The shares of this leading paper company fell by more than 13 percent in Thursday’s trading session after reporting a decrease in net profits by over 56 percent YoY, in its Q1 FY25 results.
Price movement
On Thursday’s trading session, with a market capitalization of Rs.8,737 crores, the share price of JK Paper Ltd. opened at a low of Rs.489.95 per share falling more than 13 percent from its previous closing price of Rs.563.9 apiece.
Q1 FY25 Results
In the first quarter of FY25, JK Paper Ltd reported significant financial results, marked by a sharp decline in net profit. The company experienced a 56 percent year-on-year drop in consolidated net profit, amounting to Rs.140.79 crores, down from Rs.312.56 crores in the same quarter of the previous fiscal year. On a quarterly basis, the company reported a net profit decline of 50 percent from Rs.278.6 crores in Q4 of FY24.
Despite the net profit downturn, consolidated revenue from operations increased to Rs.1,804.47 crores, compared to Rs.1,663.97 crores in the corresponding quarter of FY24. Furthermore, the revenue fell slightly by 0.1 percent quarterly from Rs.1,804.87 crores in Q4 of FY24.
Total expenses of JK Paper Ltd. rose significantly by 25 percent to Rs.1,549.21 crores, up from Rs.1,238.34 crores in Q1 of FY24.
While the financial ratios of JK Paper Ltd remain stable, the company currently reports a Return on Capital Employed (ROCE) of 20.53 percent and a Return on Equity (ROE) of 22.13 percent. Additionally, its Price-to-Earnings (P/E) ratio is recorded at 10.02.
Management Commentary
“The results have been adversely impacted due to a significant drop in market prices coupled with a surge in wood cost compared to the corresponding quarter,” JK Paper Ltd. Chairman & Managing Director Harsh Pati Singhania said. The company, however, increased sales volume driven by higher utilization in the packaging board business, he added.
Pulp Prices and Imports
Pulp prices have remained steady until recently, when they began a significant upward trend over the past 2-3 months.
JK Paper Ltd. is worried about imports from nations such as Indonesia and China, as these countries have excess capacities and benefit from lower raw material expenses. The influx of goods from ASEAN countries, notably Indonesia, is adversely affecting the Indian market through dumping practices.
Global Presence
JK Paper Ltd. leveraged its robust distribution network to service a pan-Indian customer presence and a global presence across 60 countries including the USA, major countries of Europe, the Middle East, Asia, and Africa.
About the company
JK Paper Ltd. is a leading player in the Indian paper industry, specializing in the production of various paper and packaging products. The company operates three large integrated manufacturing units with a total capacity of 595,000 tonnes per annum and serves a diverse customer base across India and in over 60 countries worldwide.
Written by – Siddesh S Raskar
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