We are benefiting from soft newsprint prices in improving gross margins: Girish Agarwal 

DB Corp Ltd, Non-Executive Director Girish Agarwal during the Q3 earnings call shared that Q3 performance had been good for the company. He said, print media's dominance in the news landscape has been demonstrated with consistent growth in advertising. 

According to Agarwal, Dainik Bhaskar's brand equity as India's No.1 newspaper is reflected in the impressive portfolio of advertisers that continue to enforce their trust and increase advertising spending every quarter. He said, “The buoyancy in the Tier II and III cities continue to drive strong local economic growth in our key markets, the auto sector saw further traction with the festive season and the new launches driving further ad spends.”

He further shared that advertisers’ categories such as education, real estate, jewellery, government, health, BFSI, etc, continue to use print as their preferred medium and have given a very good growth in this quarter. On the cost front, he said, “We have been benefiting from the soft newsprint prices, and this has certainly helped us improve the gross margins.” 

He said the company’s balance sheet is in a very healthy position with cash and bank balance at Rs 825 crore with zero debt. “Our ROCE and our RONW have a healthy 24% and 18% level. Also, happy to share that our company has generated free cash flow of Rs 337 crores in the last 9 months.”

Speaking on the newsprint prices, Agarwal highlighted that last year, in the same quarter, newsprint prices were roughly around Rs 61,000 per ton, whereas in this year Q3, it came down to almost Rs 50,000 per ton. “If I see the Q2, we were at some Rs 51,500 and this Q3, we are at Rs 50,000 and going forward, it looks like there is a strong possibility of this going down by another 2 - 3%. There is an overseas freight issue happening because of the Red Sea and if that doesn't create any problem, then this price should further go down by 2 - 3%.”

Agarwal further spoke about the segments that spent in Q3 in print. He shared that in Q3, most of the advertising categories have grown in double digits. He shared that categories like automobiles had grown by almost 47%, FMCG by 20 - 25%.real estate by 20%, jewellery by 26% and Government spending had shown 36% growth because of the elections in these states.

On the other hand, the hospitals and healthcare sector has grown by 20% while Banking and finance and IPOs have gone up by almost 16%. 

“There are a few categories, those who have maintained their number like response is one big category for us, which is a classified obituary- that segment has taken a slight beating by almost 3 - 4%. Education has gone down by 10% in Q3 because it's not an education quarter.” Another category which has taken a nosedive, is a hypermarket, which is a small category for the group, shared Agarwal- which has gone down by 25%. 

Speaking on the ad rates whether it's gone back to pre-COVID levels, Agarwal shared that in some categories, they have gone higher than the pre-COVID level and in certain categories, the newspaper is still at the same level.

When asked if print media is growing better, Agarwal explained that newsprint cost reduced for the entire industry. Also, the group witnessed a double digit growth in the advertising revenue. 

“I'm assuming the same would be for others and if not same at least single digit for the other players also. Overall, the trust factor in newspapers has gone up. I think that makes us in a very happy situation.” He also mentioned that he believes this is the right time for all the newspaper organizations to invest in content. 

“At DB Corp, we are investing more in the content. I believe it's our responsibility that we must invest in the content, so our reader, our consumer feels more delighted and the relationship with them continues.”