Focused on agro-based paper
This paper company enjoys many raw material, location and other advantages
| Ruchira Papers |
| 532785 |
| B |
| RUCHIRA |
| INE803H01014 |
| RUCP@IN |
| RCHR.BO |
| Rs 10 |
| Rs 69 / Rs 26 |
| Rs 63 (as on 1st April 2016) |
Ruchira Papers (Ruchira) is a manufacturer of writing & printing paper and kraft paper.
Kraft Paper finds its application in the packaging Industry especially for making Corrugated Boxes / Cartons and for other packaging requirements. The special feature of its Kraft Paper is load-bearing capacity and tensile strength which makes its most suitable for corrugated packing application.
The company initially set up Agro Waste Paper Mill for manufacturing of Kraft Paper and commenced its operations with a small 2310 TPA Capacity. Over the Years, it has undertaken several phases of expansion and the Production Capacity of Kraft Paper since then has increased from 2310 TPA to 52800 TPA
Writing & printing paper is manufactured from virgin pulp (agro based), which finds its usage in manufacturing note books, special grade paper for wedding & greeting cards, art sheets & colored scrape books, drawing sheets and paper for multipurpose office use.
Creating tree-free papers
The company is a contemporary paper farm in the heart of Himachal Pradesh. Since its launch it has endeavoured to be one of the greenest papermakers in the industry. The company takes pride in creating tree-free papers for writing, high volume print and packaging.
Ruchira Papers manufactures paper based on agro-residues with a chemical-recovery plant. Agro-based paper manufacturing requires less energy, less water, fewer chemicals and is highly environmental-friendly compared to companies using wood pulp, resulting in lower cost of production. Agro-based paper manufacturing coupled with environmental-friendly production process are key sustainable competitive advantages for Ruchira Papers.
Enjoys various tax incentives
Ruchira's plant being located in Himachal Pradesh, is enjoying the following benefits.
- 100% excise exemption upto 2018 for printing & writing paper capacity (33000 MT capacity and 59% of operating revenues)
- Concessional rate of central sales tax at 1.5% against 2% in other states.
- Power tariff in Himachal Pradesh is cheaper comparatively than neighboring states.
Abundant availability of major utilities required for manufacturing paper namely power, fuel, and water
The major utilities required for manufacturing paper are power, fuel, and water
In the Kraft Plant, 100% Power supply is from H.P. State Electricity Board (HPSEB). A 132 KV Sub-Station of HPSEB is just around 600 Meters away from the Mill, from where dedicated Feeder for Ruchira Papers has been drawn to get better quality of Power in terms of voltage as well as to reduce the interruption. Mill has 4000 KW Power connection.
In the Writing & Printing Plant, the company has set up 7.2 MWh power co-generation plant for captive purpose to get uninterrupted power supply for its operations.
The company also lays due emphasis on power conservation. CII (Confederation of Indian Industry) energy audit team conducted a detailed energy audit of Ruchira Papers including all thermal and electrical equipments. Various energy saving proposals were suggested. Implementation of some of the proposals has resulted into reduced power consumption (per ton of paper) which has added to the profitability of the company. It is were also accredited with an appreciation letter from CII for contributing to the power conservation.
Agricultural Residues (Bio Mass) are being used as a fuel such as Rice Husk, Bagasse, Forest Waste Plants, Cotton stock, Mustard stock etc.
Water, which is one of the important requirements of paper industry is abundantly available at site in the form of ground water. The water level at site is very good as the Markanda River flows just 1000 meters away from the site. In both Plants, Water is sourced by digging the Borewell and adopting most advanced system for re-circulation of the back Water. The Consumption is reduced to only 42 M3 Per Ton of Paper against normal consumption of 100/150 M3 Per Ton of Paper in similar Industries (Kraft Unit) and 293 M3 Per Ton of Paper (Writing & Printing unit). The company has its Tube Wells running at present.
Investment in technology to boost margin
The company has been maintaining pace with the changing technology in the Paper Industry. Since the start of Commercial production in 1983, the company has been regularly upgrading its plants.
The company will be investing around Rs 38-40 crore towards technology up-gradation and process refinement by June 2016. This will lead to better efficiency and higher production output. Integrated chemical-recovery plant, improvement in operating efficiency and strategic shift towards high margin value-added products will drive margin expansion
Education and e-commerce are driving demand for writing and packaging paper
India's current paper production is estimated at 12.75 million tones. India, which is the second most populated country in the world after China, consumes less than 10 kilograms of paper as against global average of 58 kilogram and US consumption of over 350 kilograms.
India paper consumption is only 3% of global paper consumption while the population accounts for 17%. There are about 700 - 800 paper mills in the country. 12 large sized paper companies account for production of about 30%. 40% capacity is wood based, 30% Agro residue based and 30% Waste Paper based. Geographical distribution: North 35%, West 30%, South 30%, East 5%.
India's paper consumption is expected to grow to around 40 million tonnes by 2026 from the current 14 million tonnes. Industry sources estimate that new investments of Rs 90000 crore is required in the coming few years. The exponential growth of e-commerce in the country has opened up a new horizon and could contribute significantly to the demand where paper is being extensively used for packaging.
Backed by buoyant economy coupled with the commitment of Government to increase literacy and growing awareness of quality paper among the consumers, paper industry is on the threshold of a promising future.
Paper producers raise prices ahead of peak season
Paper manufacturers have raised prices by 2-5% on expectation of rising demand from user sectors for printing of books and notebooks for the next academic year - 2016-17. As demand will continue prices are likely to remain firm in the coming months. Domestic demand seems to be picking up.
Union budget 2016 was positive for paper industry
Union budget 2016 was positive for paper industry. Basic customs duty (BCD) on wood chips or particles for manufacture of paper, paperboard and news print has been removed from 5%. This is positive news for paper manufactures. Since, wood chips are primary raw material for paper industry; reduction in BCD will help them to reduce their raw material cost and lift their operating margin.
Nine months sales grew 6% and PAT jumped 68%
For the nine months ended December 2015, sales grew 6% to Rs 272.90 crore. OPM recovered 290 bps to 14.1% (from 11.3%) which took OP up 33% to Rs 38.54 crore. PBT jumped 84% to Rs 26.04 crore. After providing for tax (up 112% to Rs 10.60 crore), PAT went up 68% to Rs 15.44 crore.
For the quarter ended December 2015, sales grew 10% to Rs 90.09 crore. OPM jumped 330 bps to 14.4% (from 11.1%) which took OP up 42% to Rs 13.00 crore. Other income fell 32% to Rs 5 lakh and interest cost fell 32% to Rs 1.67 crore. As depreciation stagnated at Rs 2.45 crore, PBT jumped 106% to Rs 8.93 crore. After providing for tax (up 87% to Rs 3.50 crore), PAT jumped 121% to Rs 5.43 crore.
Valuation
For FY'16, we expect the company to register sales and PAT of Rs 369.32 crore and Rs 20.75 crore respectively. This gives an EPS of Rs 9.3. This EPS is likely to rise to Rs 11.1 in FY 2017 on sales of Rs 398.86 crore and PAT of Rs 24.83 crore. At current market price of Rs 63, the scrip trades at 5.7 times its expected FY'17 projected earnings.
| 1203 (12) | 1303 (12) | 1403 (12) | 1503 (12) | 1603 (12P) | 1703 (12P) | |
| Sales | 284.28 | 297.41 | 320.13 | 346.56 | 369.32 | 398.86 |
| OPM (%) | 14.2 | 17.1 | 15.3 | 11.3 | 13.7 | 14.2 |
| OP | 40.38 | 50.87 | 48.84 | 39.11 | 50.63 | 56.64 |
| Other inc. | 1.47 | 1.74 | 1.80 | 1.36 | 0.79 | 0.63 |
| PBIDT | 41.84 | 52.61 | 50.64 | 40.47 | 51.42 | 57.27 |
| Interest | 19.79 | 16.93 | 13.54 | 10.45 | 7.30 | 7.23 |
| PBDT | 22.05 | 35.68 | 37.10 | 30.02 | 44.11 | 50.04 |
| Dep. | 10.65 | 10.99 | 11.68 | 9.58 | 9.52 | 10.00 |
| PBT | 11.40 | 24.69 | 25.42 | 20.44 | 34.59 | 40.04 |
| Total Tax | 3.82 | 8.26 | 10.13 | 7.61 | 13.85 | 15.22 |
| PAT | 7.58 | 16.45 | 15.28 | 12.83 | 20.75 | 24.83 |
| EPS (Rs) * | 3.4 | 7.3 | 6.8 | 5.7 | 9.3 | 11.1 |
| * Annualized on current equity of Rs 22.42 crore; FV of Rs 10 each EO: Extraordinary Items EPS is calculated after excluding EO and relevant tax Figures in Rs crore (P): Projections Source: Capitaline Databases | ||||||
| 1512 (3) | 1412 (3) | Var. (%) | 1512 (9) | 1412 (9) | Var. (%) | 1503 (12) | 1403 (12) | Var. (%) | |
| Sales | 90.09 | 82.27 | 10 | 272.90 | 257.62 | 6 | 346.56 | 320.13 | 8 |
| OPM (%) | 14.4 | 11.1 | 14.1 | 11.3 | 11.3 | 15.3 | |||
| OP | 13.00 | 9.16 | 42 | 38.54 | 29.00 | 33 | 39.11 | 48.84 | -20 |
| Other inc. | 0.05 | 0.07 | -32 | 0.21 | 0.56 | -62 | 1.36 | 1.80 | -24 |
| PBIDT | 13.05 | 9.23 | 41 | 38.75 | 29.56 | 31 | 40.47 | 50.64 | -20 |
| Interest | 1.67 | 2.46 | -32 | 5.60 | 8.19 | -32 | 10.45 | 13.54 | -23 |
| PBDT | 11.38 | 6.77 | 68 | 33.15 | 21.37 | 55 | 30.02 | 37.10 | -19 |
| Dep. | 2.45 | 2.44 | 0 | 7.11 | 7.21 | -1 | 9.58 | 11.68 | -18 |
| PBT | 8.93 | 4.33 | 106 | 26.04 | 14.16 | 84 | 20.44 | 25.42 | -20 |
| EO | 0.00 | 0.00 | -- | 0.00 | 0.00 | -- | 0.00 | 0.00 | -- |
| PBT after EO | 8.93 | 4.33 | 106 | 26.04 | 14.16 | 84 | 20.44 | 25.42 | -20 |
| Total Tax | 3.50 | 1.87 | 87 | 10.60 | 4.99 | 112 | 7.61 | 10.13 | -25 |
| PAT | 5.43 | 2.46 | 121 | 15.44 | 9.17 | 68 | 12.83 | 15.28 | -16 |
| EPS (Rs) * | 9.7 | 4.4 | 9.2 | 5.5 | 5.7 | 6.8 | |||
| * Annualized on current equity of Rs 22.42 crore; FV of Rs 10 each EO: Extraordinary Items EPS is calculated after excluding EO and relevant tax Figures in Rs crore Source: Capitaline Databases | |||||||||
You received this message because you are subscribed to the Google Groups "LONGTERMINVESTORSRESEARCH" group.
To unsubscribe from this group and stop receiving emails from it, send an email to longterminvestorsresearch+unsubscribe@googlegroups.com.
Visit this group at https://groups.google.com/group/longterminvestorsresearch.
For more options, visit https://groups.google.com/d/optout.
No comments:
Post a Comment