Music Broadcast Limited (RADIOCITY) Q3 FY23 Earnings Concall Transcript

Music Broadcast Limited (NSE:RADIOCITY) Q3 FY23 Earnings Concall dated Jan. 25, 2023.

Corporate Participants:

Ashit Kukian — Chief Executive Officer

Rajiv Shah — General Manager, Corporate Strategy

Analysts:

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

Apurva Mehta — AM Investments — Analyst

Mohit Khanna — Banyan Capital Advisors — Analyst

Nimish Maheshwari — RSPN Ventures — Analyst

Hiten Boricha — Joindre Capital — Analyst

Aditi Kasbekar — Individual Investor — Analyst

Pravin Sharma — Individual Investor — Analyst

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Music Broadcast Q3 FY ’23 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Ashit Kukian, CEO, Music Broadcast Limited. Thank you and over to you, sir.

Ashit Kukian — Chief Executive Officer

Thank you. Good afternoon, everyone, and thank you for joining the Q3 FY ’23 Earnings Call for Music Broadcast Limited. Joining me on the call is Mr. Rajiv Shah from our IR team, and our Investor Relations partner, Strategic Growth Advisors. Beginning with the macroeconomic factors at play, the COVID scare at the start of the year has fortunately not materialized into anything serious and India has been fairly insulated from the same. Recovery has been agnostic across all sectors.

And with the multiple tailwinds, whether in terms of government policies, strong demand or easing of raw material and other input prices, we are fairly confident of allaying any fears of recession in the near term. Talking about the radio industry, volumes grew by almost 19% in Q3 over Q2 volume and by 26% over Q1 volume. This is extremely encouraging as the same metric for other mediums are not so bright, with TV remaining flat and digital de-growing by over 30% in display and about 8% in video content. Even when compared with print, the growth is significantly higher with print registering a 11% growth over Q2 and 19% over Q1.

In an era of numerous media and information sources, radio has always held high credibility and trust rating, thereby maintaining its superiority [Phonetic]. Utilization levels stands at 71% in Q3 FY ’23 as against Q1 — sorry, Q3 FY ’20, which is pre-COVID, which is a healthy sign and provides a sense of optimism for higher utilization in the times to come. Digital revenue contributed 8% of the total revenue amounting to INR4.03 crores. We are confident about the previous guidance, which indicated that digital is a key growth driver and accounts for major chunk in the total pie of our revenues.

Our digital offerings are quite broad and provides the clients an omni-channel, end-to-end solutions for their products and services. Across multiple platforms, Radio City commands a total reach of 274 million, which helps brands reach a large audience and maximize returns on their ad spends. Radigitalization strategy followed by the organization leverages or RJs and the strong social media presence has resulted in a more effective and meaningful engagement with our audiences, aiding broadcasters in generating higher revenue.

Talking about market share and client counts, Radio City has continued to maintain a sizable 19% market share in the Q3 of FY ’23, up from the 18% in the Q2 of FY ’23. We serviced 40% of the total clients advertising on radio. Further, radio also bagged 38% of the 955 new clients who advertised for the first time on radio in Q3 of FY ’23. Coming to the sectoral ad spends, we observed growth in some of the major sectors, signaling strength of these sectors and indicating the prospects we can expect going forward.

Real estate, which contributes 17% to the industry, grew by 24% year-on-year, while auto, which contributes 9%, grew by 12% on a year-on-year. A staggering growth was observed in pharma as well, with this sector growing by 33% and contributing 9% of the volume of the industry. Food and soft drinks is one high contributing sector and contribute 8% of the volume, that witnessed adfree growth of 13%. The negative trend observed in the government sector continued this quarter as well, with this sector de-growing by 19% and contributing to 6% of the industry.

The most unexpected results were in the finance sector, which contributed 7% and de-grew by 18%. Approximately, INR15.6 crores, that is 31% of our revenue came from created business opportunities. In line with our internal forecasts that we have shared over the past few calls, we continue to believe that these revenues will continue to increase. Coming to the financial performance of the quarter gone by, we netted a Q-on-Q growth of 64% in EBITDA, or INR14.5 crores in Q3 of FY ’23 against INR8.9 crores earlier.

The top line growth is 12% Q-on-Q, and increasing our top line from INR48.6 crores to INR54.7 crores. The financial performance for the 9 months is a strong, is on a much stronger footing with the top line growing by 20% from INR122.4 crores in the 9-month period last year to INR147.5 crores in the 9-month period this year. From an EBITDA of INR21.7 crores in the 9-month period last year, we have managed INR32.2 crores EBITDA level in the 9-month period ending FY ’23, indicating of 48% price.

Lastly, in terms of PAT, we moved from a loss of INR3.6 crores in the 9-month figure last year to a profit of INR4.2 crores in the 9-month figure this year. The size of our present results aided to the fact that the company has always placed a high premium on maintaining a sound balance sheet. As an evidence of a strong liquidity position on December of 1st 2022, our cash reserves climbed to INR288 crores from INR264 crores in the end of March 31, 2022.

These resources offer us leeway needed to take advantage of the current and potential future opportunities. However, with the issue of this preference shares, there will be a component of debt in our book with additional finance costs pertaining to the sale. Lastly, with regards to the bonus issue of the nonconvertible noncumulative redeemable preference shares, the scheme was approved by the Honorable NCLT on the 23rd of December 2022.

The company had fixed the record date as 13th of Jan 2023 to determine the eligible non-promoter equity shareholders to receive Bonus NCRPS. The Bonus Committee has allotted the NCRPS to the eligible shareholders on 19 January, 2023. As per the terms of the scheme, the shares will be listed at both the stock exchanges and will be readily tradable. Further, the NCRPS shall be redeemed at the price of INR120 per NCRPS after the period of 36 months from the date of allotment.

With this, I will request the moderator to open the floor for Q&A. Thank you.

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question is from the line of Bajrang Bafna from Sunidhi Securities. Please go ahead.

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

Congrats for finally the preference issue has got approved and hopefully, the minority shareholders will get the advantage. So sir, coming back broadly on the trajectory that we were seeing pre-COVID, where the company has been continuously growing, both in terms of top line and bottom line. And post-COVID, we are still yet to go back to the earlier profitability trajectory. Yes, this quarter has been a little better as compared to last two, three quarters. But going into future, what sort of utilization that you are looking at and when we can perhaps go back to the trajectory of INR40 crores, INR50 crores kind of net profit that we were looking before COVID.

So if you could guide on that sense. I think we are quite seeing the delayed profitability coming to our way, though, the top line is moving up, but because of the costs which has also moved up, we are yet to see the real impact of operating leverage playing out for us. So if you could guide us in terms of next year will be really helpful. Thank you.

Ashit Kukian — Chief Executive Officer

Yeah. So, as we’ve always been maintaining that ours being a fixed cost business led overall numbers. So obviously, the last 2, 2.5 years, for reasons, we all know has been a tough period for media per se, including radio. So that’s the first point I would like to make. So keeping in mind hereon, going from the results that we have seen in the third quarter, now hopefully that we’ve managed a decent fourth quarter, we believe it’s going to be an upside for us for the next one year because currently, from the way the businesses are poised, we believe we should be able to show a continuous quarter-on-quarter growth, both in terms of top line and bottom line, with the fixed costs being taken care of.

Yes, our investments on new business and the inflationary-related cost escalations will be there. If you ask me, when are we going to reach the pre-COVID level profitability and bottom line figures? I think at this point in time, it will be too early for me to commit anything. All I can commit is quarter-on-quarter growth, which will, hopefully, in a near period of time, reach the erstwhile numbers that we are seeing. Two, of course, we, as an organization has very clearly directed ourselves also for things that the world is looking at, which is book beyond radio.

That is where the current investments are happening, whether it is digital outlook and the investments that we are doing. And we believe once that starts giving results much more than what it is giving to us right now, we should be hopefully closer to the numbers that we have in mind, which we saw at the peak of our operations two, three years back.

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

Okay, got it. And sir, in terms of utilization, where are we right now, vis-a-vis, pre-COVID? I think you’ve spoken, but I just missed that number.

Ashit Kukian — Chief Executive Officer

No problem. We are — actually, at the utilization level, for the Q3, we are actually at more than the utilization level than pre-COVID. Pre-COVID, the utilization level was 61%. We are at 17% right now. So, this brings to the same story, which I have been saying in the past two meetings is that the challenge now is moving the yield for the business. Once the utilization level reaches peak, moving yields become easier because that’s how the correlation between increase in effective rate versus utilization of inventory. So yes, to answer your question, our volumes are much more than what it was pre-COVID. But it is a value which is dependent by the yields is which is what we are working towards.

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

Okay. And what sort of yields that we have achieved, if we try to compare with pre-COVID numbers?

Ashit Kukian — Chief Executive Officer

We are at about 72% of the pre-COVID numbers.

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

Okay. Yet, a long way to go. Okay, got it, got it. And just sir, last question on the digital front. We are already at, let’s say, INR4 crores kind of run rate on a quarterly basis. So we are moving towards, let’s say, INR15 crores to INR20 crores kind of yearly run rate. Where do you see that? Because you always highlighted that this is a segment, which is going to grow far faster as compared to the traditional channels. So if you could just highlight what sort of steps that we are taking and when we can see some sort of profitability also flowing for us from this segment of the business?

Ashit Kukian — Chief Executive Officer

Yeah. So profitability is, yes, even now flowing in, but to the extent that we would want to see, which is what we are aiming towards. So to answer your question right now, I personally believe, our percentage if you know last year, we were about 4.5% of contribution of digital that moved to 8%, 8.5%. Next year it will be in between 12%, 15%. So, this percentage will continuously grow and that growth is coming on the back of a 50%, 60%, 70% growth over the earlier numbers. Of course, the base is small as against the 12%, 14% regular radio business growth. So that’s the first point. So once the base increases, the percentage growth that we are talking about anywhere between 50% to 60% is how the whole number stacks are going to play out in the next two to three years.

Bajrang Bafna — Sunidhi Securities & Finance Ltd. — Analyst

Got it. Thank you very much, sir, and all the very best for future good performance.

Ashit Kukian — Chief Executive Officer

Thank you so much.

Operator

Thank you. [Operator Instructions] The next question is from the line of Apurva Mehta from AM Investments. Please go ahead.

Apurva Mehta — AM Investments — Analyst

Hi, sir. Just wanted to know that how is the ground reality when you go to, say, pitch for the new advertisement and everything? And how is the pricing front?

Operator

Sorry, Mr. Mehta. Sir, we are not able to hear you clearly. Can you use the handset?

Apurva Mehta — AM Investments — Analyst

Can you hear me now? Hello?

Ashit Kukian — Chief Executive Officer

Yes. Yes. We can hear you now.

Apurva Mehta — AM Investments — Analyst

Yeah. So just wanted to know the — to check with you, how is the ground reality when you go to pitch for new advertisers or things like that coming? And how are the pricing fronts? We were trying to go for quality than quantity. And still we are — our utilization is now 70%. So are we back to the levels that we would go for quantity and not the quality that we were guided a quarter back that we will not go down on prices and we will fight for it?

Ashit Kukian — Chief Executive Officer

So yeah, I’ll answer this question in two ways. As we continue to stand by our position that it is always quality over quantity because in the end result, the inventory at some point in time will be limited. The rates are not limited because it’s where we want to take, we can take it. That’s the first point. The second point of inventory utilization is the larger challenge at the overall level. So financing 70%, I’m talking about the industry utilization level itself is at that level.

So unless and until there is a saturation of volumes for all players, any change in your rates will not be easy because the movement you try to push in for a higher rate, there are options which becomes far more attractive as far as an advertiser is concerned. Answering your first question about the sentiments of advertisers, I have already in the earlier note said that almost 38% of our clients in this quarter have come in new. So that means there are lot of newer players or newer entrants into the radio investment market, which is coming in investing in radio, which is an healthy sign, where people believe that radio still works.

In fact, just last week an independent survey kind of put up a record saying that 8 out of 10 people believe, especially in the Tier 2, Tier 3 cities that radio works for them and most of the time is spent on radio. So, that itself is a justification of the fact that if you divide India into the metros that are Tier 1, Tier 2, Tier 3 cities, there is a lot of radio play still existing. And we are gung-ho from the fact that newer advertisers are coming in and hence, we believe that the optimal utilization level should reach in the next four to five quarters. And then the ER play, which is the effective rate play will be easier when you are at a saturated level of utilizations.

Apurva Mehta — AM Investments — Analyst

Sir, the trend of higher prices, we are seeing any trend like we were at maybe, two quarters, we were at 60% of our peak rate. Now we are at 65%. Now we are 70%. Is that trend changing? Are we seeing some changes in the trend or no?

Ashit Kukian — Chief Executive Officer

On the rate fronts, from our perspective, there is a marginal increasing trend that we are seeing. That is because that is directed, and we believe that’s the way forward. On the inventory front, I have already told you that there is an increase front from a Q1 to Q2 to Q3, the utilization level is increasing. And we believe if everything settles down, our utilization level will increase and that will allow us, and I would want to believe competition to kind of somehow push for rates because without that, revenues will be at a struggle for most players because after inventory, it is just the rate that which will play around when it comes to final revenues.

Apurva Mehta — AM Investments — Analyst

And on the — there will be lot of government spending will come because of election and everything. There is state election. There is central election coming. So what is your assessment of how much of that will come to the ad spending, which the election will be there? Any ballpark figures that you have envisaged that next year, there will be some big ad spend income?

Ashit Kukian — Chief Executive Officer

See, unfortunately, what will happen is it all depends between now and the time when the election comes, how bullish is the present government because unless and until the present government is not pushed from a perspective of losing their elections, that much prudency from the end because even in the state election when there is a confidence, the investment has really not been as high as it was normally in the erstwhile period. So if competition is not there, we don’t see huge investments happening. But having said that, without a doubt, government spending vis-a-vis what it was this year will be higher next year for sure.

Now the percentage of growth over this year will completely depend on the mood of the nation, if I may say so, and the confidence of the present government. Because if the present government doesn’t invest much because the others hardly have any monies to invest, to be fair all this because it has to be led by the government because that’s where they want to. But typically, what happens in an election year is that they use that last four, five, six months to kind of talk down on the achievements of the things they have done in their tenure. That’s what their confidence will come to us in form of radio investments also as in other mediums.

Apurva Mehta — AM Investments — Analyst

On the previous year, have you any data that last election, how much maybe the central was there? How much was we — have you got any ad spent? Any data parts, which we have and?

Ashit Kukian — Chief Executive Officer

Honestly speaking, any data of the past will have no reference because that past was very competitive. At least the top three political parties had to aggressively invest, expecting a favor for them in terms of the elections. That has changed. And I’m not — we can argue on that, but that has changed. So hence, our data may not have relevance. But if you see and ask me and you want me to kind of put my neck out and say, I believe if all goes well, then say INR8 crores to INR10 crores of additional play, that will be there, that can come from the current base as we go forward for the next year.

Apurva Mehta — AM Investments — Analyst

Okay. And on the fixed cost front, license will be roughly around INR20 crores. Employee cost will be around — roughly around INR60 crores for next year and other expense will be roughly around INR100 crores. Can we take all this ballpark figure?

Ashit Kukian — Chief Executive Officer

Yes, yes. So, you are saying the combined cost of anywhere around INR195 crores, INR200 crores, is that what you’re saying for the next year?

Apurva Mehta — AM Investments — Analyst

Yes. INR180 crores to INR190 crores.

Ashit Kukian — Chief Executive Officer

INR180 crores is what possibly we’ll end up this year, a little here and there. Nominal inflation cost and a little bit of marginal employee related costs and the additional investment will be the additional that you are talking about. But like, as always, we’ll be prudent about our top line versus bottom line and our investments and cost increments will be as per that. And we can be rest assured that we’ll keep a close eye of not exceeding current cost by the basic requirement that will be there from a year-on-year perspective.

Apurva Mehta — AM Investments — Analyst

Okay. And the additional costs which we are talking about, can you ballpark tell us what kind of — which area we would like to spend, which will help our future growth to go? And are you spending on that kind of area where we want that future to grow substantially on the digital side?

Ashit Kukian — Chief Executive Officer

All cost investments, to answer your question, is only on the future growth business. When I’m saying that, I’m talking about digital, whether it’s increasing the digital ecosystem in this whole solution providing business that we do for brands and clients is where we are investing. Any major investment, which we’ll look leapfrogging ourselves will possibly come out of capex, if that’s the way we are looking at it, or acquisitions as opportunities come out to us. And it will be in the digital part of our business per se. And the traditional business will be only in a growing and growing efficiency management is what I believe.

Apurva Mehta — AM Investments — Analyst

Okay. Thanks a lot and wish you all the best.

Ashit Kukian — Chief Executive Officer

Thank you.

Operator

[Operator Instructions] The next question is from the line of Mohit Khanna from Banyan Capital Advisors LLP. Please go ahead.

Mohit Khanna — Banyan Capital Advisors — Analyst

Afternoon, sir. Good evening. Sir, I just wanted to.

Operator

Sorry to interrupt, Mr. Khanna, sir, your voice is sounding very muffled.

Mohit Khanna — Banyan Capital Advisors — Analyst

Hello. Is it fine now?

Ashit Kukian — Chief Executive Officer

Yeah. You will have to be a little louder. We can hear you now. The last statements we could hear you.

Mohit Khanna — Banyan Capital Advisors — Analyst

Okay, okay. Sir, I just wanted to understand a little bit better on the advertising front, right, and within different sectors. So what sectors are you seeing advertising should now pick up because as you highlighted finance, unfortunately, didn’t, actually de-grew in this quarter?

Ashit Kukian — Chief Executive Officer

Yeah. So for us, auto will definitely increase now because more or less, things are falling in place, so we believe, although real estate is definitely increasing for the projects that is in aisle. And the other sectors that we are looking at the top 5 will be your pharma and health care, which I have said is also increasing. And in the coming years, I also believe government should increase, given the reasons where we mentioned about the state government going into the final Lok Sabha elections. So, this normal four or five top categories will increase as we go forward.

Mohit Khanna — Banyan Capital Advisors — Analyst

Right. And if I compare your numbers year-over-year and if I remove the other income fees because that’s the interest income that you earn, the operating side has not delivered as much in the festive quarter of third quarter as it was what are the probable reasons, where did it go wrong with the market that the advertising didn’t come through?

Ashit Kukian — Chief Executive Officer

So clearly, I don’t know if you’ve been observing media closely, November has been an aberration month across media industries, and we’re all trying to figure out what happened. A good Diwali and then, normally, there is — after Diwali, but this was a complete watershed moment for the media industry, with absolutely no recovery post the first 10 days, 18 days after Diwali. So, that is the only place where we believe, like in our case, we had a great quarter last year unlike some of our competitors.

And we had actually increased our percentage share in the business from a revenue perspective. That really didn’t play out because if you see, we are at about roughly around 7%, 10% — 9% down over the last quarter, primarily given from the fact that November, we were completely down. So yes, to answer your question, that is the only place where possibly things have not played out and that has been an aberration month if you look for the quarter for us. Otherwise, on a quarter-on-quarter basis and our bottom line to top line numbers are more or less been efficient enough, I would believe.

Mohit Khanna — Banyan Capital Advisors — Analyst

Right. And one more thing when you talk of utilization levels at 71%, can you give us a breakup of what exactly the numbers for Tier 1 cities and Tier 2 and Tier 3 cities?

Ashit Kukian — Chief Executive Officer

So yeah, it’s a nice question that you have asked. The challenge is that the top metros are actually lower than the 71 — at the 70% utilization level, and that is where the revenue is getting hit because typically, what happens is — and in the quarter three, where you have the peak quarter happening for media and for radio also, you end up at anywhere around 85% to 90% of utilization level. And the average of all markets put together because if you see the top markets traditionally are the ones like the top 8 metros that we talk about.

They are anywhere in the Q3 of any normal year will be around 90%, 95% utilization level. The next set of markets, even markets [Indecipherable] markets will be around 70%, 75% and the rest of the market fall anywhere between 55% to 60%. Now what has happened is that 90%, 95% that you are getting in the top market is stagnated still at 70%. And that is the reason why the overall increase has not happened in a utilization level as against the erstwhile numbers that we are talking about.

Mohit Khanna — Banyan Capital Advisors — Analyst

Right. So just for us, are we still going to stick to the strategy of pulling in more volumes or now do you think when the utilization levels of products starts at 70% level, so do you think it’s a better strategy from here on to go for price increase or maybe.

Ashit Kukian — Chief Executive Officer

Right from quarter one of this year, I’ve already stuck to my first clarity as price increase, even when the market was not saturated. Because that’s where I believe it’s a better play when it comes to media, especially when you’re talking about businesses which have finite inventory, unlike in print where you can have DTC plus costs and increased pagination. So, I’ve always believed that it has to be a price-based, quality-based strategy, which I’ve continued in all the three quarters.

Only difference being that in the first two quarters, if you have observed, I was at a 18% volume share. In the third quarter, when we saw that the erstwhile 90%, 95% of inventory utilization is not being seen, we said let us do a change and take a little bit more than what we would conventionally do, which means a little hit on your year from what it was and ensure that, that additional 1% will offshoot the little bit of erosion of year. But our strategy will still continue to be riding on quality-based ER-led strategy because that’s where the future of the business is.

Mohit Khanna — Banyan Capital Advisors — Analyst

Fair enough. Thank you so much. I’ll come back in the queue.

Operator

Thank you. The next question is from the line of Nimish Maheshwari from RSPN Ventures. Please go ahead.

Nimish Maheshwari — RSPN Ventures — Analyst

Hello? Can you hear me?

Ashit Kukian — Chief Executive Officer

Yeah, we can. Little louder, you can be a little.

Nimish Maheshwari — RSPN Ventures — Analyst

Yeah. Sir, I just want to understand what is the rationale behind distribution of these INR90 crores via preference share using Section 230 rather than simply giving the bonus to the shareholders?

Ashit Kukian — Chief Executive Officer

Okay. So here the bonus was not supposed to be — we, basically

Rajiv Shah — General Manager, Corporate Strategy

Okay. So here the bonus was not supposed to be — we, basically — so this is basically — see under Section 230 to 232 typically, we share to the shareholders and through the NCLT approval, we have selected this Section 230 to clear the fixed. So that’s the main reason the NCLT approval route have been taken.

Nimish Maheshwari — RSPN Ventures — Analyst

No. I just want to understand why you were not using the bonus issue directly, like you can distribute the money directly to the shareholders rather than going through the preferential route because if we have INR200 crores of mutual funds as an investment in the balance sheet, we can directly sell and distribute to the shareholders.

Ashit Kukian — Chief Executive Officer

So if you remember, in 2019, we have issued the bonus and this was in 2020 when we have done this NCRPS. Unfortunately, due to COVID and NCLT and all the approvals got delayed by 2, 3 years. So at that point in time, we wanted to give the value to the shareholder over a period of time because there was a buyback in 2018, there was a bonus in 2019 when the split has happened. And the decision was there, which we have continued. And in a staggered manner, the money can be distributed to the shareholders, at the same time the investment required in the business can be continued.

Nimish Maheshwari — RSPN Ventures — Analyst

Got it. And why there is a three-year time period for the redemption of INR90 crores when company currently have more INR200 crores in the balance sheet? So why it should not be in the one-year time period?

Ashit Kukian — Chief Executive Officer

So — okay. When the scheme was launched, it was COVID period and that is the reason to — cash had to be saved, and we gave this bonus over the three-year [Phonetic] period provided, we get out of the COVID period. Unfortunately, the regulatory approval took time. Otherwise, if that approval would have come in time, we would be — in the next year, we would be actually redeeming the NCRPS.

Nimish Maheshwari — RSPN Ventures — Analyst

And one more thing on the business per se. Can you little bit explain about your digital offerings and how the revenue will be coming into the P&L from the digital front?

Ashit Kukian — Chief Executive Officer

So very clearly, I’ve been saying that we have been increasing the digital contribution to the overall business from a 4.5% to 8% to 12%, 14%, what we are looking next year. Our offerings are very clear. We are right now offering the — we are playing in the social media influencing place, which is where marketplaces are currently putting almost 25% of your investments, unlike radio, which has 3% of the advertising pie. Within the digital, 25% of advertising investments are happening in the social media influencer marketing space, largely led by influencers.

Our advantage here is that with the RJs that we have who are influencers and I’ve already spoken about the reach that we get, our play is very clear. We are using a mix of our RJs that are influencers in the social media space. We’re using our radio inventory and wherever needed where on-ground event is required, we are clubbing all of them and giving this as holistic solutions to brands. And to answer your question, we are looking at anywhere between a 12% to 14% contribution coming from digital as we go forward.

Nimish Maheshwari — RSPN Ventures — Analyst

Got it. Got it. One more thing in the — from the investment per se, is there — how you are thinking to use the investment going forward? Like INR100 crores, we can see that we can expect for the redemption of the preference shares. Other than this, how we are planning to use the money to better our ROE and ratios?

Ashit Kukian — Chief Executive Officer

Yeah. So like while we are exploring various opportunities in the digital space, as you know, the digital space in our scheme of things means 2 or 3 things. One is, of course, the influencer marketing space that I spoke about. The other is this whole content creation and distribution that happens, which includes creation of audio, video formats. It also includes creation of podcasts and distribution of podcasts into various platforms.

So as we go forward and as we see the whole evolution of the digital industry in terms of marketers needs, we may, at times, also look at acquisitions of existing players who would want to kind of be part of a larger game plan. Clearly, when it comes to us, we will see it from a perspective of what value it adds to our future game plan in terms of solutions — the ad solutions that we are giving to our clients. So that’s the way we’re looking at it. It will be investments from things that we have told to create on our own and also possible acquisitions of platforms or businesses, which is complementary to the digital play that we are looking at.

Nimish Maheshwari — RSPN Ventures — Analyst

Any other — any plan in the pipeline right now?

Ashit Kukian — Chief Executive Officer

See, our discussions are happening at 2 or 3 different levels. They are 2 early stages. It will be — possibly, you’ll have to give me a couple of more quarters before I really — things squeeze out for us and we really make the game plan for me to share anything. Otherwise, it will be just a good thought from our end. But to kind of give you the confidence and this, we are exploring multiple things. And unfortunately, I’m in no point to kind of at this point in time to kind of disclose that.

Nimish Maheshwari — RSPN Ventures — Analyst

Okay. So, we can expect this in next year?

Ashit Kukian — Chief Executive Officer

Sure. For sure.

Nimish Maheshwari — RSPN Ventures — Analyst

Okay, thank you for your time.

Operator

Thank you. [Operator Instructions] [Operator Instructions] The next question is from the line of Hiten Boricha from Joindre Capital. Please go ahead.

Hiten Boricha — Joindre Capital — Analyst

Hello?

Ashit Kukian — Chief Executive Officer

Yes.

Hiten Boricha — Joindre Capital — Analyst

Thanks for the opportunity, sir. Good evening. Sir, my first question is on the guidance side. So, we have been doing around INR50 crores kind of revenue from last 2 quarters. So just wanted to understand by when can we — like, do you see any visibility this revenue run rate can go up to INR70 crores, INR80 crores per quarter in coming, let’s say, two, three quarters or maybe four quarters in next four, five quarters?

Ashit Kukian — Chief Executive Officer

Too difficult to kind of give that kind of an indication. But very clearly, you can see at the INR50 crores, INR55 crores level, it’s a positive bottom line that we are talking about. So, we are looking at whatever increase that will happen will go straight to the bottom. Yes, we’d be happy to look at the numbers you are talking about, but it will all play around with the fact how fast the levels of utilization increase, how fast we are able to kind of increase our rates and how fast the digital playout is going to happen. It’s a combination of all those things that we are looking at. But I can only give you one confidence that the numbers that we are looking at, both at the top line and the bottom line level for the next year will be definitely far more than what you have seen in the past two or three years.

Hiten Boricha — Joindre Capital — Analyst

So are we like very confident to do like 20% growth at least for next two years?

Ashit Kukian — Chief Executive Officer

Without a doubt.

Hiten Boricha — Joindre Capital — Analyst

Okay. 20%, 25% growth. Okay. And sir, when you talk about the operating leverage, which is going to play in the next four, five quarters, so are you pretty much confident our margin will go back to 30%, 35% kind of level? Because currently, we have–

Ashit Kukian — Chief Executive Officer

Sorry.

Hiten Boricha — Joindre Capital — Analyst

Yeah, yeah. Sir, please?

Ashit Kukian — Chief Executive Officer

I would not be able to commit on the margin levels because I think continuously in the last two calls, also I’ve been saying that our digital plays will need investments from our side, both at the piece level and there were required maybe at the tech level and so on and so forth. So that will take — increase our costs a little. So, margins will be not as high as 30%, 35% that you are looking at. But as we kind of peak ourselves, you will possibly see those margins coming in.

Hiten Boricha — Joindre Capital — Analyst

Sir, you are continuously focusing on digital investments in the digital. So, can you some — like throw some more color in detail what exactly are we doing in digital, where are we focusing and what kind of investments we are looking?

Ashit Kukian — Chief Executive Officer

So like I said, we are right now exploring two or three different avenues in the digital platform. And of course, one is, of course, in the social media influencing space. The other, of course, like I said, as we are exploringly [Phonetic] going forward in the digital business and as we feel there’ll be more and more need for content creators or distribution that has to be happening, we will kind of do an investment in those areas as we reach those destinations. And hence, all I can say is that it’s a work in progress. And whatever number changes you are seeing in the digital for whatever the base is, is I think should be reason enough for you to believe that we are on the right track.

Hiten Boricha — Joindre Capital — Analyst

Sir, sorry, but what do you mean by avenues in digital platform? I didn’t get that exactly.

Ashit Kukian — Chief Executive Officer

There are various things. If you really look at the whole digital space, we got more than INR50,000-odd crores this year with all put together. Then in that, there is a search base revenue, that is a display and we will have to take those two things out, there’s a lot of revenues happening in the influencer marketing space. There’s a lot of revenues happening in the video space, which is distribution of video space, which is YouTube, Value Star [Phonetic] and so on and so forth. If you look at the opportunities of all these things put together, which is social media marketing, using influencers, creation of video and storytelling formats, advertising solutions for brands, that space is worth INR25,000 crores, INR30,000 crores. And we are talking about playing a role in that INR25,000 crores, INR30,000 crores, initially with the RJs that we have from an influencing platform, nothing stops me to kind of extend myself and go out and also work with external influencers to kind of increase this reach of mine to advertisers and get a higher share of revenues.

Hiten Boricha — Joindre Capital — Analyst

Understood. Okay sir, thank you.

Operator

The next question is from the line of Aditi Kasbekar, an Individual Investor. Please go ahead.

Aditi Kasbekar — Individual Investor — Analyst

Hello sir, can you hear me?

Ashit Kukian — Chief Executive Officer

Very clearly. Very clearly, Aditi.

Aditi Kasbekar — Individual Investor — Analyst

Okay. Sir, just a question on the industry side. And pardon me for this because I’m a little new to the industry. But you mentioned that the utilization levels in top metros generally are 85%, 90%, but this time, they seem to be stuck at sort of that 70% level. One of the other things that you also mentioned is post Diwali for about 10 days, 15 days was almost like a watershed moment for the industry. Just broadly wanted to understand what’s your take on this? Why this could have happened? And secondly, do we think that it’s going to change? I mean, is this something which was like a one-time thing that happened? Or do you in your sort of mind see this happening again for like in the coming times as well? So, just want to sort of get a sense of what exactly was your read on the situation?

Ashit Kukian — Chief Executive Officer

So two ways to look at it. One is, of course, if you look at it immediately post Diwali for whatever reasons that this whole global scare of COVID coming back again because of few cases happening in the European markets and so on, and of course, the sentiments that the U.S. market carries, somehow for companies associated with global markets felt a little in need of being prudent because suddenly, one started talking about recession and so on and so forth.

But to answer your question, I want to believe it’s one-time because that sentiment already people in India have gotten over because we have realized that, fundamentally, we are much more stronger. I don’t see — I don’t know whether it will be a aggressive statement for me to say, but I think most in India don’t see recession being anywhere closer to what the global markets in the Europe and the U.S. are thinking about. So, I think that’s a positive sign. And sentiment at the India level is going to be much higher, I mean, all the parameters on which a country is indexed or a spending — consumer spending is indexed. I think India is doing well in all parameters.

So, I want to very strongly believe that this is an aberration. And like I said, it is an aberration beyond any conventional logic. Typically, there is a lull after Diwali, historically. But Christmas was completely — for example, if you do 100 on — during the core Diwali season, you may fall down to a 75, 80 or a 70. This was like completely off. So that’s the reason I believe it’s an aberration. To answer your question, I think things are bullish. I think we’re all finding ways of kind of energizing both the retail market and also the consumer market for the corporates and with the categories that I spoke about, we see upside going forward from here.

Aditi Kasbekar — Individual Investor — Analyst

Understood. So, you think it was a one-time and you think that it was also because of this overall fear of sort of recession and sudden pullback in ad spends happening?

Ashit Kukian — Chief Executive Officer

Absolutely. Absolutely. And I think finance to an extent is also back because if you look at the large drain, it’s actually happened with finance really not peaking up for us when we look at that because logically, finance kicks off in the second and the third and the fourth quarter. So even if a little correction happens in that, you would have recovered 90% of what we believe is a watershed moment for us.

Aditi Kasbekar — Individual Investor — Analyst

Understood. And sir, you also mentioned that a bunch of your clients who come back to you are actually sort of new clients, who sort of never been on this platform. So can you just explain the nature of these people? Like are these the new age consumer companies that you’re talking about, like, for example, Nykaas and Zomatos of the world? Or what’s sort of the nature of these clients?

Ashit Kukian — Chief Executive Officer

Yeah. So, I think it is more the Zomatos, future Zomatos of the world and the future unicorns of the world that we are talking about. But yes, two things. To answer your question, of course, there is a change of investment pattern happening at the retail market level. I think the fact that we are doing better than print. Conventionally for retail, print and radio happens to be traditional mediums because there is a limitation of investments that happens and they feel that it’s easy to kind of manage these mediums. So one, of course, I believe there is an update that we have got from the fact that people have seen radio has more effect on you. B, of course, like you said, the new age markets, the entrepreneurs and the whole ecosystem around startup culture that is happening and people who want to kind of expand their business who are using radio as the first entry point in their communication to the world about the products and the categories that we are presenting. So it’s a mix of both.

Aditi Kasbekar — Individual Investor — Analyst

Understood sir. Okay. Thank you, sir.

Ashit Kukian — Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Pravin Sharma, an Individual Investor. Please go ahead.

Pravin Sharma — Individual Investor — Analyst

Yeah, good afternoon sir. Am I audible?

Ashit Kukian — Chief Executive Officer

Very audible, Pravin.

Pravin Sharma — Individual Investor — Analyst

Yeah. Sir, my first question is, does our catchment area for advertisers overlaps with these OTT and apps like Gaana and Spotify and things like that? Or our advertisement — advertisers’ profile is quite different from these guys?

Ashit Kukian — Chief Executive Officer

See, if you look at the all three streaming platforms put together, which is your Gaana and Spotify and whichever other platform you have, I don’t think they are all combined making more than INR250 crores in advertising revenues. So that is a challenge there vis-a-vis INR2,500 crores, INR3,000 crores of advertising revenues that we’re talking on radio. So, I think there is no shift or there is no consideration which is parallel between what is happening in the streaming platform, vis-a-vis, what is happening in radio.

Consumption has possibly doubled up with radio always being there and maybe one more avenue of listening to a song. But typically, people at the streaming platform levels have realized that if they don’t sound and be live like radio, it’s not working for them. So, they are actually moving the radio way rather than being worried about moving the streaming way. So to answer your question, we don’t see any direct conflict of them. On the contrary, like I have told in the past, it’s one more opportunity for us because we create content and give it to the streaming platforms for monetizing.

Pravin Sharma — Individual Investor — Analyst

That takes me to another questions — a question wherein it was — I slightly get baffled, but why the streaming — live radio streaming has not picked up really, wherein — because it’s much more interactive than these apps and things like that? So is it like the licensing fee from the content providers, which is exorbitantly higher for streaming or things like that? Or am I wrong in my understanding?

Ashit Kukian — Chief Executive Officer

No, the licensing fee is definitely high because there is limitations from a radio licensing. If I have to answer your question, let me once again get your question right, are you asking about the existing streaming platforms or you’re asking about why the radio stations not getting into live streaming platforms?

Pravin Sharma — Individual Investor — Analyst

Yes. The second part, sir.

Ashit Kukian — Chief Executive Officer

So that we are not allowed to do because we can only relate within the city. And obviously, when you talk about the digital platforms, you’ll have digital costs being separately done. And we, in any case, can’t go live across all markets. So it has to be within the city that you are operating. So that becomes quite exorbitant because we are guided by the GOPA and we cannot go across cities.

Pravin Sharma — Individual Investor — Analyst

Okay. But I do see on Radio City’s app quite a few radio, but they are not allowed.

Ashit Kukian — Chief Executive Officer

Those are non-Bollywood’s music, [indecipherable], for which, of course, when you look at the whole consumption patterns, that becomes the next audience vis-a-vis the larger audience, which is a Bollywood music listening audience. So, those are things which are not covered by the licensing and the labels that we are talking about, because what Indian music that we’re talking about, where the cost is too high.

Pravin Sharma — Individual Investor — Analyst

And the licensing is from the regulatory licensing? Correct?

Ashit Kukian — Chief Executive Officer

Yeah, both the label and regulatory, both.

Pravin Sharma — Individual Investor — Analyst

Okay. And second part is, sir, just to understand the strength in digital, do we — when an advertiser comes to us, do we find spaces wherein they come exclusively for digital, or it’s always radio first and on top of that digital?

Ashit Kukian — Chief Executive Officer

See, right now, because we are just creating that space in the last two, three years, that we are just getting to understand brands because brands themselves are trying to find out what in digital we want. So for us, it is a — and because we just started building this ecosystem in a big way since last two years, right now, it’s 90/10 for us. Largely 90% is radio. But we believe as more and more digital solutions from our end go and fans see the kind of successes that we are giving them, you will see that mix changing.

Pravin Sharma — Individual Investor — Analyst

And sir, last question, basically, considering and comparing the times pre-COVID, when take a typical advertiser, he had a certain purse of advertisement. Now, do we find that advertisers are not coming up with the similar purse or he is actually spending on advertisement, but his proportion to radio is not coming up to that level and he’s finding other avenues. Which one is the true scenario?

Ashit Kukian — Chief Executive Officer

See, radio continue to be a 3% medium overall. So that has not changed, I think — and advertisers are looking at because avenues have only become — the fragmentation has happened, I would say. So, there is no preference because what happens is, as an advertiser, unlike in the past, you can’t just rest with two mediums and say that 80% of my audience is covered. There was a time when you would take a Doordarshan or you take a StarPlus highly-rated program and to one or two radio stations and do a leading newspaper, you’ve covered 85% of the market. Now that fragmentation is with radio with print, with television, with OTT platforms and so on and so forth. So the spend is getting fragmented across. For radio in the overall space, we have continued to be the 3% of the medium. So that has not come down. But yes, advertisers has more options. So maybe in the other heavy-usage medium, there is a fraction that is changing as far as advertisers are concerned.

Pravin Sharma — Individual Investor — Analyst

The intensity as we move away from COVID and the economic pulls up more and more proportion. What I feel is as the advertisement kitty goes up, the 3% will also correspondingly grow here.

Ashit Kukian — Chief Executive Officer

I would want to believe that way because with more and more research coming up with the fact that efficacy of radio is being seen. And again, like I said, this reference which I’m talking about is absolutely a third-party research agency, which has come out with this data with no investments from either the radio industry, but possibly, they would have worked it for a client and they’ve made it public only to prove that advertisers will then see more value when more and more such information comes in the public domain. And like you rightly said, when that happens and when every investment is prudently looked, given the way the economy is split, radio will be seen as a far more attractive medium as we go forward.

Pravin Sharma — Individual Investor — Analyst

Okay. Thank you, sir. That’s all from my side.

Ashit Kukian — Chief Executive Officer

Thank you.

Operator

Ladies and gentlemen, we’ll be taking the last question. That is from the line of Riya Mehta from Aequitas Investments. Please go ahead.

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

Hello. Thank you for giving me the opportunity. My first question would be what amount of time are we giving for the advertisements slot right now and what was the pre-COVID level?

Ashit Kukian — Chief Executive Officer

We have always been talking about 15 minutes as the inventory. And at 70%, that means we are still at the 10%, 11%, 11 minutes of inventory utilization.

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

Okay. And my second question would be in terms of broader industry. So, you said that the print is not being taken as a first priority when someone wants to invest in the traditional media. So could you throw more light on it? Like what growth percentage has print or the radio, whichever each other has seen for this quarter and why?

Ashit Kukian — Chief Executive Officer

In fact in the note, if you see, our growth from an industry perspective was from a quarter-on-quarter, our growth has been, like I said, 26% growth over Q1 and 19% over Q2 as far as radio is concerned. And print in the same period has grown only 19% in Q1 and 7% over Q2. So the fact that the industry for radio has grown much more than print is the first available data that I can talk about. Plus, print has been struggling to an extent. And again, when I’m talking about print, the language print possibly is not struggling as much. Because if you see, the Hindi belt newspapers are perhaps doing better than the English newspapers largely because of the fact that the reach of the Hindi-speaking market of certain leading publications is far more and advertisers still see value in that. But I’m now — when I’m talking about print, I’m talking about holistically all languages put together. So, there is a challenge that’s persisting in that sense. But language I think still holds its weight when it comes to advertiser reach and requirements.

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

Right. Okay. And in terms of the lower clients, which we have seen almost 30% or 38%, what client industry is this coming from?

Ashit Kukian — Chief Executive Officer

Across. It is — largely a lot are coming from the smaller retail market and also from the entrepreneurial setup that we are talking about, about people who are working with this new start-up culture and ecosystems that we are talking about, which includes servicers, which includes products and so on and so forth.

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

Okay. And while we speak about digital, you just mentioned that we are planning to do social media influencer based marketing. So, I was just trying to understand what kind of arrangement do we have with these radio jockeys? And is there a chance of poaching by the competitor and how is the entire scenario?

Ashit Kukian — Chief Executive Officer

See, I think as far as poaching is concerned, I think irrespective whether they will be a digital influencer or not that poaching was even there when there were radio jockeys because ultimately, the popularity for them were always there irrespective of the social media presence. So as an organization, we have really not seen that as a challenge because we believe a lot of our people-led relationship and the culture that we carry is what creative people which RJs are want to be in because, ultimately, that’s what gives them the kind of stability and ease of doing what they do best as far as storytelling is concerned.

Coming to the question of the — their presence in the digital media space, we are ensuring that they get a little more out of the whole value we create as individual. And hence, they have no problem because it’s a win-win situation. The organization uses their social media reach and get more and more brands to be exposed to the audiences, which otherwise would have been captured through the traditional media, and it’s the mix that we are offering. And poaching, we have never been worried because I think what we do is largely from the whole format of business that we do rather than promoting one particular individual. Because when I am talking about an RJ-led influencer media campaign, I’m talking about influencers across my key markets, 39 markets that I operate.

So, I have a portfolio of 100-plus RJs, who I can utilize for a brand because when it is digital, you’re not blocked by the geographical challenges that you have. So a RJ who is popular in the digital world can do promotion for any brand from any market for that perspective. So poaching is not so much of a concern, but what value you bring on to the table both for the RJ and the brands is what I would want to believe is what we should be focusing on.

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

No, sir, what I mean to say is that even, say, tomorrow the RJs, the followers are particular person-led, don’t you think we have lot of — we are dependent on that person, like tomorrow he may just start his own thing and since he’s getting the collaboration and the brand, he might not be associated with Music Broadcast.

Ashit Kukian — Chief Executive Officer

So there are two things. I think brands have — as RJs, as influencers have realized that they are there in that place because they have got the opportunity to communicate what they are in the social medial space. We have seen — I don’t want to take names. We have seen names in the past of people who at a particular point in time felt that they can do without the radio clout or the Radio City clout, if I have to talk about myself, and this I can speak across the radio stations. Over a period of time, they saw that they had lost the sheen because if you’re not there in the station every day coming and telling who you are and creating stories and creating that all excitement, people will tend to forget you because that’s the way the world works.

So obviously, it is in their need to be constantly be there on ad, to talk about what they are on air and also talk about what they have in the social media space. So, I am not worried about that because you may have one or two people out of the 100 people who can move that, but that’s the risk in life you always take. Because a lot of them have realized, it is that because they are RJs. In fact, the reason why we talk about RJs more effective than any other influencers because there is a correlation between being a radio RJ and the efficiency and the engagement rate that they have vis-a-vis influencers who are not RJs.

So, my understanding would believe that there is no such thing saying that they become so popular that they can take the risk of not being an RJ and still get the same popularity and collaboration with brands. Because to kind of excite the followers, followers can go up and down if you’re not constantly in the media space. And Radio is one big space through which they manage to be on the top of things is what we believe and empirical studies states it’s that way of things.

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

Okay. And my last question would be what kind of revenue do we see after that the entire revenue would come down to PAT level? What would be that breakeven or threshold revenue for us?

Ashit Kukian — Chief Executive Officer

Sorry, I didn’t get your question.

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

I think earlier we were saying after INR200 crores, INR250 crores, whatever revenue we do would come directly to the PAT level. So what —

Ashit Kukian — Chief Executive Officer

That INR200 crores, we are already showing things at the PAT level.

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

Okay. So INR200 crores is status quo, right?

Ashit Kukian — Chief Executive Officer

Yeah, yeah.

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

Do we expect this to reach this year, this current financial year?

Ashit Kukian — Chief Executive Officer

Of course, we’ll reach INR200 crores this year.

Riya Mehta — Aequitas Investment Consultancy Private Limited — Analyst

Okay. Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Ashit for his closing comments.

Ashit Kukian — Chief Executive Officer

Thank you. We sincerely appreciate your participation in today’s earnings call.

We at Music Broadcast Limited will keep building on the efforts undertaken and the advancements made over the previous several quarters. With simplified effective operations and excellent talent pool, supplying high-quality content to a wide audience, extensive relationships and networks build over time, the dominant position of your firm has been for so long will only further solidify.

The presentation, earnings release and results are all available on the corporate website and stock exchanges. If you have any further queries, please get in touch with any one of us or with Strategic Growth Advisors or our Investor Relations Partners. Stay safe and take care. Goodbye.

Operator

[Operator Closing Remarks]