Saturday, June 29, 2019

3 paper industry stocks which could give 20-23% return | Stock Market


Free Stock Tips | Share Market Tips

Share Market Tips, Free Stock Tips, Free Stock Advisory,stock market tips in hindi, stock recommendations for intraday, free intraday trading tips
Share Market Tips

Manali Bhatia

China is the major consumer of paper worldwide at 106 million tonnes, followed by the US at 71 million tonnes and India sharing the same scale of the population as in China consumes a very little share which makes us understand the fact that India has a lower penetration rate and enjoys a greater scope of growth.
Talking particularly of the packaging sector, around 55 percent of the global consumption of paper is in wrapping and packaging. India is still behind in this particular segment. The plastic used to be the first choice of manufacturers for packaging.
In the recent past, state governments have taken a series of measures to ban plastic and ensured strict compliance in the plastic industry. This move has helped gain traction for the paper packaging industry, though not fully scaled up yet, and would increase its demand in the coming years. Also, robust demand in the food industry, mono cartons in the pharma sector, and multiple orders online are expected to drive substantial demand for paper packaging.
Secondly, China has banned the import of certain waste grade of paper owing to environmental concerns resulting in a decrease in waste paper prices. India which imports around 40 percent of waste paper stands to benefit out of the same. As already India has a scarcity of Pulpwood, the raw material used for manufacturing paper, and in the coming years owing to environmental concerns this scarcity is expected to shoot up further, giving pricing power to this industry. Attributes to this pricing power are also due to limited production (68.58 lakh tones) and increase in consumption (109.27 lakh tones).
Thirdly, there is a demand by major players to increase import duty on paper products, currently at 0 percent as per FTA. If it does, it would also provide benefit to this sector.
Also, the “Going digital” the slogan was expected to be a major slowdown in the paper sector. But, nevertheless, it should be known that paper packaging would be a boon for this industry.
JK Paper | Rating: Buy | CMP: Rs 122 | Target: Rs 150 | Return: 23 percent
The last quarter has been the best for FY19. A surge in the price of paper has contributed to an upside in revenue. Moreover, most of the pulp is derived from plantations close to their manufacturing units attributing to the reduction in material costs and expansion of margins.
The company is having two large integrated paper manufacturing units with a combined capacity of 4,55,000 TPA and is already running at 100 percent capacity utilization. At the Sirpur plant, two machines will start producing from the second quarter and the other two machines will be ready for production by September-October 2019. Thereby, the full capacity will be used for production purposes by October.
This additional expansion will help grow by at least 20 percent in volume terms. Furthermore, the expansion plan is in line for a new packaging board machine and pulp mill in Gujarat, awaiting environmental clearance were an additional new board machine of 1.7 lakh tone or two lakh ton would be added.
Also, it would be putting up a pulp mill of almost 1.5 lakh ton capacity in the next two years.
The company has a healthy financial profile; the net debt has been brought down significantly to Rs 700 crore in fiscal 2018-19 and the surplus cash being generated in going ahead will be used for repaying the debts.
Huhtamaki PPL | Rating: Buy | CMP: Rs 259 | Target: Rs 310 | Return: 20 percent
Being having a strong legacy, a unique client base and relative inelasticity of the FMCG sector (derives 80-90 percent of revenue) to economic cycles, coupled with the global footprint of parentage, and deep market penetration; aids company to make profits in long run.
In 2018, it suffered from extra provisioning on account of income tax and interest. However, from Q4 CY 18, most issues have been settled down and delivered vigorous Q1 CY19 results. Forthcoming, it expects topline to grow at 10-12 percent and likely to see 60-80 Bps ramp up in operating margin in the next two years. But, the margin growth depends on upcoming monsoon, the scenario of the FMCG sector and volatility in crude oil prices.
Increasing capacity utilization to a maximum of 80-85 percent, improving demand for flexible packaging and NASP initiatives would enable to improve its volume growth and boost revenues as well as profits ahead. In addition, the acquisition of PPIL and Ajanta Packaging (India) would help to consolidate its position in pressure sensitive label business, and is likely to be EPS accretive as well, which could help to expand strong foothold and growth too.
International Paper APPM | Rating: Buy | CMP: Rs 428 | Target: 520 | Return: 21 percent
International Paper APPM being an MNC company is well placed to take advantage of the growth in paper industry. On the front of the number, it reported pretty damn good results with EBITDA soared 61 percent during Q4 FY 19 driven by higher sales volume, record production levels, lower cost of raw material and improved operational efficiencies. Besides, a sharp fall in interest charges added to the company’s profitability, registering 83 percent PAT growth in Q4.
In addition, Debt has been significantly dwindled from Rs 180 crores to Rs 12.54 crores in FY 19 and is expect to be brought down further moving forward. Despite its plant running at 95 percent capacity utilization, it has not yet announced any significant capacity expansion plans for subsequent years. Moreover, China’s ban on imports of low grade recovered paper is expected to keep global pulp prices elevated, the resultant increase in global paper prices which has improved its realizations, thereby supporting its high margin ahead.
By investing in fiber-based markets, controlling costs, managing capital spending and focusing on deliberate improvement efforts to increase productivity and efficiency, expects a company generating a strong set of numbers and free cash flow in years to come.
The Author is Senior Research Analyst at Rudra Shares and Stock Brokers
Disclaimer: The views and investment tips expressed by investment expert on here are his own and not that of the website or its management. We advise users to check with certified experts before taking any investment decisions.

source:- https://www.moneycontrol.com/news/business/stocks/demand-of-import-duty-gives-pricing-power-to-paper-industry-3-stocks-could-give-20-23-return-4151431.html

15 comments:

  1. Nice post really worth it and helpful.
    stock tips

    ReplyDelete
  2. Theequicom blog is one of the finest resources for latest and important Indian stock market updates. It also provides you daily market gainers and losers.

    Theequicom Placementindia
    jobs in Theequicom
    jobs in Theequicom


    ReplyDelete
  3. This post is really very useful for me, keep sharing posts like this. If you want the latest update related to commodity market you can visit Free Commodity Tips.

    ReplyDelete
  4. this blog provides best free tips about share market. this is really useful for me.
    Equity Tips

    ReplyDelete
  5. If you are seeking free tutorials on stock market visit www.bikramchoudhury.org and for stock market trading courses in Kolkata India visit this link

    ReplyDelete
  6. Dearest Esteems,

    We are Offering best Global Financial Service rendered to the general public with maximum satisfaction,maximum risk free. Do not miss this opportunity. Join the most trusted financial institution and secure a legitimate financial empowerment to add meaning to your life/business.

    Contact Dr. James Eric Firm via
    Email: fastloanoffer34@gmail.com

    Best Regards,
    Dr. James Eric.
    Executive Investment
    Consultant./Mediator/Facilitator

    ReplyDelete
  7. Thanks for posting your valuable information. Please posting
    Nifty & Sensex
    CapitalStars
    CapitalStars Pricing


    ReplyDelete
  8. I'm thankful for finding your blog post. I've bookmarked this site and will return again soon.
    BTST!
    stock futures tips!
    Stock Option tips!

    ReplyDelete
  9. I have read your articles many times and I am always inspired by your tips and knowledge. Thank you for sharing.

    Stock Tips

    ReplyDelete
  10. Thanks for sharing this kind of information. Wealth research providing the best Option Trading in a share market. We are setting the target of share and first, you see the target than decide how to invest in the share market. Options trading for experiencing the accuracy of our services just fill the free trial from here and make your trading risk free.


    stock market courses in delhi
    Stock Market Institute in Delhi
    Share Market Training in Mumbai
    Share Market Courses in Mumbai
    Share Market Classes in Chennai

    ReplyDelete
  11. I really appreciate your post and you explain each and every point very well. Stock market update's click this. Stock Option Tips

    ReplyDelete
  12. You are sharing fantastic Share market news & global market update... Thanks a lot.

    Nifty Future Tips

    ReplyDelete
  13. Allow me to introduce the LE-MERIDIAN FINANCING SERVICES. the loan company that grant me loan of 5,000,000.00 USD When other loan investors has neglect my offer but Le_Meridian Funding Service grant me success loan.they are into directly in loan financing and project  in terms of investment. they provide financing solutions to companies and individuals seeking access to capital markets funds, they can helped you fund your project or expand your business.. Email Contact:::: lfdsloans@lemeridianfds.com Also  lfdsloans@outlook.com or Write on whatsapp Number  on    1-(989-394-3740)Good Intend,

    ReplyDelete
  14. This is very informative and interesting tips on share market. This tips can help for those who are interested to invest in stock market in India. Thanks for sharing this tips.. :)

    ReplyDelete