DB Corp Ltd’s revenue grew by 9.7% yoy to Rs567.3cr, in-line with the estimate of Rs561.4cr. However, revenue declined by 5.2% qoq. EBITDA came in at Rs97.9cr, down 12.8% yoy and 29.8% qoq. EBITDA margin contracted by 445bps yoy and 605bps qoq to 17.26% owing to higher cost of goods sold and other expenses. Company’s adjusted Net profit declined by 11.1% yoy and 26.9% qoq to Rs57.1cr. Both EBITDA and Net profit came below estimates of Rs120.9cr and Rs65.9cr respectively.
• The Printing & Publishing and Radio segment’s revenue grew 10.2% and 9.3% yoy to Rs515.3cr and Rs36cr respectively. However, Internet segment’s revenue declined by 7.6% yoy to Rs13.1cr.
• Advertising and Circulation revenue grew by 8.2% and 8.5% yoy to Rs386.1cr and Rs132cr respectively.
• Further, excluding impact of circulation expansion related one off expenditure, EBIDTA growth would have been in mid-single digit.
• Cost of goods sold grew by 20.5% yoy to Rs193.5cr. Cost of goods sold stood at 34.1% of sales, which is higher than 31.1% yoy.
• Other expenses grew by 19.6% yoy to Rs166.4cr. Other expenses stood at 29.3% of the revenue for Q4FY18 vs. 26.9% yoy. This has resulted in contraction of EBITDA margin.
• Circulation expansion strategy has delivered excellent growth of almost 18% in 9 months from around 51 lakh copies in June, 2017 to around 59.6 lakh copies in March, 2018, an increase of almost 9 lakh copies.
Con Call Highlights
• 80% of the Advertisement revenue growth of 8.8% in print media is contributed by volume growth, while rest 20% is from yield growth.
• Major advertisement revenue growth is driven by categories like education, banking and finance, etc., however real estate and automobile categories are growing at a slower pace than earlier.
• Further, management clarified on lesser dividend distribution that company neither has any significant capex plan nor any acquisition plan. As a policy, company will keep minimum cash on balance sheet going forward. Board is evaluating the economic means of distributing money.
• This year, company has incurred Rs161cr capex, which consists of Rs30cr in Bihar, Rs25cr in Rajasthan, Rs20cr in MP, Rs20cr in Gujarat, for upgrading its facilities.
• FY19E guidance is of Rs50-60cr maintenance capex.
• Cost of newspaper to a reader is Rs4-5, which management is planning to maintain at current level.
• In FY19E cost of newspaper (print, etc.) to company is expected to increase by 10-15%.
• FY19E circulation is expected to grow by 6-10% yoy.
• From last 3 to 4 quarters, advertisement revenue growth is not going up significantly. Company plans to launch new content categories which are expected to engage readers directly to its platforms.
• Increase in the receivable days is on account of increase in the proportion of government advertisement in last months. Other commercial debtors are stable.
D B Corp Ltd is currently trading at Rs. 271, down by 4.3 points or 1.56% from its previous closing of Rs. 275.30 on the BSE.
The scrip opened at Rs. 274 and has touched a high and low of Rs. 282.30 and Rs. 267.10 respectively. So far 3,02,143 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.
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