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Paper
n We expect aggregate revenues to increase by 8% which is driven by 2% volume growth and 4% increase in
realisations. During the quarter, TNPL commissioned its paper plant resulting into 33% increase in capacity however
volume growth is muted due to inventory clearance in Q4FY10
n Paper realisations remain firm at average 44,684 / mt in Q4FY11 (+4% yoy) however various players have taken price
increase of Rs 750- 1000 / mt (2%-3%) during the quarter which should drive average realisations for subsequent
quarters
n Though the industry has witnessed cost pressure on account of higher input prices like pulp, chemicals and
transportation cost. However driven by higher realisations, we expect average EBITDA / mt to increase to Rs 11300 /
mt (Rs 9780 / mt previous year) also driven by higher pulp margins. EBITDA margins to improve by 180 bps to 23.1%
n Rayon Grade Pulp (RGP) prices have increased further to Rs 60,000 / mt (+41% yoy / 16% qoq) and expected to drive
BILT’s profit margins
n In a recent deal, world’s largest paper company has entered into Indian PWP segment through acquisition of AP
paper. Valuations paid by the company at FY2011E EV/EBITDA of 16x are at significant premium to domestic paper
companies trading at average EV / EBITDA of 6x.
n Significant premium paid by global giant to enter into fast growing Indian market (growth of 8-12% as against global
average of 2-3%) has propelled the stock prices in the sectors by 15-20% post this deal. However valuations continue
to remain attractive at current level for our universe at FY2012E EV / EBITDA of 4.7x, P/E of 6.3x and P/BV of 0.9x. We
maintain our BUY recommendation on the sector
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Paper
n We expect aggregate revenues to increase by 8% which is driven by 2% volume growth and 4% increase in
realisations. During the quarter, TNPL commissioned its paper plant resulting into 33% increase in capacity however
volume growth is muted due to inventory clearance in Q4FY10
n Paper realisations remain firm at average 44,684 / mt in Q4FY11 (+4% yoy) however various players have taken price
increase of Rs 750- 1000 / mt (2%-3%) during the quarter which should drive average realisations for subsequent
quarters
n Though the industry has witnessed cost pressure on account of higher input prices like pulp, chemicals and
transportation cost. However driven by higher realisations, we expect average EBITDA / mt to increase to Rs 11300 /
mt (Rs 9780 / mt previous year) also driven by higher pulp margins. EBITDA margins to improve by 180 bps to 23.1%
n Rayon Grade Pulp (RGP) prices have increased further to Rs 60,000 / mt (+41% yoy / 16% qoq) and expected to drive
BILT’s profit margins
n In a recent deal, world’s largest paper company has entered into Indian PWP segment through acquisition of AP
paper. Valuations paid by the company at FY2011E EV/EBITDA of 16x are at significant premium to domestic paper
companies trading at average EV / EBITDA of 6x.
n Significant premium paid by global giant to enter into fast growing Indian market (growth of 8-12% as against global
average of 2-3%) has propelled the stock prices in the sectors by 15-20% post this deal. However valuations continue
to remain attractive at current level for our universe at FY2012E EV / EBITDA of 4.7x, P/E of 6.3x and P/BV of 0.9x. We
maintain our BUY recommendation on the sector
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