JK Paper Ltd. share price target

JK Paper Ltd.'s (JK Paper) Q2FY26 result was broadly in-line with our estimates on key parameters. The management guided that the Paper and Paper Board segment continued to face challenges arising from higher wood cost and lower sales realisation due to cheap imports. This has adversely impacted profitability across the product segments despite increased sales volume over the corresponding period. However, on a positive note the performance of the Company's packaging conversion subsidiaries improved during the quarter. Further, the management cited that the recent changes in GST rates have also had...

JK Paper Ltd.'s (JK Paper) Q1FY26 result was broadly in-line with estimates on net sales and EBITDA front, while net profit was below our forecast. The Company's core business in Paper and Paper Board continued to face headwinds from cheap imports resulting in depressed sales realization and ongoing high domestic wood prices weighed on operating margin. Despite this, JK Paper improved its profits on a sequential basis. The management believes that packaging conversion business is amongst the fastest growing segments in the Indian Paper and Packaging industry driven by growth in end use industries....

Beats EBITDA estimate (+17%) on improved gross margin; EBITDA margin improved for the second consecutive quarter

JK Paper Ltd.'s (JK Paper) Q4FY25 result was broadly in-line with estimates on key parameters. The company reported improved performance on a sequential basis led by higher volume and cost optimization. However, on YoY basis the earnings were subdued, reflecting underline pain in NSR and raw material cost. The management attributed weak earnings to surge in imports at low prices and high wood cost. During Q4FY25, the Company acquired 60% of the Equity Shares of Radhesham Wellpack Private Limited (RWPL) and 62.14% of Equity Shares of Quadragen Vethealth Private Limited (QVPL). We have fine-tuned earnings...

Higher sales volume and improved NSR aided net sales growth Despite challenging business environment, JK Paper's sales volume was at 104,841MT, a growth of 32% YoY. The company reported NSR improvement of 7% YoY to Rs63,029/MT led by higher packaging board and coated paper prices. Sirpur plant has gained traction during Q1FY22 and it would reach at 100% capacity expansion by Q4FY22E or Q1FY23E. Packaging board unit will be operational in Q3FY21E and would have meaningful contribution to net sales in FY23E. Operating leverage and cost cutting led to robust EBITDA margin expansion...

JK Paper Ltd.'s Q4FY21 result was beat to our estimates on key parameters. The company reported another quarter of an all-round performance aided by higher volume as well as improved net sales realization. Net sales increased by 22.1% YoY to Rs8,982mn, while EBITDA came in at Rs2,284mn, up by 29.4% YoY. It reported net profit of Rs1,361mn, a healthy growth of 46.8% over Q4FY20. The management's prudent strategies on price hike and focus on increasing sales volume led to outperformance despite challenging business environment. The global softwood pulp prices are still holding up at ~USD800/MT mark, which gives us confidence that the domestic paper prices are bound to increase once...

JK Paper Ltd.'s Q3FY21 result was in-line with our estimates on net sales and EBITDA front, while higher than anticipated interest cost led net profit below our forecast. Net sales declined by 9.6% YoY to Rs7,423mn, while EBITDA came in at Rs1,552mn, down by 32.7% YoY. The company reported net profit of Rs646mn, lower by 51% over Q3FY21. The management attributed net sales decline to sharp degrowth in net sales realization (NSR) on account of subdued demand for PWP in Q3FY21. On a positive note, higher global pulp prices and demand revival in the domestic market from beginning of Q4FY21 has led to increase in NSR. Sirpur plant is now operational and should contribute to net sales in next...

JK Paper Ltd.'s Q2FY21 result was above our estimates on key parameters. The company's writing and printing paper (WPP) demand remained subdued in Q2, while packaging board growth has returned to pre-Covid level. Net sales declined by 19.2% YoY to Rs6,383mn. EBITDA came in at Rs1,402mn, down by 41.3% YoY, while EBITDA margin declined by 824bps to 22% over Q2FY20. The company reported net profit of Rs679mn, lower by 48.9% YoY. The management guided that Sirpur paper will start operation from mid of November, 2020. However, considering unpredictable business environment, they refrained from giving sales volume guidance for H2FY21E. We believe JK paper is well placed to show...

JK Paper Ltd.'s Q4FY20 result was higher on net sales/EBITDA front, while PAT came in-line with our estimates. Net sales declined by 9.5% YoY to Rs7,302 mn. EBITDA came in at Rs1,817 mn, down by 17% YoY, while EBITDA margin eroded by 220bps over Q4FY19 to 24.9%. The company reported net profit of Rs914 mn, down by 18.6% YoY. For full year, the company reported net sales of Rs30.6bn, down by 6% YoY. EBITDA came in at Rs8.7bn, up by 0.4%, while EBITDA margin improved by 180bps to 28.5% over FY19. JK's total PAT stood at Rs4.6bn, a healthy growth of 10.2% YoY. COVID-19 would have a long term impact on sales volume led by closure of plants and...

JK Paper continues to dominate in the domestic market, which reflects in its outperformance compared to industry peers. The management has reduced demand growth outlook of domestic paper industry from earlier 7%-8% to 5%-6% owing to slowdown in the economy. Cheap imports from neighboring countries have further put pricing pressure on the domestic paper manufacturers. We remain positive on JK Paper amongst the organized players and we believe the company's well strategized expansion plans and its execution capabilities would pave the way for consistent earnings growth in future. We forecast Net Sales/EBITDA/PAT to grow at a CAGR of 3.2%/7.9%/5.9% over FY1921E. Maintain BUY with a price target of Rs184 based on 4x EV/EBITDA to FY21E....