Yash Shah | Sep 18, 2019 10:40
There is a quantum jump in the consumption and growing demand pattern for paper products in india, supported by strong will of the goverment to curb consumption of single use plastic products .
We expect a BIG BANG reform on the issue to be announced on the eve of Gandhi Jayanti (2 October 2019) .
We are witnessing a change in consumption habits and environment for which we expect paper , Jute and Cardboard board industry to gain the most. From the given galaxy of companies our best picks boils down to Orient Paper and Industries Ltd (NS:ORPP).
Orient Paper Mill is a paper and paper crafts manufacturer in Amlai, India. It has been associated with paper manufacture in Africa. The mill is part of Orient Paper & Industries which comprises the paper facility and manufactures of Portland cement and ceiling fans, and which itself is a subsidiary of CK Birla Group.
Orient paper has shown robust growth over the years contributing to one of the highest operational margins in the industry with stable divided history .
Company virtually has becomed a debt free and increasing reseves of the company on quater on quater basis simply strenghes the balance sheet with time .
The comapany spends adequate resouces on research and development and few of them are as follows :
1. Analysis of all the species of plants to evaluate their suitability in for Paper Plant.
2. Optimization of fibrous Raw material in different proportion to get the desired quality of pulp without compromising the parameter of the end product.
3. Carrying out oxygen delignification on pilot scale basis in the lab to check the quality of pulp for bleaching like Kappa No., Brightness, Viscosity & characteristic of the effluent generated.
4. Study on the quality of ClO2 & imported pulp received by giving mechanical action (PFI mill) to enhance properties of the fibre.
5. Fiber classification of the pulp on Buer Mc net fiber classifier to check out the retention of fiber on specific screen size and generation of fines so as to minimize fiber loss during papermaking.
6. Bleaching study of pulp to optimize chemical doses in the bleaching process and checking the environment load of the effluent generated.
7. Monitor water holding capacity of pulp before and after mechanical treatment at Tissue machines by Schopper Reigler freeness tester.
8. Determining Chemical Oxygen demand of unbleached pulp from Post ODL process to ensure the efficiency of washing during the process.
9. Moisture determination of all Fibrous Raw material received to arrive at ADMT weight.
10. Micro-biological analysis of various locations at Paper Machines and White Water Clarifier to check the healthiness of the system in terms of bacterial growth.
11. Analysis of Scales samples from various locations to understand the reason of scale formation and to take corrective actions.
12. Comparative studies of fiber morphology of different source of Pulp sample sheet (Imported pulp as well as own pulp)
13. Fiber morphology analysis of competitors’ tissue paper samples and comparison with our samples.
14. Analysis of AOX in the Effluent samples as well as discharge according to the guideline of MPPCB and CPCB.
15. Analysis of pH, C.O.D, B.O.D, S.S, Colour, Chloride, T.D.S, on a daily basis to fulfill the norm of PCB according to standard methods.
16. Checking on a monthly basis the piezo samples received from nearby locations to ensure the quality of groundwater.
17. Analysis of important parameters of soil samples like Ca, Mg, Na & SAR value to check the health of the soil of the nearby area. 18. Analysis of treated water used in HRTS.
We have seen an increase in allocation of equity shares holdings by Principal Trustee Co.Pvt.Ltd. from 0.65% to 2.52% and by L & T Mutual Fund Trustee Limited from 3.41% to 5.06% for the year ended.
Orient Paper Mills gets a substantial amount of revenue from exports and we expect them to benefit from weaker rupee which is hovering around 72 per Dollar.
Taking the given points into consideration we expect a strong breakout on the positive direction and yield 20% returns within 3 months time horizon.
The stock is currently range-bound around rupee 30 per share.
target - ₹36 within 3 months.
We have already seen a strong rally in large-cap paper industry stocks and expect Orient paper and mills to join the party soon.
Written By: Yash Shah
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