Paper stocks see strong investor interest as biz cycle turns favourable

Improving demand and likely consolidation in the industry are key triggers

The paper industry has seen a recent surge of investment interest. Part of this is a natural consequence of investments in the packaging industry, which is doing well. Investors expect the paper cycle to also remain strong as a result.

However, unlike in the packaging sector, the financial position is less clear in the paper industry. Approximately 20-25 per cent of the revenues of the paper industry are generated by listed companies, with the rest coming from smaller mills.

In Q4, 2020-21, a sample of 21 listed companies saw their revenues up 16 per cent year-on-year at Rs 5,244 crore