Indian Express FY19 consolidated net profit slips to Rs 19.2 cr

MUMBAI: Print media company The Indian Express Private Limited (TIEPL), the publisher of dailies such as The Indian Express (English Daily), Loksatta (Marathi Daily), Jansatta (Hindi Daily) and The Financial Express (Business Daily), has posted a consolidated of Rs 19.2 crore for the fiscal ended 31st March 2019.

The FY19 net profit is lower than Rs 33.2 crore that the company earned in the previous fiscal. In FY17, the net profit stood at Rs 30.8 crore. The print media company’s operating income in FY19 stood at Rs. 462.6 crore as against Rs 448.5 crore in FY18 and Rs 437.6 crore in FY17.

TIEPL’s ad revenue growth during the fiscal witnessed significant headwinds on account of issuance of the government order in 2018 that no longer mandated the publication of tender ads in newspapers.

Further, the implementation of the Model Code of Conduct (MCC) ahead of various state and general elections resulting in a substantial decline in advertisement volumes from Public Sector Undertakings (PSUs) and the government besides constrained advertisement budgets of corporates.

Moreover, the rating also takes cognisance of TIEPL’s revenue concentration in print media with a geographical concentration of publications in the intensely competitive Delhi and Maharashtra (Mumbai and Pune) markets. The rating also factors in the structural challenges faced by newspaper publications, especially in the English-print segment, where advertisers have been moving to digital mediums.

TIEPL’s top 10 advertisers account for less than 15% of the total revenues.

The company is promoted by Viveck Goenka, who has more than 30 years of experience in the print media industry and holds a 40% stake in TIEPL, together with his son, Anant Goenka.

Rating agency ICRA has reaffirmed TIEPL’s credit ratings while the outlook has been revised to stable.

According to ICRA, the revision in the rating outlook of TIEPL to Stable from Positive considers the persisting weakness in the advertisement revenues of the company, which is expected to limit the improvement in profitability metrics over the near-term.

It further stated that the company’s operating margin remains vulnerable to the global newsprint prices and foreign exchange fluctuations, given that imported newsprint account for more than 75% of TIEPL’s total newsprint costs.

A sharp increase in the newsprint costs during FY2019 resulted in 380 bps reduction in TIEPL’s operating profit margin (OPM) over the previous year. Even as global newsprint prices have moderated over the past few months, the imposition of 10% customs duty on imported newsprint (effective July 2019) as well as muted revenue growth outlook would continue to adversely impact profitability indicators in the near-term.

The rating, however, continues to favourably factor in the strong brand recall and a stable readership base of the company’s key publications including The Indian Express (IE) and Loksatta, which rank among the top five English and Marathi dailies, respectively, as per the Indian Readership Survey, Q1 2019.

The rating also considers the extensive experience of its promoters in the newspaper publishing industry and its diverse and established advertiser base resulting in low revenue concentration risk.

ICRA expects TIEPL’s ad revenue to remain largely stable in the near-term on account of limited advertisement budgets of corporates. Further, ICRA believes that healthy and growing contributions from circulation and event income would continue to support revenue growth over the medium-term.

TIEPL also has a robust liquidity profile characterised by no long-term debt, healthy unencumbered cash balances (Rs. 57 crore at FY2019 end) and flexibility from unutilised cash credit facilities of Rs. 35 crore.

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