D B Corp hosted a conference call on July 28,2022. In the conference call the company was represented by Mr Pawan Agarwal-Dy Managing Director, Mr Girish Agarwal-Non-Executive Director, and Mr P G Mishra.

Key takeaways of the call

Despite inflationary pressures and difficult challenges both in domestic and international markets, the company has delivered strong results in Q1FY2023. The company witnessed good growth both in circulation and advertising. The company has commenced FY2023 with strong optimism.

Advertising Revenue grew by 96.6% to Rs. 336.9 cr as against Rs. 171.3cr in Q1FY2022. This was mainly due to advertisers moving back to print in a significant way. Circulation Revenue grew by 4.5% at Rs. 115.6 cr as against Rs. 110.6 cr in Q1FY2022.

Circulation copies is 42 lacs in Q1FY2023. The company expects the number to increase by couple of lacs in Q2. However, when compared to FY19-20(pre-covid) it is down by 10-15%.

EBITDA stood t Rs 73.8 cr as against 5.1 cr in Q1FY2022 despite high newsprint prices and continued investment in digital business. This was possible due to stringent cost control measures undertaken by the company. EBITDA margin stood at 20% in Q1FY2023. EBITDA margins expanded more than 700 bps.

The company's various cost cut measures are long lasting. The company has been able to reduce operating cost by 6% vis-a-vis Q1FY2020.

News Print: News print prices have increased from 41,000/ton in Q1FY2022 to Rs 62000/ton in Q1FY2023.

The company imported around 30-35% of its news print requirement in Q1FY2023 and was higher in Q1FY2022.

The government of India is planning to remove custom duty on imported news print which will help reduce prices. However, depreciating rupee will have a negative impact. Due to Russia-Ukraine war, the company is not able to import from Russia, however is trying to import from wherever possible.

The company is working in all markets including tier II and tier III cities to increase circulation.

The company has increased the cover price from Rs 4.33 ps to 4.62 ps in Q4FY2022 and further increased to Rs 4.76 ps in Q1FY2023 and plans to increase further by 7%.

Average paper in Q1FY2023 stood at 19 pages as against 16 pages in FY2022 and 23 pages in FY19-20. The company is working hard to increase the average pager per issue.

Digital Business: The daily active users has increased from 2.1 million in Jan 2020 to 17 million in May 2022(which is more or less steady in last few months) due to high quality content, highly personalized knowledge experience. This has helped the company to become no 1 Hindi and Gujarati news app player.

The company is seeing stickiness in app users with total time spent is 13 minutes per day per user.

It is difficult to comment on when will company start charging for users, whether it will happen in next couple of quarters or will get delayed will depend.

Digital news paper association has filed a petition with competition commission of India against Google and other similar kind of monopolies to share revenues. The matter is sub-judice and the company is hopeful of getting a positive outcome very soon.

The quantum of digital add spends were largely done in Q4FY2022. However, the company is continuing to make investments in data, technology in digital business.

The company is not taking advertisement as of now in digital news, however plans to take going forward.

Advisement Yield: Category wise in some categories, the advisement yield is higher than pre covid levels where as in some it is still struggling. Advertisement yield is a function of performance of category in the market.

On an average the yield is still below the expected number. The company is trying to recover by Q3.

Education contribution as a category is the highest contributor in Q1, followed by government, real estate. Real estate is doing very well for the company. Jewellery and health sector is also doing well.

Sectors which are down is education, government is down and also automobile is down due to short supply. FMCG contributes around 5% of the company's kitty and when compared to FY19-20 it is lower.

Radio Business:

Advertising Revenue grew by 105.8% YoY at Rs.32cr versus Rs. 16 cr in Q1FY2023. EBITDA grew exponentially to Rs 9.4 cr versus loss of Rs 0.3 cr. EBITDA margin stood at 29.4% for the quarter.

MY FM has helped the company get better add rates.

The leadership position of the company in the market has helped attract wide variety of advertisers both from the traditional categories like real-estate, jewellery and education as well as new ventures like e-commerce, start-ups and fintech's.

The company has increased the advertisement funnel by innovation including award winning special edition, providing a advertisement hyper local platform.

Market share for the company is high in radio business. The market share is high not only in volumes but also wallet share.

Main advertisers in radio include lifestyle, healthcare, FMCG, BFSI and e-commerce companies.

Other expenses is down by Rs 30 cr in Q1FY2023 which is mainly due to lower digital market spend.

Dividend: The Board has declared interim dividend of Rs 3 per equity share of Rs 10/- each.

Based on recommendation of the Nomination and Remuneration committee, the Board of Directors has reappointed Mr Pawan Agarwal as the Deputy managing Director of the Company for another term of 5 years.

Management commentary:

Commenting on the performance Mr Sudhir Agarwal, managing Director said:

“Our industry has always been the most resilient in the face of challenges. While several experts were writing off print media in the wake of the digital revolution, we, at Dainik Bhaskar, continued our focus on delivering high quality and trustworthy content to our loyal readers. Not only have we moved to a strong leadership position in both physical and digital, but we are also benefiting from an industry level shift where advertisers are moving back to print in a significant way. This strategy has helped us deliver strong financial results for the Q1 FY2023.

The editorial team at Dainik Bhaskar has established a strong mechanism to understand the pulse of its readers and deliver content that is honest, relevant, and useful. With our strong on-ground presence, we have established ourselves as the #1 Indian Language omni-channel news delivery platform. Our circulation strategy has enabled us to scale up to the pre Covid-19 peak.

We continue our focus towards strengthening our financial position by remaining committed to our cost saving measures, especially important in light of high newsprint prices, which we expect will stabilize in the forthcoming quarters. We commence this new financial year with a sense of strong optimism.”