West coast paper mills ltd

Paper stocks bump in anticipation of govt’s anti-dumping duty levy

Prices of all varieties — newsprint, writing and printing paper, packaging and speciality paper — have gone up by five to seven per cent this calendar year, primarily because of the China factor and a sudden upsurge in consumer demand,” said Saurabh Bangur, vice-chairman, West Coast Paper.

Last year, China had banned import of mixed paper waste and this had significant impact on the global market. China has substantially raised its import of pulp, leading to a spike in pulp prices. Pulp is a substitute for waste paper and its major exporters —Indonesia, Malaysia, Chile – have diverted theirs to China at a higher price.

  • See the below video to understand the china ban on mixed waste paper

The Indian paper industry is in a sweet spot, as increasing global paper prices have provided an umbrella for raising of domestic prices, even as backward integration for wood / pulp locally through farm forestry has been highly successful. With international pulp prices strong, and a more disciplined global industry, we expect the upswing to be sustainable in the medium term,” says Bhakti Thacker, an analyst with Investec Securities.


Report : :page_with_curl: INVESTEC - PAPER INDUSTRY REPORT has the content related to Westcoast paper mills

West Coast Paper Mills (WCPM) is one of the top branded paper company in the country, which is benefitting from a consolidating industry in India, and overseas. WCPM has successfully delevered its balance sheet over the past few years, and we expect it to be practically debt free by FY20. The management team is one of the more experienced team in the industry, and has built a solid distribution network making it capable of quickly expanding capacity, and sales. Valuation of 7.6% FY18 FCF yield, 10x FY18E P/E (8x FY20E EPS) is supportive, even as we expect strong cash flow to sustain. However, a track record of unrelated diversification makes us somewhat cautious, and we initiate on the stock with HOLD rating.

:small_blue_diamond: WCPM is one of the top paper companies in the country by size – it operates a 320,000 integrated paper mill, with sufficient pulping capacity, and a 75 MW power plant. An optimal size of the plant, it is amongst the more profitable paper companies in India today – FY18 EBITDA margin of 21.2%, and RoIC of 14.7%. WCPM also enjoys adequate supply of water, a key ingredient in paper making, ensuring a disruption free production schedule.

:small_blue_diamond: We expect the paper cycle to remain buoyant, which should support profitability of top paper companies like WCPM. Over the past 2 years, WCPM has generated
over Rs.5,825.6 mn of free cash flow as it has taken advantage of the 2nd widest distribution network in the country as the paper cycle recovered.

:small_blue_diamond: WCPM has successfully delevered over the past 2 years, and is practically debt free today. While a solid balance sheet positions WCPM to be one of the consolidators, a bank default in one of the group companies has created a stumbling block in the NCLT process. This means that expansion by WCPM has to be organic, making its desire of expanding its manufacturing footprint more challenging than its competitors. For instance, it was ruled out of the NCLT process for Sirpur Mills, which eventually has been acquired by JKPL.

:small_blue_diamond:Like the other majors, WCPM has also sought to control its supply chain for wood fibre. However, success has been somewhat mixed, and it still imports ~43% of its requirement of wood fibre. This exposes WCPM to price volatility of fibre, which has been a key risk for the industry in the past.

Above report has well covered analysis on JK Paper, west coast paper mills and Tamil Nadu Newsprint Papers Ltd. One go through the report to get an idea on the paper industry

Disc: no holdings


Any further developments on this subject. I also hear that anti plastic drive by many states will help paper industry. Any view

Invested for Tracking

Promoters group are buying in market though it is small quantity.



Q3 2019 results

  • Sales u 7% yoy
  • Operating Profit up - 56% yoy
  • Operating Margin increased from 24% to 35% yoy
  • Net profit up - 56% yoy

Promoters are buying (albeit in small qty); results are good and the future prospects of the industry also looks good. Is there any reason behind the recent fall? Particularly today’s (around 9%)? Am I missing anything or the markets are just being irrational?

Why is this stock falling continuously. December results are not showing any negative indication


I won’t chalk it up to irrational markets. From my limited observations, cyclical stock results are looked at QoQ and not YoY. Since QoQ has seen an EPS drop this is falling. The general tendency to stay away from non-Nifty stocks in these times is also a drag.

Any views regarding the take over of APPM ?

Found an article jotting the details of the acquisition of International Paper APPM. An interesting story of West Coast Paper and entry of International Paper in India and eventual exit. - West Coast Paper Mills buys majority stake in International Paper APPM


IPAPPM has argued for lower valuation by saying that their plant is very old and need major replacement…

Imports up

If any of you get an opportunity please ask these Qs at the AGM/1130am/ tomorrow…
Sharing incase, i dont get to ask.

  1. Is it beneficial for West Coast to merger Andhra Paper, or keep it as a seperate entity. The reasons.

  2. Also if you could quantify and explain the synergy benefits of this acquisition

  3. Andhra Paper being an old plant might require large modernisation/upgradation capex. If so how much and by when we plan to do the same.

  4. Is there any scope for brownfield capacity addition in both plants

Results out for Q3. Losses have reduced both on standalone and consol basis. Paper prices seems to be bouncing off from the lows as Jiten also alluded here Commodity and Cyclical Plays - #1141 by jitenp and next quarter might be better.

Things are getting better slowly for paper industry

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