Wednesday, January 20, 2010

Stock Idea: JK Papers Ltd

JK Papers Ltd— STRONG BUY—50—INR
Sector — Paper
Regd.Off.— Central Pulp Mills, Fort Songadh, Surat, Gujarat-394660
Listed — NSE, BSE.
Company Overview—
JK Paper Ltd. is a part of well known group JK organization a leading multi-product, multi-business group of India. J K Paper Ltd was formerly known as Central Pulp Mills, a member of HS Singhania group is originally promoted by Parkhe Group to manufacture Paper and Paper products. Company purchased a Pulp Drying Plant from Finland in 2001 to increase the output and realization of market pulp. Company enjoys the location advantage in respect of sourcing raw material. It sources all its bamboo requirements with in the 200 kms radius of the plant. Further for long term continuous source of raw material the company is running social forestry and farm forestry programs in 11 districts of Orissa and 3 districts of Andhra Pradesh, covering a total area of over 20,000 Hectare. The name of the company was changed to JK Paper Ltd from The Central Pulp Mills Ltd. JK Paper has a deep commitment to protecting the environment. Company is the first paper mill in India to have been accredited with ISO-14001 certification for the Environment Management System Standard. Company Paper has a research and development wing involved in developing high quality seedlings and helping farmers achieve better yields from their plantations.
Products & Services—
Company is an established name in the manufacture and marketing of paper. It has the distinction of being the largest manufacturer of branded copier paper in India. Company is also been consistently exporting its products to markets such as Sri Lanka, Bangladesh and several West Asian Countries. Company was first to introduce surface sized maplitho in India, first to introduce high quality bond paper 'Finesse' in A4 size consumer friendly retail packs of 100 sheets. Company was first to introduce laser paper in India. The company has introduced two new value added products i.e. MICR Cheque Paper and Cup-stock Board and both of them have well established in the market. Company is well known for its success in creating brand in paper industry with having top two paper brand i.e JK Copier & JK Easy Copier in its basket the company has initiated outsourcing of paper products in india. Company outsources JK Cote from an international producer, who produces as per the specification of JK Paper. JK Paper today has an combined installed capacity of 2,40,000 tpa with two integrated Paper Mills at JK Paper Mills, Raygarh, Orissa and Central Pulp Mills, Gujarat.
Company has quality benchmarks from its commencement, and continues to do so. Its major brands include JK Copier, JK Easy Copier, JK Evervite, JK Excel Bond, JK Bond, JK SHB Maplitho, CPM Parchment and JK MICR. Company has one of the largest distribution networks in the paper industry. With more than 100 wholesalers, over 1700 dealers, 10 warehouses and 4 regional offices spread across country, it has achieved matchless service levels. Nearly 50% of the exports are of branded products.
Recent development—
JK Paper plans to infuse Rs 14 billion to expand its manufacturing capacity by 1.5 lakh tons annually in the next three years. The proposed investment and expansions will take place over a period of two to three years. The company is producing 2.6 lakh tons of paper every year, more than the current capacity of 2.4 lakh tons. Going forward, it plans to increase the capacity by 1.5 lakh tons.
At current market price, stock is trading at attractive valuation of 4.9 P/E multiple of its FY2010 estimated EPS. We recommend investors "Strong Buy" on "JK Papers limited" with medium to long-term investment prospective.

Source: Internet (Valuenotes by Abhishek Jain)

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