In last 15 days to one month, several paper stocks have rallied 20-80 percent.
Paper stocks have remained on buyers' radar after Prime Minister Narendra Modi, in his Independence speech, urged people and companies to junk single-use plastic beginning October 2, the birthday of Mahatma Gandhi.
Emami Paper, Genus Paper, JK Paper, Malu Paper, Orient Paper, Pudumjee Paper, Ruchira Papers, Seshasayee Paper, Shreyans Industries, Star Paper and West Coast Paper gained 2-10 percent on September 18. In last 15 days to one month, all these stocks have rallied 20-80 percent.
Modi has called for end single-use plastic use by Gandhi Jayanti in 2022. Plastic bags, cups, plates, small bottles, straws, and certain types of sachets are among the items the Prime Minister wants put out of use.
Analysts, however, are not taken by the rally in paper stocks. They say it could be short-lived, as paper is not the only alternative to plastic."This is news-based momentum rally as fundamentally, these are high- debt firms with major working capital and raw material issues," said Sameer Kalra, Founder of Target Investing.
Kalra said only those with captive raw material source would benefit in the medium to long term.G Chokkalingam, Founder of Equinomics Research & Advisory, agreed with Kalra. "The rally in paper stocks may fizzle out soon. The ban on plastic will come into effect gradually and also there are other alternatives to plastic as well such as jute and cloth bags," he said.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.