Satia Industries - Journey towards Cyclical to Shallow Cyclical?

Still no news from the company regarding the con call. This is quite unusual as the company usually does com calls every quarter. Not sure how to read into this

@Investor1234 yes, this does look strange. Usually they are very proactive with setting up the investor call.

As far as I can see it , they do not do it every quarter .They do it twice a year or so …

Atleast thats whats available in screener .

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Screener info is not correct – I have double checked that from BSE website. In CY 2021 – they did 4 concalls – notification for each was sent along with the results. Perhaps the management is busy with sth more important. I am pretty confident that they will do a concall.

I think screener scrapes some keyword like ‘Earning Call’ that’s why it didn’t scrape all four.

Disc.: invested


somewhere in q4 concall they were told they are in talk with US paper companies. US companies are planning to move some part of their requirements from china. Satia says orders from these vendors will be very big. However, they said the company will take a decision by July end. IS THIS MANAGEMENT BUSY? THEN I AM SUPER INTERESTED

Disc: Invested and positively biased for the next couple of years. However, the company’s stock return for last year was good compared to nifty and very disappointed compared to JK…


Summary of rating agency report that came out today

Thanks to @kalpesh4430

Looks like this acquisition is done to boost the cutlery production.

Disc.: invested


Let us not get excited about this, the opportunity size for Satia in the segment is very negligible; from the 700 ton capacity a day , the share of these molded product is max 2 tons a day ? And there is no further update on FSSAI approval (looks like they don’t see much of traction in this segment )


My 2 cents in this:

  1. It’s very clear opportunity size for Satia is limited:

    • In last concalls there was any emphasis on molded cutlery
    • Did scuttle butt, talked with ex employee; promoters too see it as side activity. Their main focus is on ensuring supply of raw materials for paper mill & cost optimisation initiatives.
  2. Satia doesn’t own the brand (unlike Yash Pakka), neither they have expertise/proven track record in brand building.
    At the same time, jury is not out whether this Moulded cutlery business turn out to be commoditized business or branded business. If it gets developed as branded business, Yash Pakka will have first mover advantage.

  3. FSSAI registration is not a show stopper Coming from food industry, can say with conviction that, FSSAI registration takes time, rejection rate is very low. Satia has mature leadership team to get through.

Disc. : Tracking, did scutlebutt as well. Convinced with management quality, not convinced yet with moats of the business & growth prospects.


Negen Capital bought Satia today. The PMS is run by someone named Neil Bahal.

Disc.: invested


Neil bahal investment thesis about satia

1 stock idea - we haven’t had this for a while. So here goes…

Satia Industries: (Mcap 1335cr, CMP 133/share).

In short, Satia is not a Special Situation as such. It comes under the value investing category where significant Capex has just taken place and if ramp up happens as per plan, stock is available at 6.6x P/E, which is a considerable discount to historical multiples this company has got of approx 10x P/E.

(It has even seen 12-14x P/E at times in the past, but we should always conservatively take target multiples).

What I like here?

I really like that its big capex has finished already and now the ramp up should happen in the remainder of FY23. Hence, the risk is lesser in this case.

It is always a risk to buy a business when a ‘significant’ capex is just announced.


Also**, Satia is a backward integrated player which makes it a safer proposition compared to many of the listed peers who are at the mercy of ‘imports’ of raw material.**

Relying on imports can make margins unpredictable.

Hence, an integrated player like Satia offers some comfort.


In our estimates (extrapolating from official management guidance),

FY23 revenue could be 1500cr with 300cr EBITDA.

In FY24, EBITDA could increase to 400cr.

This translates into PAT in FY24 between 190-200cr.

And based on current mcap of 1335cr, stock is currently available at 6.67x P/E on FY24e.

Ps- Satia Industries is one of the rare companies which remained profitable even during the Covid pandemic which indicates a strong business and able management.


*Disclaimer: Negen Capital PMS owns Satia Industries. This post is our research note on Satia Ind and not investment advice. We can sell our positions at any time. We have not been paid by anyone to write this newsletter. Kindly consult your financial advisor before acting on the contents of this newsletter. The estimates mentioned could go wrong. The views could be biased.*

Press Release


Great results!
But the trade receiveable have gone up significantly in the first half…


Solid results…operating leverage looks to be playing out. I regrettably exited around 145 level in anticipation of another round of poor results (similar to last Q).

150 cr sales/month…Debtor days 44 days… Hence 43 Cr not seems to be a huge…


Super results… doubled sales and profits😊. What excited me more putting more capex into the business. WIP 137 crore.


Earing updates Q3

SATIA Q1 22-23 Earning updates.pdf (531.9 KB)


Satia Industries Ltd.

Why we like the stock?

  1. Satia is one of the more efficient players in the paper industry, because of their backward integration.

  2. They have 100% co-gen power facilities which lets them use electricity at cost of Rs 2-2.5 per unit against grid cost of Rs 7-8 per unit.

  3. They have a caustic soda recovery plant. Paper is an industry which uses lots of caustic soda and it is very expensive at around Rs 50000 per ton. Satia has a plant that can recover 90% of the caustic soda they use in the manufacturing process. This is approximately 120-130 tons a day which comes to cost savings of about 60 lakhs a day, which means savings of 180 crores a year.

  4. Satia is strategically located in Punjab which allows for easy availability of agro based raw material used to make paper. This helps them save on freight costs.

  5. The agro based raw materials such as rice straw and rice husk which they use for generating power are usually burned by the farmers causing stubble burning pollution. Satia is transforming waste which would have caused pollution into something valuable. Because this is considered as green energy they earn REC certificates on this. These certificates can be traded on the energy exchanges and is an additional income for the company.

  6. They have recently installed boilers in their plant which are able to use rice straw while most other players’ boilers use rice husk. For comparison, rice husk costs Rs 7000-8000 per ton, which while rice straw costs Rs 2000-4000 per ton. This allows for more cost savings

  7. They have existing relationships with State Textbook corporations, and these corporations place bulk orders with Satia for paper. Because of this, we don’t see the volitility in their PAT numbers as compared to other paper players which mostly sell through the market. These relationships will be of further help to them, when the NEP is implemented and all new books have to be printed.

  8. Even during peak covid period, when almost all other paper manufacturers were posting losses, they never posted a single quarter of loss. This points to an inherent strength in the business.

  9. Usually in these types manufacturing companies such as paper, cement, steel, being the lowest cost and the most efficient producer is THE moat. And Satia, seems to have a deep one at that.

  10. They are upgrading their wood pulping facilities from 150MT per day to 300MT per day. Once that is operational they’ll be able to make higher grade paper on their latest PM4 machine. This will lead to further margin expansion and higher profitability with operating leverage.


  1. Low float
  2. Paper price volatility. This remains a risk even though they have proved they could remain profitable even during lockdown period which was probably the worst time for the paper industry ever, in recent decades

Disclosure: Invested from 90 levels.

Material Cost % Satia Industries 60% 38% 39% 44% 46% 51% 44% 37% 39% 44% 39% 45%
Yash Pakka 30% 40% 41% 32% 41% 51% 53% 26% 28% 25% 21% 22%

Why there is gap in gross margin, being a BI company satia’s material cost must be at par with peer or better, any specific reason for that

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May be because of end product…Yash Pakka focus on low grammage MG industrial bleached and unbleached paper grades of between 30- 80 GSM and Specialised paper grades for rapping, packaging, interleaving for food and pharmaceutical industries, etc. Whereas Satia supplies 50% of its production to State textbook boards with the balance sold in the open market.

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