Coated paper accounts for 60 per cent of the paper and paperboard imports in India | BS Photo
Shares of paper manufacturing companies were in focus with West Coast Paper
Mills, Star Paper Mills, Seshasayee Paper, Emami Paper, and Balkrishna Industries rallying between 7% and 9% on good demand outlook.
Orient Paper & Industries, Nath Pulp & Paper Mills and Ballarpur Industries were up 6% each, while JK Paper and International Paper APPM have locked in upper circuit of 5% on the BSE.
In comparison, the S&P BSE
Sensex was trading 0.11% higher at 38,070 points at 12:17 pm.
The Paper Industry is cyclical in nature and its performance depends on the global pulp and paper demand-supply situation. The domestic paper sector is likely to see marginal improvement in demand from education and corporate sectors, aided by expected higher GDP growth of the Country.
“For the Indian paper industry, strong economic growth has been accompanied by equally robust demand for paper. The demand drivers and growth triggers have come from a combination of factors such as rising income levels, growing per capita expenditure, rapid urbanization and a larger proportion of earning population which is expected to lead consumption and there is enormous potential for the paper industry in the country,” the rating agency CARE Rating said in recent report.
CARE Ratings expects that the overall paper demand growing at a CAGR of 6.7% to touch 20.7 million tonnes in FY20.
Among the individual stocks, West Coast Paper
Mills has surged 9% to Rs 394, also its record high on the BSE
in intra-day trade on the back of more than two-fold jump in trading volumes. Till 11:45 am; a combined 802,471 equity shares changed hands on the counter on the BSE
In past two months, the market price of West Coast Paper
zoomed 53% as compared to 7% rise in the S&P BSE
Sensex. The company had posted a strong 56% year on year (YoY) growth in net profit at Rs 840 million in June quarter (Q1FY19).
“Import pressures are likely to be continued and could result in pricing pressures on paper products particularly copier and maplitho segments. Further, continued thrust on manufacturing different variants of cup stock paper having double digit growth prospects augurs well for maintaining the market share in this competitive segment. With optimum capacity utilization, good demand outlook, moving into environmental friendly and value added products; the Company is expected to sustain its growth prospects,” West Coast Paper
said in an annual report.