JK Paper rallies 29% in 1 week, hits new high on improved biz outlook

The re-opening of offices, educational institutions, and courts will lead to normalisation of paper demand.

Shares of J K Paper hit a new high of Rs 288, up 4 per cent on the BSE in Tuesday’s intra-day trade, gaining as much as 29 per cent in the past one week on improved business outlook. The re-opening of offices, educational institutions, and courts shall lead to normalisation of paper demand. In comparison, the S&P BSE Sensex was up 6 per cent during the same period. The stock surpassed its previous high Rs 284.80 touched on August 9, 2021.

The company on January 14, 2022 had intimated the stock exchanges of commencement of commercial production from its new packaging board plant at its Unit CPM, Gujarat, w.e.f. that day i.e., January 14, 2022.

In the past three months, the stock has outperformed the market by surging 35 per cent as compared to a 2.3 per cent decline on the S&P BSE Sensex.

For the October-December quarter (Q3FY22), JK Paper reported 134 per cent year-on-year (YoY) growth in profit after tax at Rs 151 crore on the back of 35 per cent YoY jump in turnover of Rs 1,094 crore.

The management had said that the improvement in company's performance was due to recovery in the paper segment and growth in production and sales volume coupled with higher realisation. This was despite sharp increase in major input costs in the recent period.

"The outlook for the paper sector is optimistic in India on account of the intrinsic use of paper in education in India, based on which the market for writing and printing paper in India is expected to grow around 4 per cent per annum, higher than the global average," JK Paper said in FY21 annual report.

The market for packaging board is likely to grow at 9 per cent to 10 per cent annually in India, compared to around 4 per cent around the world. This growth is catalysed by personal consumption and the growing substitution of plastic products, the company said.