Best Paper Stocks in India 2023: Should you Buy?
Created on 12 Oct 2022
Wraps up in 5 Min
Read by 6.2k people
Updated on 03 Dec 2022
Without the invention of paper, we would not have been able to read Ramayana, Mahabharata, or the biographies of legends like Mother Teresa. As a result of the paper revolution, all these scriptures transformed into books and literature, and thanks to globalisation, they became widely accessible.
When the internet wasn't available everywhere, the newspapers were the only way to keep up with what was happening worldwide. All of us would agree that there is nothing better than solving our crossword in the Sunday paper or reading our astrological predictions.
Even though technology has reduced the use of paper, it can never fully replace it. That is why the paper sector is steadily expanding despite the economic turmoil and world crisis. From rural to urban areas, it is an indispensable part of life.
But first, here's what paper is made of.
This article will give a brief overview of some of the top paper stocks in India.
The right time to invest in paper stocks in India
A popular quote by Warren Buffet says that someone can sit in the shade today because someone thought of planting a tree a long time ago.
Global warming has intensified the focus on green and clean energy. One of the inducers of global warming has been the use of plastics. To counter this, the government has instituted a ban on single-use plastics from 1st July.
It has resulted in a greater demand for papers. A report on India's paper consumption indicates it will reach 30 million tonnes by 2027. Additionally, in the last five to seven years, to be environmentally friendly, the paper industry has already invested Rs 25,000 crores in clean and green technology.
Before we give you a glance at some best paper stocks in India, here are some reasons for the surge in the price of paper company stocks in India.
Re-opening of Educational Institutions
The educational books and resources sector greatly contributes to the paper industry. Furthermore, the Government is increasingly emphasising literacy and education. Literacy rates increased from 64% in 2009 to approx 75% in 2021-22. Therefore, with schools and colleges reopening, the demand for notebooks and textbooks increased, driving up the paper industry demand.
Increase in paper exports
The ease of Covid restrictions, the liberal stance of Global Central Banks and fiscal stimulus by the Government have led to a surge in the country’s exports. In 2021-22, the country saw a record jump of 80% in exports, touching ₹13,963 crore.
No adverse effects of inflation and global triggers
The world is affected by soaring commodity prices, crude oil prices, the Ukraine-Russia wire geopolitical tensions, and more. Fortunately, all these triggers do not affect the paper sector. The rise in prices of pulp and waste paper wild raw a huge margin benefit for the paper industry.
High demand for quality packaging
Today, we can see a lot of supermarkets and stores. Thus, there will be an increasing demand for packaged papers and boxes, which will directly impact the growth of one of the largest sectors of the Indian economy, the FMCG sector. The rise of the FMCG sector will favourably impact the paper sector.
The Best Paper Stocks
Below are some top paper company stocks in India in 2022.
1. West Coast Paper Mills Ltd.
One of India’s largest and oldest paper producers for writing, printing and packaging, West Coast Paper Mills Ltd., was established in 1955. Innovation and creativity are their two pillars. In addition to paper and paper boards, the company's multiple segments include export incentives, wind power, scrap and traded goods.
- The company’s promoter holding has increased from September 2021 to June 2022. The increase represents the company’s strength.
- Domestic Institutional investors’ and Foreign institutional investors’ holding has also gone up.
- With 51.41% annual revenue growth, West Coast Paper Mills Ltd. outperformed its three-year CAGR of 19.57%.
- As of the last trading session, the stock return was 159.38% Compared to the Nifty small cap 100 return of 80.94%.
2. JK Paper Ltd.
As a leader in coated papers and high-end packaging boards, and has gained a reputation for providing sustainable solutions to all our paper needs. JK Paper Ltd.'s strength is its ability to produce paper without harming any natural trees.
- The company’s promoter holding has increased from September 2021 to June 2022.
- In the last 17 years, the company has seen intraday declines higher than 5 % in only 3.1% of its trading sessions.
- JK Paper Ltd witnessed annual revenue growth of 43.01%. It is much higher than its 3-year CAGR of 7.29%.
- The stock also had a much higher 3-year return (313.37%) than its Nifty Midcap 100 return (101.64%).
3. Satia Industries Ltd.
Satia Industries Ltd. is one of the country's largest wood and agro-based paper plants. Its key revenue segments include agricultural products, electricity, paper writing and printing, solar power, and wood pulp.
- The Foreign institutional investor’s holding has increased from 0.0 to 0.12 from September 2021 to June 2022, respectively.
- The company plans to invest Rs 500 crore and increase its manufacturing capacity by 1 lakh TPA.
- Its quarterly growth is the highest in the last three years.
- Compared to a 3-year CAGR of 6.72%, Satia Industries Ltd.'s annual revenue growth was 54.04%.
- The stock returns are also higher than its benchmark, Nifty Smallcap 100.
As per a recent report, Norway is the only country that recycles 97% of its plastic bottles.
Expert's Advice to consider before investing
After reading about the popularity of paper stocks, you will want to buy them immediately. Experts warn that you need to be cautious and patient. While 2022 may be the year for paper stocks, one must remember the volatility and risks associated with investing in stocks. With media digitisation on trend, the paper sector is to suffer.
Also, while reviewing paper stocks, we must analyse its power account and raw material purchases. The rising cost of pulp and coal is a cause of concern. Furthermore, there is no news of rupee appreciation in the recent future. Thus, before buying a paper stock, remember that the lower the dependency on imported coals, raw materials and labour, the better the company’s profitability.
The Bottom Line
Some trends above are concerning while some pacifying. This was just an overview of some of the top paper stocks in India and how you can invest in them to maximise profits. But before you buy a paper stock, analyse your finances and research thoroughly.
Until next time!
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