Margins may go up to 30% if ad growth rises: DB Corp

DB Corp saw advertising revenue at 9% this quarter, majorly led by auto and lifestyle segments and overall ebitda has come in at 26%. Agarwaal says that if advertising growth goes up back to the strong double digit, then ebitda margin of 30% plus is very much doable going ahead.

After successful four editions in Maharashtra, DB Corp plans to launch their fifth in Solapur district by April this year.

Below is the edited transcript of the interview. Also watcht he accompanying video.

Q: You have seen some year-on-year growth in your ad revenue. What exactly was the experience quarter-on-quarter and which verticals led the ad growth?

A: In the December quarter, our ad growth is around 9% and major growth has come from automobile, electronics and the lifestyle segment.

Q: Can you just take us through why margins have come under pressure this quarter for which your PAT has also drifted down year-on-year quite significantly?

A: If you look at my EBITDA margins for the mature editions, we are around 34%, which is pretty good as per our expectations. Overall, we are at around 26% EBITDA margins. This includes the losses which we are incurring and the investments which we are doing in the state of Maharashtra and Jharkhand.

Q: So by when do you see the impact from the new editions even out leading you back to 30% plus overall blended margins?

A: The advertising growth this quarter is 9%. If advertising goes up back to the strong double digit, then this EBITDA margin of 30% plus is very much doable.

Q: Any levy in terms of whether you can up circulation revenues or if you can do something on pricing in order to improve the margin performance?

A: Quarter-to-quarter news print cost has gone up by 2%. We assume that this will stabilize at this number now. Whatever the impact is coming is because of the dollar moving up. So that 35%, which is an important component for our news print, that is still hurting a bit on the dollar cost. Overall, if you look at the growth which we have taken from the news print revenue, circulation revenue is also pretty strong around almost 16%. In some places, we have been able to increase the cover price and there has been circulation growth of almost four lakh copies over a period of nine months.

Q: Some of the states where you circulate are going to polls come January and February. What is the experience usually in such phases in terms of whether it bumps up ad revenue growth or otherwise for you?

A: Frankly nothing much because whatever the advertising revenue, like Punjab is one state where we are into, whatever comes from the election revenue, that much the government revenue goes down and other revenue goes down because most of the private sector keeps holding on to their investment because of the new government or whatever happens. So I don’t think election is a big spike at all in advertising revenue.

Q: Can you give us an update on how the new editions are doing in terms of circulation and whether ad revenues are beginning to get some traction?

A: The response which we have got from Maharashtra and Jharkhand is phenomenal and that has encouraged us to launch our fifth edition in Maharashtra. We already have four editions in Aurangabad, Nashik, Jalgaon and Ahmednagar. Now we have decided to launch Solapur around April this year itself, and the advertising has really picked up very well; in fact, more than our expectations in Maharashtra.

Jharkhand, the circulation number is pretty strong. Advertising is yet to flow in to our expectations because the market is slightly smaller and slightly laid back to really bounce back from there.