The share prices of paper companies have risen by 89% over the past month after strong earnings reported by primary producers for the quarter ended June. Leading branded copier maker JK Paper’s share price rose 89% on the BSE to trade currently at Rs. 188. International Paper APPM’s share price has risen 49% to Rs. 465. Significant rises have also been seen in the shares of Ballarpur Industries, Seshasayee Paper, West Coast Paper and Tamil Nadu Newsprint, among others.
Cost improvement measures over the past years have started yielding results. The depreciating rupee also made paper import from other countries costlier with paper producers increasing paper prices to match the landed cost. Paper stocks are likely to remain firm in the medium firm as long as the rupee continues to hold at the current level of around Rs. 70 against the dollar or depreciates further.
V Kumaraswamy, finance head at JK Papers, said that though there hasn’t been any capacity addition over the past few years, the paper demand continues to grow at a normal rate. The depreciating rupee has also resulted in the demand turning towards local players.
Saurabh Bangur, vice chairman at West Coast Paper Mills, said that the prices of all varieties of paper had risen so far this year by 5-7%, reflecting a surge in demand. The prices in international market have also risen by varieties, by US$ 100 to US$ 150 a ton to US$ 750 to US$ 800 a ton currently attributable to the rising demand in China.
JK Paper’s net profit rose a little over 50% to Rs. 95.1 million for the June quarter 2018 from the corresponding period last year. Emami Papers rose nearly seven-fold to Rs. 20.6 million. Company shares also got support from rising demand for the packaging variety in states such as Maharashtra, which had imposed a partial ban on use of plastics.
According to the data compiled by Indian Paper Manufacturers Association (IPMA), the country’s import of paper and paperboard rose to a record of close to 1.9 million tons for 2017-18, compared to a little over 1.4 million tons the previous year. Newsprint import, however, fell to 1.45 million tons for the year, from close to 1.6 million tons in 2016-17.
On Monday, shares of International Paper and Tamil Nadu Newsprint & Papers declined by up to 5% because of BSE’s decision to put them under a surveillance due to a sudden run-up.
As reported in Business Standard