D B Corp — Q2 FY25 earnings call

Call held 16 Oct 2024

Management summary

D B Corp reported a mixed performance for Q2 & H1 FY25. While H1 saw robust growth in revenue, EBITDA, and net profit, Q2 experienced a decline in total revenue and profitability, primarily due to a prolonged monsoon and a high base from last year's election-driven advertising surge. The company highlighted strong growth in its Radio segment and significant expansion in digital Monthly Active Users (MAUs), alongside effective cost control and softer newsprint prices contributing to H1 margin expansion.

Highlights

  • H1 FY25 Total Revenue grew 2% YoY to INR 1,198.8 crores.

  • H1 FY25 EBITDA increased 10.4% YoY to INR 335.1 crores, with margin expanding from 26% to 28%.

  • H1 FY25 Net Profit rose 12% YoY to INR 200.4 crores.

  • Q2 FY25 Total Revenue declined 3.2% YoY to INR 582.5 crores, impacted by prolonged monsoon and high base.

  • Q2 FY25 EBITDA was INR 144.2 crores, down 14% YoY, with margin at 25%.

  • Radio segment Q2 FY25 Advertising Revenue grew 16% YoY to INR 41.4 crores, and EBITDA grew 22% to INR 13.2 crores.

  • Digital MAUs reached 19.6 million as of August 31, 2024, up from 14 million in March.

  • Print business EBITDA margin expanded by 400 basis points to 32% for H1 FY25.

Key financials

2 periods

Q2

  • Total Revenue
    ₹582.5 Cr
    YoY -3.2%
  • EBITDA
    ₹144.2 Cr
    YoY -14%
  • EBITDA Margin
    25%
  • Net Profit
    ₹82.6 Cr
    YoY -17.6%

H1

  • Total Revenue
    ₹1,198.8 Cr
    YoY +2%
  • EBITDA
    ₹335.1 Cr
    YoY +10.4%
  • EBITDA Margin
    28%
  • Net Profit
    ₹200.4 Cr
    YoY +12%

What they filed

Q1 FY27: revenue up 8.1%, net profit up 24.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue559 643 548 559 614 +10%605 −6%576 +5%604 +8%
EBITDA121 177 83 111 138 +14%135 −24%104 +25%136 +23%
Net profit83 118 52 81 93 +12%96 −19%62 +19%101 +25%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Radio Segment
    ₹41.4 Cr Q2 Advertising Revenue₹13.2 Cr Q2 EBITDA

Guidance & targets

Profitability

  • EBITDA Margin Profitability · FY25 · Medium confidence 30%
    I'm sure if they do something better, so we should be able to reach 30%. 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.

    — Girish Agarwal

Revenue

  • Full Year Revenue Growth (ex-election surge) Revenue · FY25 · Medium confidence strong single-digit
    To be very honest 15% full year, this year I don't think that number would be really correct to justify, but if I take the election revenue out of that, strong single-digit number should be the one what we are aiming for and should be able to deliver.

    — Girish Agarwal

  • Overall Top Line Growth Revenue · FY25 · Medium confidence strong single-digit
    So, looking at strong single-digit growth.

    — Girish Agarwal

Other

  • Newsprint Prices Other · Q3 and Q4 FY25 · Medium confidence largely similar, maybe 1%, 2% here and there
    We believe that the quarter 3 and 4 should largely be there itself, maybe 1%, 2% here and there.

    — Girish Agarwal

Risks & concerns

  • Q2 Revenue Decline due to Macro Factors

    medium

    Q2 revenue was down due to prolonged monsoon and high base effect from last year's election-driven advertising surge, coupled with a subdued GDP growth in July-September.

    Management acknowledged

  • Print Circulation Decline

    medium

    Circulation declined by 2-3% post-election, which management stated is a 'matter of concern' and is planning initiatives to address.

    Management acknowledged

  • Digital Cannibalization of Print

    low

    Management believes cannibalization is a 'very limited aspect' as digital reaches an untapped audience not previously reading newspapers.

    Management downplayed

  • Ad Yield Rates Stagnation

    low

    Ad yield rates show 'slight improvement' but 'not much improvement' as advertisers push down prices, making it 'nothing worthwhile that I can gloat about'.

    Management acknowledged

Areas of evasion (3)

  • Specific annual expenses for the digital business
  • Exact percentage contribution of government advertising
  • Timeline for digital monetization

Q&A highlights

2 direct
Circulation Revenue Decline and Future Initiatives Direct
You are right. Post election, we have seen a decline of around 2 - 3% in our circulation. And that's a matter of concern for us. ... And we have planned some reader initiative, and you will see a lot many such activities happening from November itself, post Diwali.

Reveals a key challenge in the core print business and management's plan to address it, indicating potential future expenses.

Asked by Amit Doshi

Increase in Other Expenses in Q2 Direct
Multiple things in that thing. Some of the expenses, which we were delaying from last one year, as you would appreciate, a lot many things for the staff, a lot many things for the market need to be done. As in digital, also, we are looking at newer geographies and all that. So, all these expenses put together, we saw that increase over there.

Provides insight into the drivers of increased operating costs, including strategic investments in digital and market promotions, which could impact short-term margins.

Asked by Rakesh

Government Advertising Share and Future Impact Partial
Government share - last year government share was pretty high because of the local elections there and this year it has come down. As I told you, government revenue has come down by almost half compared to last year. ... Frankly speaking, upcoming quarters, I don't think much of the government will impact much of it.

Highlights a significant revenue headwind in Q2 due to reduced government spending post-election, but management downplays its impact on future quarters, which could be a point of investor scrutiny.

Asked by Mohammed Patel

2 min read 6 chapters

Detailed narrative

Q2 & H1 FY25 Financial Performance Overview

D B Corp reported H1 FY25 total revenue of INR 1,198.8 crores, marking a 2% year-on-year growth from INR 1,175.5 crores. EBITDA for H1 increased by 10.4% to INR 335.1 crores, with the margin expanding from 26% to 28%. Net profit for the half-year also saw a 12% rise to INR 200.4 crores. However, Q2 FY25 presented a challenging picture, with total revenue declining 3.2% year-on-year to INR 582.5 crores, and EBITDA falling 14% to INR 144.2 crores, resulting in a net profit of INR 82.6 crores, down 17.6% from the prior year.

Advertising Revenue Trends and Sectoral Performance

The Q2 revenue decline was primarily attributed to a prolonged monsoon and a high base effect from last year's election-driven advertising surge. Despite this, H1 advertising revenue grew 1% to INR 829.1 crores. Sector-wise, automobile advertising showed a strong 50% growth, real estate grew 35%, and FMCG increased 20%. Conversely, government advertising was down by almost half, and the lifestyle category (clothing and shoes) declined by 10%.

Circulation and Newsprint Price Dynamics

Print circulation revenue remained flat at INR 117.5 crores in Q2, but the company noted a 2-3% decline in overall circulation post-election, which is a 'matter of concern'. Management plans to launch reader initiatives and promotion schemes from November onwards to address this. Newsprint prices softened to INR 48,000 per tonne in Q2 FY25, down from INR 51,500 last year, and are expected to remain soft, with minor fluctuations of 1-2%, in Q3 and Q4.

Digital Business Growth and Strategy

The digital segment demonstrated robust growth, with Monthly Active Users (MAUs) reaching 19.6 million as of August 31, 2024, a significant increase from 14 million in March. D B Corp positions Dainik Bhaskar as the digital leader in Hindi and Gujarati news apps, attributing this growth to content quality, technical product, and expansion into new geographies like Uttar Pradesh, Bihar, and Uttarakhand. The company aims for both subscription and advertising revenue from its digital platforms.

Radio Segment Outperformance

The Radio segment delivered strong performance, with Q2 FY25 advertising revenue increasing by 16% year-on-year to INR 41.4 crores, up from INR 35.6 crores. This growth translated into a 22% rise in EBITDA for the segment, reaching INR 13.2 crores compared to INR 10.8 crores in the prior year. The radio business contributed to the overall H1 growth with an 11% year-on-year increase in revenue to INR 80.1 crores.

Profitability Outlook and Cost Management

The company's H1 EBITDA margin expanded from 26% to 28%, with the print business EBITDA margin specifically expanding by 400 basis points to 32%. This improvement was driven by effective cost control measures and favorable newsprint prices. Management acknowledged an increase in 'other expenses' in Q2 due to delayed staff-related expenses, market needs, digital expansion, and festival season promotions. Despite Q2's 25% EBITDA margin, management expressed confidence in reaching a 30% EBITDA margin for the full year FY25.

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