Revenue of paper makers likely to fall 8-10% this fiscal year: Crisil

Indian paper manufacturers could see revenue decline 8-10 per cent this financial year, compared with a steep 30 per cent growth last year, with average revenue expected to soften, according to Crisil Ratings.

The paper manufacturers' sales volume is seen rising 5-7 per cent this fiscal, similar to last, the rating agency said in a report.

The packaging paper segment dominates sales in India with a share of 55 per cent, followed by writing and printing paper at 30 per cent. 

Newsprint and specialty paper account for the rest.Packaging paper, mainly comprising kraft paper and duplex board, is used to pack pharmaceuticals, e-commerce goods, consumer durables, fast-moving consumer goods (FMCG) and readymade garments.

The education sector and corporates are the major consumers of paper.Further, Crisil said the operating margin will remain healthy at 18-19 per cent this fiscal, slightly lower than 20 per cent last fiscal, but better than the pre-pandemic average of 17 per cent, as price corrections have mainly been because of lower input costs. 

Margins should also benefit from a moderation in the prices of imported coal.“We expect credit profiles of papermakers to remain largely stable, supported by healthy cash flows and limited addition to debt,” said Joanne Gonsalves, Associate Director, CRISIL Ratings.“Debt metrics will thus remain healthy,” Gonsalves added.