D B Corp Ltd Q2 FY2025 Concall Summary

Key Takeaways

• Ad revenue missed, election base haunts: Advertising growth targets were not met in Q2 FY25, as a prolonged monsoon and a high base from last year's election spending combined to drag the top line.
• Cost control protects EBITDA: Softer newsprint prices and effective cost management drove EBITDA growth, even as other expenses rose on festival spending and digital expansion.
• Government ad spend halved: The government revenue share dropped by almost half versus last year, a key swing factor that management says will not materially impact upcoming quarters.
• Digital is growing but opaque: Dainik Bhaskar claims the number one Hindi and Gujarati news app spot, yet management declined to disclose any detailed digital financials, asking investors to "have patience."
• What to watch next quarter: Whether the post-Diwali reader and circulation schemes can reverse the 2-3% circulation decline, and if the festival season's "good" ad momentum carries into Q3 to hit the strong single-digit full-year growth target.

Top-Line Performance: The Election Hangover

• Base effect from elections: Last year's Q2 included a surge of government advertising and disposable income from state elections in MP, Chhattisgarh, and Rajasthan. Excluding this roughly 5% onetime election surge, the top-line decline almost reverses.
• Monsoon disruption: A prolonged monsoon further suppressed advertising demand in the quarter, hitting the usual seasonal recovery.
• Circulation softens post-polls: Print circulation declined 2-3% YoY after the Lok Sabha election euphoria faded, with the usual summer dip shifting into Q2. Management is planning reader schemes from November to arrest the slide.
• Sectoral ad mix shifts: Automobile (50% growth), real estate (30%), and FMCG (20%) were bright spots, while government halved and lifestyle fell ~10%. Education posted single-digit growth.

Girish Agarwal: "Frankly speaking, we were not able to meet our advertisement growth targets in Q2FY25 due to prolonged monsoon and also a pretty high base of last year."

Profitability & Costs

• EBITDA growth despite revenue miss: Softer newsprint prices and effective cost control measures drove EBITDA expansion, with a substantial improvement in debtor collection reducing the provision for expected credit loss.
• Other expenses spike: Other expenses rose on delayed staff costs, market expenses, circulation agent outreach, advertiser engagement events (awards functions) not held last year, and digital expansion into Uttar Pradesh, Bihar, and Uttarakhand.
• Newsprint outlook stable: Management expects Q3 and Q4 newsprint prices to remain at current levels, with only 1-2% variation.
• Festival spending to taper: Other expenses incurred for the festival season will "go down drastically" from next quarter onwards, and management expects other expenses to track in line with revenue growth going forward.
• Margin target is a stretch: Management aims to reach a 30% margin for FY25, calling it "not an easy task, but not undoable," contingent on market and GDP support.

Girish Agarwal: "It's not an easy task, but it is not like an undoable task. We're working hard. If market supports us, India's GDP support us, I'm sure we should be able to do that."

Advertising: Yield, Mix & Festival Sentiment

• Yield rates barely budge: Ad yield rates saw a slight improvement versus pre-COVID levels, but management described it as "nothing worthwhile" amid constant push-pull with advertisers.
• Festival season decent, not spectacular: Navaratri ad spends were "good" but not exceptional. Management hopes the momentum continues but is not "burning crackers" yet.
• Government share normalizes: Government revenue halved YoY after last year's local election boost. Management stated the government share will not impact much in upcoming quarters, though it declined to disclose the exact percentage contribution.
• Consolidation tailwind slowing: The pace of benefit from competitor consolidation has slowed, but management remains "very hopeful" it will "take a blip and jump in coming months."

Girish Agarwal: "It is not amazingly that I'm already burning the crackers right now. It's not that good, but it's good and I hope this continues going forward furthermore."

Digital Business: Growth Visible, Financials Hidden

• App leadership claimed: Dainik Bhaskar is positioned as the number one Hindi and Gujarati news app, with MAU growth cited as evidence of traction.
• Geographic expansion underway: The company has opened up the markets of Uttar Pradesh, Bihar, and Uttarakhand for its digital presence.
• Financials remain a black box: Management has taken board approval to not disclose any detailed numbers of the digital business, declining to share annual expenses or a timeline for better disclosure. The revenue model will blend subscription and advertising.
• Monetization timeline is indefinite: When asked whether digital would contribute meaningfully in three or five years, management's sole response was "have patience."

Girish Agarwal: "I can only say one word, have patience."

Capital Allocation & Governance

• Dividend policy unchanged for now: Despite a history of ~60% payout and having already distributed 100%, management deflected a question on any change in dividend policy, calling it a Board decision based on cash reserves and future requirements.
• ESOPs in the pipeline: More ESOPs are planned, as management believes in incentivizing employees who "work day-in and day-out."
• Content-payment law sub judice: Management declined to comment on the law requiring Google and Facebook to pay for content, citing that the matter is sub judice.

Guidance & Commitments

Key Metrics