Sumit BilgaiyanEquity99
Ruchira Papers is manufactures writing and printing paper and kraft paper. It's white writing and printing paper is used to make notebooks and writing material, while the colored paper is used in the fabrication of spiral notebooks, wedding cards, shade cards, children's coloring books, colored copier paper and bill books. Of the 750 paper mills across the country’s fragmented paper industry, only 50 have the capacity to produce 50,000 or more metric tonnes per annum.
The current industry demand has been pegged at ~16 million tonnes with over 2 million tonnes being imported annually. During 3QFY2018, Ruchira Papers reported revenue growth of 15% YoY driven by strong realization. On the operating front, margins expanded by 340bps YoY due to lower raw material cost and other expenses. This led to an increase in bottomline by 48% YoY.
On the segmental front, sales volume of writing & printing paper segment fell by 2.5%, while that of kraft paper increased by 3.5%. We believe Ruchira Papers has potential to report healthy topline growth on the back of superior demand in printing & writing paper and kraft paper segments.
On the profitability front, it will post better operating performance aided favorable raw material prices. We are recommending a buy with target of Rs 187 with stoploss of Rs 158.
Disclaimer: The author is Founder of Equity99. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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