Description
BPPL publishes the ‘Dainik Bhaskar’ Hindi newspaper in seven editions - namely Jabalpur, Satna, Chindwara and Singrauli in Madhya Pradesh and Nagpur, Aurangabad and Akola in Maharashtra. Dainik Bhaskar has maintained its lead on circulation numbers (as reported by the Audit Bureau of Circulation-ABC). BPPL’s revenue growth continues to remain healthy marked by satisfactory growth of 19.5% in the circulation revenue in FY2016 even though the ad revenue saw a slower growth of 1.6% against an average increase of 3% over the past couple of years. In the current year, ad revenue growth has further seen a marginal dip due to the impact of demonetisation in Q3 FY2017. The revenue remains restricted to a single publication under Dainik Bhaskar, accounting for around 97% of the total revenue from the publication and the ad business while 3% revenue from the company’s local cable business. The circulation to ad revenue improved to 0.44 times in FY2016 as compared to 0.37 times in FY2015, indicating a lower vulnerability of revenues to economic cycles on account of ad revenue. Jabalpur is the key market for BPPL, contributing ~65% of the revenues followed by Nagpur with a combined contribution of ~84%. This also reflects the restricted geographies the company is allowed to cater to. A favourable industry growth has been visible for leading Hindi dailies supported by an increasing literacy rate; higher penetration and strong domestic consumption driven growth in the rural markets. The profitability has been stable for the company despite the continuous increase in employee expenses (operating margin of 16.9% and net margin of 6.4% in FY2016). The company has been able to negotiate the prices on the imported paper, resulting in higher consumption of the same as compared to lower domestic purchases. The company has incurred significant debt-funded capex in FY2017 towards augmenting its printing infrastructure. On account of healthy internal accruals, ongoing repayments and modest working capital requirements, BPPL’s capital structure and debt coverage indicators have remained comfortable over the years. BPPL’s working capital requirements have remained limited as it is able to enjoy credit from newsprint suppliers and is also able to realise its receivables on time.
