India’s Writing and Printing Paper Industry Set for 4–5% Revenue Growth This Fiscal: CRISIL

New Delhi : India’s writing and printing (W&P) paper manufacturers are projected to witness a revenue growth of 4–5% in the current financial year, driven by stable volumes and a moderate rise in prices, according to a report by Crisil Ratings released on Monday.

This marks a strong rebound from a 7% revenue decline last fiscal. The report notes that realisations, which fell by around 12% last year, are likely to increase by 2–3% in FY26, supported by steady demand-supply dynamics, limited low-cost imports from ASEAN countries, higher domestic production, and the absence of new capacity additions.

While the rollout of the National Education Policy 2020 had spurred demand last year, volume growth is expected to ease slightly—by 200–300 basis points—due to growing digitalisation. Still, sectors such as banking, education, and the judiciary are expected to keep volume growth positive at 2–3%.

Operating profitability is forecast to improve by 200–250 basis points as hardwood prices fall due to better supply availability. Operational efficiencies, such as improved processing techniques, will also support margins.

“With no new capacity being added either domestically or in ASEAN countries, we anticipate a modest rise in realisations and volume growth, enabling a revenue rebound,” said Shounak Chakravarty, Director at Crisil Ratings.

W&P paper continues to play a critical role in sectors like education, coaching, banking documentation, and legal proceedings. Factors like stable school enrolment, the expansion of coaching institutes, increased KYC documentation, and consistent judicial demand are expected to sustain demand even as digital adoption gradually increases.

Capacity utilisation is expected to remain robust at 86–87%, with no significant investments planned for capacity expansion. Instead, companies are likely to focus on efficiency improvements, such as chemical reuse and energy-efficient manufacturing processes, which will enhance yields and cost savings.

Industry margins are forecast to recover to 15–16% this fiscal, up from the previous year’s five-year low of 12–13%. This recovery will be supported by lower hardwood prices and enhanced operational efficiency. Hardwood acreage, which had declined during the pandemic, has been on the rise since FY23. The improved harvest is expected to ease raw material supply pressures from the second half of this fiscal year.

With improved profitability and negligible capital expenditure, companies are expected to see stronger cash flows and enhanced credit profiles. Debt indicators are also projected to improve, with the debt-to-EBITDA ratio estimated at 1.3–1.4 times and interest coverage at 7.5–8.0 times—better than last year’s 1.6 times and 6.4 times, respectively.

With inputs from IANS