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

Profitability of print media impacted by higher raw material prices

Indian news media in print| print media
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.”

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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