact also came in. So, I think the real impact of circulation we will start seeing in post September only."

Cost Structure: Newsprint Tailwind, With a Caveat

• Newsprint costs fell sharply: At ₹46,900 per metric ton, newsprint costs declined 17.2% YoY, and as a share of overall costs, newsprint now stands at 37%, down because the overall cost base has come down.
• Freight-driven increase ahead: Management expects a couple of percentage points of increase in newsprint price next quarter because international freight costs have started rising.
• No hedging available: Newsprint cost cannot be hedged meaningfully; freight costs are unhedgeable, and Indian newsprint can only be hedged for 3-5 months maximum.
• Advertising expected to absorb the hit: Any increase in newsprint cost next quarter should be offset by advertising revenue growth, per management.

Digital: Experiments in Progress, Numbers Kept Private

• Paywall and advertising tests underway: The company is running experiments on digital paywalls and e-paper, with results described as good so far, and has begun opening up very limited areas for advertising on the app to gauge response.
• No quantitative disclosure: Management declined to share digital business numbers, citing two reasons: the size of the business is not substantial, and the competitive market makes them reluctant to send out unnecessary information.
• Data disclosure expected eventually: Management expects to share key operational data for digital maybe in a couple of quarters from now, though no firm timeline was given.

Girish Agarwal: "The only reason why we are not showcasing so much of digital because first of all the size of this business is not very substantial... Second thing, since the market is very competitive and we do not want to send out any unnecessary information, that's the reason we are holding it back."

Radio: Capped Until Regulation Changes

• Segment size static: The radio segment will largely stay at the same size and same percentages unless the Government of India opens up news and current affairs on private radio.
• Regulatory unlock is the catalyst: Once news and current affairs are permitted, management believes listening ability and viewer interest will rise significantly, expanding the segment's potential.

Girish Agarwal: "This segment largely will stay in the same size, same percentages, unless until Government of India opens up the news and current affairs in this. Once news and current affairs get opened up, then suddenly the whole listening ability of viewers for this segment will go up much, much more, interest will go up."

Capital Allocation: Dividend Declared, Buyback Undecided

• Interim dividend of ₹7: The Board declared an interim dividend for the quarter.
• Payout ratio and buyback under consideration: Management will take the point about increasing the dividend payout ratio and any investment opportunity or buyback to the Board, which will take a thoughtful call going forward; no commitment was made.

Guidance & Commitments

Key Metrics