There are multiple questions here which we should discuss and try to answer:
1/ Demand declined in Q1 even when the industry is at top of cycle. We don’t know whether it is temporary or the industry is entering into down cycle?
2/ Margins expanded because of lower raw material costs. We don’t know whether it is temporary or the prices will move up?
3/ All the players are expanding capacity which should be live in next 2 years. This will again create a supply glut leading to lower margins in the industry
Think you’re looking at QoQ numbers.
When one looks at YoY numbers, the results look good. There’s around 12% growth in the topline and the bottomline although looks flat, but if we remove the inventory impact from last yr Q2 numbers, the bottomline looks good too.
Paper pri es are expected to go up shortly. Market information is
Duplex board by Rs 4 to 5 (NR Agarwal)
FBB/SBS by Rs 7 (JK, ITC)
Kraft Paper already increased by Rs 3 and expected to go up further by 3 to 4.
Price of NR already shot up in last one week.
This is being attributed to shortage in recycled paper.
Looks like 2020 will be repeat of 2018 when paper tightened and spiralled upwards. Year has begun on a good note for paper industry it seems.
If you will search on youtube there are multiple interviews by management time and again on CNBC, Zee business etc. They give some sort of guidance of prices etc. But yes item by item it will have to be through dealers and distributors. as in Coated paper/ uncoated paper, paperboard etc.
While it will be difficult to conclude. But based on the import restriction of the 30% of the categories where JK paper operates, it should have decent positive impact for the company and overall as an industry it might improve or strengthen the prices (depending how on the ground implementation of this happens).
Just happened to speak some people on the ground level and got to know that this new restrictions are for “stock lots” basically “left over” paper stock which used to have multiple combinations of paper etc so which was being dumped into India. While do not have exact data, but the import of these items may not be very significant.
A S Mehta, President & Director, JK Paper downplayed the impact of coronarirus, saying, “Prices have gone up marginally in the last couple of months because imports of coated paper from China have been hampered due to port congestion. As a result, the price of coated paper has increased but most other varieties are subdued.”
