Multi Baggers
West Coast Pap
BSE ID : 500444 NSE ID : WSTCSTPAPR
RECOMMENDED PRICE 299.55
PEAK FROM RECO 748.20 149.77%
CURRENT PRICE 606.55 Resource id #18
Co has shown strong financial performance in FY17. Co has posted Rs 128.50 Cr PAT in FY17 as against loss of Rs 47 Lacs in FY16. Topline of co has jumped by 4% as production of Paper, Paperboard and Hardwood Pulp was at 3,13,311 MT which is at 98% capacity utilization during the year against 3,06,960 MT in the last year (i.e 96% capacity utilization). we recommend Buy on the stock with price target of Rs 390(appreciation of almost 30%) for long term investment.
Co has shown strong financial performance in FY17. Co has posted Rs 128.50 Cr PAT in FY17 as against loss of Rs 47 Lacs in FY16. Topline of co has jumped by 4% as production of Paper, Paperboard and Hardwood Pulp was at 3,13,311 MT which is at 98% capacity utilization during the year against 3,06,960 MT in the last year (i.e 96% capacity utilization).
Co has reduced its debt as evident from the fact that co’s debt to eq ratio has lowered significantly from 1.27 in FY16 to 0.59 in FY17.Also, co has proposed mill development plan worth of Rs 500 Cr in order to increase its capacity, approval of which will lead the increase in company’s revenue significantly.
The conventional raw material i.e. pulpwood is required in the production process of the company.In order to ensure long term availability of raw material, the company continue to focus on Captive Plantation Project and on social forestry. Total cultivated/plantation area is around 49425 acres of land so far within a radius of 200250 km from Dandeli, as to enhance the availability of pulpwood. Co is also using clonal forestry. Clonal technology is a strategy adopted in tree improvement programme to capture and exploit the best recombinations in a shortest possible time.
West Coast Paper Mills is one of the oldest & largest producers of paper for printing , writing & packaging in India. It is in manufacturing of paper, paperboard and coated duplex board.The company is flagship company of Kolkata based- SK Bangur Group.The Company operates in two business segments – Paper / Paperboard (including Duplex Board) at Dandeli and Telecommunicaon Cables at Mysore, apart from having Wind Mills of 1.75 MW capacity in Tamilnadu for power generation. In Paper Segment,the product-line features many well-established brands- ranging from 52 to 600 GSM- of commercial to premium grades of paper and boards,spread out across six different product segments : Writing,Printing, Business stationery, Specialty, Industrial and Packaging. Co also manufactures optical fiber cables at Mysore, Karnataka having installed capacity of 83500 Km.
The company is currently trading at 10.43x of TTM eps of Rs 28.71 while it is trading at 10.20x of FY18E eps of Rs 29.37 & 9.50x of FY19E EPS of Rs 31.50. On the back of capacity expansion, co’s focus on deleveraging its balance sheet & strong demand in paper sector , co will stand to benefit going forward. Along with it reasonable valuation at current level makes it strong investment candidate. Hence , we recommend “Buy” on the stock with price target of Rs 390(appreciation of almost 30%) for long term investment.
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Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advice. Reader is requested to rely on his own decision and may take independent professional advice before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned herein and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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