CRISIL – Indian print media revenue to grow 20% in FY 22-23

Profitability of print media impacted by higher raw material prices

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CRISIL – Indian print media revenue to grow 20% in FY 22-23
Indian print news media in recovery mode

The financial press has reported that a recent CRISIL Rating report expects the Indian print media’s topline to bounce back in the next financial year by about 20% despite challenges such as high newsprint prices. The report is clear that this growth is likely to be on the low base of the 2021-2022 financial year.

It expects both circulation and advertising revenues to recover to approximately Rs. 27,000 in FY 2022-23, from the dismal Rs 18,600 crore in FY 2021-22. Moreover, the industry is not likely to reach its pre-pandemic high of Rs 32,000 crore for several years.

With the Indian economy recovering, ad revenues for print media are expected to increase by about 25% over the previous year. The report says that subscription revenues are likely to come back by 30% but that there is some long-term erosion of customers shifting to digital media.

Profitability is forecast to be impacted by 300 to 350 basis points (3 to 3.5%) by the high newsprint prices that other sources tell us are currently prevailing in the US$ 1,000 to US$ 1,200 range. According to the analysis of print media companies rated by CRISIL, the higher newsprint prices take away as much as 40% of the sector’s revenues although they represent about 30 to 35% of its costs. The operating margin of print media companies is projected to be 6 to 6.5% in FY 2022-23, in comparison to the previous financial year’s margins of 9 to 9.5% according to the research.

Possible challenges include a continued rise in raw material prices instead of a leveling-off after a couple of quarters or other unforeseen global events. CRISIL expects smaller media organizations to be more vulnerable because of the rising raw material prices. It said, “While the credit risk profiles of large print media companies will be cushioned by healthy liquidity and strong balance sheets – most of them are net debt-free – liquidity management will be crucial for the smaller ones because of the rise in newsprint prices, as their interest cover is estimated to be 2 to 2.5 times as on 31 March 2022.”

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