Hi All,
Sharing my notes from JK Paper’s credit rating report.
It has some good insights on the ongoing capex and stabilisation of the Sirpur unit.
Overall, I believe the company is well placed in the paper industry with the upcoming paper board unit and overall tailwind in the industry.
Hope this helps!
Regards,
Yogansh Jeswani
Disclosure: Invested
hey can anyone tell me the projected revenue from this new facility and op margins.
Topline at 100% capacity of thisnew plant should be 1200-1300 Cr and op margins should be 15-20%.
You can go through the links below.
It is a stock that very much been my one of the first multi bagger and is one that i personally know as have many contact with the whole distribution line as my family is majorly in stationary and paper business only.
If we see the current climate in the whole distribution chain it is somewhat written in stone that the 2017-18 level of high paper price will be beaten very soon and many big supplier are already stacking jk paper copies paper as it has already have risen by 20-25% in past 1-2 month atleast in retail and have said to rise till 30-40% till June period.
This price will be very much 5-10% more then past peak at 2018 period and this could make a fully sourcing company form inside like jk paper to actually benifit as they don’t really much on raw material so this will directly help them increase the margins.
If we look at most suppliers they are saying and have made plans that the current prices might be more sustainable then ever and it might create a bottoms then before and when prices go back to normal it will be higher then past normal price.
This make long term margins to be better and with sudden increase in margin even in short term can help them fund there packaging paper capex and even make bigger plans or even a better dividend,buyback possible.
I see a good opportunity but at current level to be to high and betting to much on recent capex.
Hello, Can you share the Source of the above notes please?
Annual Report of JK Paper.
Great earnings report. Quarterly earnings on a consolidated basis of 19.14 (after an exceptional item of 33 cr).
Link - https://www.bseindia.com/xml-data/corpfiling/AttachLive/5dd9e485-b0bb-4aac-9385-3d5120d314d8.pdf
JK Paper Management Interview/Future Quarters Guidance:
CFO on another interview mentioned that imports have increased for packaging paper and hence price reduction will happen in coming Qs. Considering packaging constitute a major revenue share it could impact the topline. But even with this headwind, at the 3-5 yr average PE of 10 and expected EPS of 55-58 at year end, the stock price could be around 550. Does this sounds reasonable ?
Disc : Invested
The stock prices of commodity stocks peal much before the peak earnings. Such stocks only rise when the outlook is good for the medium term and not based on low valuation itself. Same is happening with Rushil in the MDF space. The stock is attractively valued with good growth but coming margin contraction is taking the stock down.
Broadly agree with you but here the sector is also getting multiple tailwinds with NEP, SUP ban, supply demand imbalance and no major new capex announcements, energy crisis in europe etc, higher demand of packaging paper due to FMCG/Ecom which is more structural etc. So overall seems like a structural story for at least 1-2 years and hence the scope of at least a Pe multiple of 10 which is close to 3-5 yr average. Otherwise how would anyone estimate the fair value of the stock ?
Right now, paper stocks are falling on great results. So the market is clearly sensing something amiss in the future. Let’s see. We should wait for better price action in the stocks. No point in fighting the trend.
JK Paper’s net consolidated profit for Q2 has double-fold and reached Rs 326.93 crore. In july- September period JK Paper logged a net profit of Rs 118.18 Crore a year ago. These numbers have shown a phenomenal growth of the company Quarter to Quarter and YOY basis.
The shift is coming as per the mgmt but how much of that will be sustainable (in terms of revenue and margin growth) and would shift the overall dynamic of the industry that will be visible in couple of years. If we compare then in my opinion the other companies such as west coast paper, tnpl are relatively better priced at these levels. Undoubtedly jk is the leader here but excellent result with no follow up move in the price rather then some cut is definitely something which can’t be ignored.
Position : Was invested earlier. Only have small tracking position now post results.
Link to updated presentation -
Is the concall not happening for q2 ? Have not found the link yet ?
