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Paper stocks up on better financials

Star Paper Mills, Ruchira Papers, Balkrishna Paper, TN Newsprint, N R Agarwal Industries, Seshasayee Paper and West Coast Paper were up in the range of 6% to 20% on the BSE



Shares of manufacturers saw sharp gain on Monday, on expectation of robust growth demand. That of Tamil Nadu Newsprint & Papers rose the highest at 8.8 per cent, to close at Rs 419.8. Emami Mills rose 8.1 per cent to Rs 898.1. West Coast Mills and JK rose six and 5.2 per cent, respectively. Experts estimate 12 per cent and four to five per cent growth in demand for packaging and writing & printing paper, respectively, next year. Writing & printing continues to face margin pressure in cheaper shipments from Southeast Asia. mills in India have reduced debt over the past few quarters and reported good financials in the quarter ended September. Probably, (stock) traders have noticed now the overall improvement in top line and bottom line.

Based on financial performance, overall sentiment in the sector is positive,” said V Kumaraswamy, chief financial officer at JK Paper stocks up on better financials According to reports, has stopped import of waste and has shifted to use of virgin pulp as raw material, to reduce environmental pollution. Consequently, Chinese mills are now facing a shortage of raw material. Industry sources believe Chinese mills have lost around three million tonnes of production capacity, as a result. Thus, their export to other countries in the region could decline for a while. companies have reported growth in profitability over the past few years, with reduction in debt to equity ratio to 1.1 for financial year 2017, compared to 1.6 for financial year 2015. Similarly, their debt and Ebitda (operating earnings) ratio fell to 3 for FY17, from 5.6 in FY15. This indicates their financials have improved over the past three years. The trend is likely to continue,” said an analyst with a large brokerage. Rohit Pandit, secretary general of the Indian Manufacturers Association, said the writing and printing segments of the sector were growing but also faced import pressure from Southeast Asian countries.

First Published: Tue, December 12 2017. 00:03 IST