The conflict between Russia and Ukraine and the resultant increase in newsprint prices could slash the EBITDA margin of print media players by about 300bps in FY23. Revenue, however, could increase 20-25 per cent year-on-year during the period, led by a strong jump in advertisement revenue, according to India Ratings and Research.

However, overall, industry revenue should remain lower than in pre-Covid levels, despite the sharp increase on a lower base, it added.

During FY21, the industry imported about 60 per cent of the newsprint consumed. Imports from Russia accounted for around 38 per cent of the total imports, followed by Canada at around 26 per cent.

After declining in FY20 and FY21, prices have increased significantly over the past 12 months on account of the Russia-Ukraine war.

“During April-March 2022, the price of imported newsprint increased 80 per cent y-o-y. In the absence of imports, prices could soar in the next three to six months. However, Ind-Ra believes that a gradual increase in domestic supply, in an extended period of absence of imports, should keep prices under check. During 10MFY22 (prior to the war), import procurement accounted for 52 per cent of the overall newsprint consumed, which remained the lowest over the past 10 years,” India Ratings said.

During FY21, newsprint requirement dropped about 48 per cent y-o-y to about 1.1 million tonnes, due to the decline in circulation volumes and low pagination following the outbreak of Covid-19. Ind-Ra estimates newsprint consumption to have increased marginally in FY22 in relation to FY21.

“While recovery of circulation volumes and higher advertisement volumes would lead to an increase innewsprint consumption during FY23, it is unlikely to revert to the level of about 2.1 million tonnes (FY20) given the substantial drop in circulation volumes during FY21 and slower recovery in FY22.” it said.

Amid the elevated newsprint prices, a melange of factors, including the increase in advertisement revenue, the key profitability contributor, stock-up of imported newsprint (at a lower cost) in the recent past and the implementation of a cost optimisation strategy should offset such input cost pressures and restrict the fall in EBITDA margins.

Ind-Ra estimates revenue to have grown around 20 per cent y-o-y during FY22, led by a bounce back in advertisement revenue of about 25 per cent. Circulation revenues, too, are estimated to have increased by around 10 per cent.