Indian Paper Companies: Are they worth buying now?


Paper stocks have suddenly come into focus after a lackluster performance for many years. A recent listing(end of 2017) of the company ‘Astron Paper’ saw a mega debut with a listing premium of 130% [2].

The situation of these companies was pretty bad just 5 years back. The table gives a brief highlight into the debt-ridden scenario of many top performing paper companies[4].

Debt Ridden Paper Companies

Table 1. Heavily leveraged  paper companies in 2013[4]

What is the reason behind the sudden reversal of fortune?


  • Higher Capacity Utilization of the manufacturing plants due to boom in e-commerce industry[7]
  • Ban on low-grade waste paper import in China under pollution control norms(September 2017)[5][6][7]
  • Increase in price of end-product in accordance with raw material(wood-pulp) price rise[7][8]

Listed Players


Top 10 Listed Paper Companies_2018

Table 2. Top 10 listed Paper Companies in 2018[3]

Selection Criteria

There are a few things to check in any paper company before making your investments[4].

  • Does it have its own power supply? If not, does it have a Purchase Power Agreement(PPA)
  • Raw material used for manufacturing  the paper
  • Labor Costs
  • Debt-Equity Ratio
  • Operating Margin
  • Product Portfolio


Paper Industry has a bright future as the companies will make good of the lost opportunity from 2013-2015 in the coming years. Considering this, paper stocks have rallied ~20% post the reasons listed above.

Subsequently, many companies will possibly be re-rated which can reduce their borrowing cost and help them create value for their long-term investors.

Kindly understand the company’s business and wait for a meaningful correction, if you really want to make an investment.

Further Reading




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