Schools, colleges, offices and courts have reopened in the last one month and this has resulted in a shortage of paper. Paper manufacturers have raised the prices.
In the past few days, the interest of investors in domestic paper companies has increased and analysts say that paper companies are likely to deliver strong returns as their earnings might grow due to the increase in the demand and the prices.
Some of the top gainers in this sector are Andhra Paper, J K Paper, West Coast Paper, Seshasayee Paper and Kuantum Papers have rallied more than 20% in the last 5 days., while TN Newsprint and Orient Paper gained more than 15%.
S Ranganathan, head of research, LKP Securities said, “Paper stocks have seen good accumulation this week as almost all players have raised prices, and traditionally the fourth quarter is always the best quarter, more so this time around in view of the opening up theme gaining momentum.”
“JK Paper has recently commenced its board facility, and the outlook is promising going forward. Despite the absence of boards, West Coast Paper has large capacities and is a formidable player with a positive outlook going forward,” he added.
There is a shortage of waste paper, which is a key raw material in the manufacturing of recycled paper since schools, colleges, offices and courts have remained closed for a long period of time due to the pandemic.
Akhil Parekh, analyst, Centrum Broking said, “With demand now crossing pre-Covid levels and favourable pricing scenario for Grade A mills, we expect significant improvement in profitability for JK Paper, West Coast Paper, and Andhra Paper overcoming few quarters.”
“There has never been a situation in the last 40 years when recycled paper manufactured by Grade B and C mills prices have been more than Grade A mills’ paper,” he added.
The wholesale prices of writing and printing paper have increased from ₹39-46 per kg to ₹ 75-80 in the past year. The price of coated paper has increased by 40% to ₹ 100 per kg, and that of the white paper has increased from ₹31-33 per kg to ₹27-44.
Andhra Paper Limited – up 31.42%
The share price of Andhra Paper Limited has increased by 11.13% today and the shares are currently trading at ₹286.50. The shares have gained 31.42% in the past 5 trading sessions.
J K Paper Limited – up 28.72%
On Wednesday, the shares of JK Paper hit a new 52-week high of ₹310 per share, up 11.01% since its previous close. The share has gained 28.72% in the past 5 trading sessions.
West Coast Paper Mills Limited – up 24.65%
The company clocked a fresh all-time high of ₹315.70 per share. Currently, it is trading at ₹308.00 per share, up 6.24%. In the last five days, the share price increased by 24.65%.
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