DB Corp Q2FY18 Concall Summary

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 Financials Highlights

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  • Total Revenue for the quarter stood at Rs. 5,741 million as against Rs. 5,432 million during thecorresponding period last year.
  • Ad revenues grew by 6% and stood at Rs. 3,966 million as against Rs. 3,714 million in Q2 FY17.
  • Circulation Revenue grew by 8% and stood at Rs. 1,273 million as against Rs. 1,179 million during thecorresponding period last year.
  • EBITDA stood at Rs. 1,456 million as against Rs. 1,547 million in Q2FY17.
  • EBITDA margins stood at 25% as against 258% during last year.
  • PAT for the quarter stood at Rs. 787 million as against Rs. 885 million generated in Q2 FY17.

Financials for the first half of the fiscal

  • Total Revenue grew by 4.8% YoY and stood at Rs. 11,753 million as against Rs. 11,219 million generated during H1 FY 17.
  • Ad revenues grew by 5.4% YoY to Rs. 8,301 million from Rs. 7,876 million in H1 FY17.
  • EBITDA remained stable at Rs. 3,390 million as against Rs. 3,400 million in H1 FY 17.
  • PAT for H1 FY 18 stood at Rs. 1,888 million as against Rs. 1,925 million in H1 FY 17.
  • DBCL’s radio business ad revenues grew by 17% at Rs. 349 million as against Rs. 299 million in the same period last year.
  • Digital properties continued to attract exponential viewership with unique visitors growing by80% to 102 million on YoY basis.

Business Performance

  • A circulation expansion strategy has resulted in excellent growth of 8% on a high base of circulation copies along with cover price increase.
  • The company has a saving of around Rs. 8 crore based on the input cost advantage.
  • 99% of the new copies addedhas come from a store-to-store sales increase.
  • Because of clear circulation dominance, there can be seen short-term, medium-term and long-term benefit of these copies.
  • Demonetization and GST has affected the business. Also, there were categories who have done good like automobile, FMCG, lifestyle but category like real estate has de-grown because of the RERA.
  • While looking at YoY the growth is 2% but if we compare September last year and September this year, the growth is almost 5-6%.
  • There has been a volume growth of almost 3.1% and there is a yield growth also.
  • In Bihar Launch the company made it presence only in 11 districts out of 38. Almost 3.5-3.75 lakh copies are there.
  • Bihar is a typical market where almost 35% revenue comes fromthe Government and there are the private sector advisors also, who are looking at some kind of markets.
  • Owing to cheaper Internet and cheaper data prices, the supply side i.e. consumption has grown tremendously. So, the overall yields have crashed in internet. This may take a quarter or two to be stabilized.
  • On the digital side, almost 25% of value comes through direct advertising and the balance of almost 70-80% is brand. Google is also brand advertising.
  • Almost 37% of the total demand for the newsprint was imported this quarter.
  • The market share has gone up and the company has been able to take away almost 60-70% of the market growth.
  • Rajasthan, Gujarat, Madhya Pradesh and Haryana, these are the markets where corrugation has largely has grown.

Cost 

  • There is a growth of 9.3% in overall newsprint cost, out of which the impact on newsprint price is around 2% and the pagination impact is 6%.
  • Because of the festive 10 days in September, the pages were much higher and there was an increase circulation by almost 2% due to impact of PO.
  • Employee cost has grown by 2% which includes expansion of the radio business as well. In print business, the personal cost is flat.
  • The company has been able to control the costs pretty well as there has been hardly any effect because of the rate but the impact was there because of increased number of pages in terms of more advertising due to festival season.
  • There has been increase in the overall cost because of the Bihar expansion cost i.e. around 7 cr. and of a lot of circulation scheme and reader scheme.
  • For the Rs. 15 cr. Jeto offers, the proportionate cost has beentaken into account because the scheme was launched in July and is going to be there till November.
  • Price remains same in Patna and in any other upcountry market, while the pagination in Patna is higher than the upcountry market. So, the distribution cost, manpower cost,the setup cost is much lower in the other market.

Future Prospects

  • The company expects to launch all new editions over the next few months riding on a stronger product and brand strength.
  • The company expects to make its presence in the rest of the Bihar’s 27 districts by adding 4 lakh copies by January.
  • In last quarter the real estate was down by 20% and this quarter it is 30%. Because market perception has gone that the pricesof the flats will go down, and hence buyers are holding out. So when they are holding back, the company expects a good growth.
  • The company is looking at around Rs. 70 crore - Rs. 80 crore of CAPEX in FY17
  • As far as IRS is concerned, report will be released in December or January. Based on that, industry will take a call that how wewant to change advertising rate.

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