DB Corp: Key Takeaways from Q2FY11 Concall:: Edelweiss

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DB Corp: Key Takeaways from Q2FY11 Concall: Oct 25th,2010
Ad revenues up by 18% in Q2FY11: In Q2FY11, split of growth was 50% each from rate
hike and volume growth (which means rate growth was 9% and volume growth was 9%
YoY). In Q1FY11 ad growth was largely led by volumes (90% from volumes; 10% from ad
rate increase) which meant volume growth was 16%, rate hike was 2%. All sectors doing
well, National advertisers have outpaced growth in Q2FY11. Local advertisers account for
59% in Q2FY11 of overall DB’s ads (58% in Q4FY10) while National ads are 41%. H2FY11 is
likely to see even faster growth as this year H2 will account for 55% of full year ad revenues
as Diwali effect will be fully in H2FY11. Ad rate industry for regional print has grown by 10-
12% YoY in Q2FY11.
Jharkhand entry: DB Corp is quite happy with Ranchi launch and will expand to Jamshedpur
in Nov,2010 and Dhanbad in Jan, 2010. Current circulation in Ranchi is 150,000 out of which
135,000 are on annual subscription package. Survey in Ranchi helped DB Corp to understand
consumer demand.
Jammu soft launch: Company has soft launched in Jammu with 20,000 copies at INR 2
cover price.
Bihar entry: Likely to happen in H2FY12.
Private treaty: Company booked INR 24 mn in Q2FY11 (INR 18 mn in Q1FY11 and INR 30
mn done in FY10).
Newsprint: Average newsprint cost for Q2FY11 was INR 26.24 and is likely to inch up to INR
28.75 in Q3FY11 on a blended basis. Mix of 20:80 in terms of International: Domestic for
Newsprint. However pulp prices have started softening. Current international rates are at
USD 650-675.
Higher employee expenses: Q2FY11 was higher due to due to shift of contractual
employees to company rolls due to which costs shifted from production to employee heads;
increments ; gratuity and ESOPs.
Capex: INR 400 mn in launch for Jharkhand. For upgradation of machinery in current
markets INR 200 mn will be used. For Bihar and Jharkhand company expects INR 850 mn in
the next 2 years.
Radio: In Q2FY11, Company got INR 110 mn in sales and INR 3.7 mn in EBITDA. The
demerger of Radio will happen in Q3FY11 and will happen from a retrospective effect from
Q1FY11. Still DB Corp has no clarity on phase 3.
Tax rate: Post approval of court, DB Corp will have a tax benefit of INR 300 mn for FY11
(likely to get approval in Q3FY11).
Cash: INR 1610 mn (2160 mn in Q1FY11)
Net Debt: INR 410 mn (INR 160 mn in Q1FY11).