New Document top_band
 
Business Standard

TNPL: Paper money

Related News

Capacity addition will boost earnings and revenues, but valuations are expected to remain unchanged.

TNPLThe future of Ltd (TNPL) is already published. The is among the fastest growing markets in the world, with a growth rate of seven-eight per cent. The per capita consumption of paper in India is around 8.5 kg, which is very low compared to the Asian average of 45 kg and the world average of 55 kg. Hence, TNPL looks well placed in terms of demand.

Globally, there has been a shortage of paper pulp due to the earthquake in Chile in February 2010, say experts. Chile accounts for eight per cent of the world’s pulp output. Therefore, the company has started using bagasse-sugarcane waste as a raw material for manufacturing paper. When dynamics of the global paper industry are changing, such strategising can place TNPL in a sweet spot, reckon analysts.

have increased sharply of late to stabilise at around Rs42,000 a tonne. In such a favourable time, TNPL also plans to modernise and create additional capacities of around 500,000 tonnes by 2011-12. If these capacities come onstream, there could be a pressure on prices. However, strong demand is likely to restrain the fall in prices.

TNPL is currently in the process of installing new paper machine capacity and will be increasing its production capacity from 245,000 million tonnes per annum (MTPA) to 400,000 MTPA by September at an outlay of Rs1,000 crore. The capacity addition will boost earnings and revenues, but valuations are expected to remain in line with the historic patterns of around 8-10 times of prices to earnings, giving it a pure commodity status.

The value addition angle for the paper manufacturer has been missing, unlike other players in the similar business. Hence, volume growth and price spikes will be the only driving factors.

Read more on:   
|
|

Read More

Tata Motors: Q3 margin decline a one-off

Shares of Tata Motors lost six per cent on Thursday after it disclosed that operating margins of Jaguar Land Rover (JLR) in the third quarter would ...

Quick Links

Have Your Say




There have been 10 major exits at Infosys in the past one year. What do you think is wrong with the company?

There have been 10 major exits at Infosys in the past one year. What do you think is wrong with the company?

Financial X-Ray Rss icon

Lupin: Earnings upgrades likely after stellar Q1
Malini Bhupta

Strong product pipeline to sustain sales growth of 25% in FY15, margins likely to settle at 30%

Bharat Forge: Strong Q1, more gains ahead

Higher proportion of non-auto business is helping the company improve revenues and margins

Back to Top