Time period given by analyst is six months when JK Paper Ltd. price can reach defined target.
JK Paper Ltd., incorporated in the year 1960, is a Small Cap company (having a market cap of Rs 3937.76 Crore) operating in Paper sector.
JK Paper Ltd. key Products/Revenue Segments include Paper & Paper Boards, Other Operating Revenue for the year ending 31-Mar-2021.
Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 694.96 Crore, down -25.68 % from last quarter Total Income of Rs 935.09 Crore and up 39.98 % from last year same quarter Total Income of Rs 496.48 Crore. Company reported net profit after tax of Rs 104.22 Crore in latest quarter.
Investment Rationale
Strong rebound in paper demand and large expansion plan would be key drivers for growth. In Q4FY21, the company had registered robust performance both in India and international operations. Even in Q1FY22, the YoY growth in revenues and PAT was noticeable. The brokerage expect 18% CAGR in revenue led by strong double digit volume growth over FY21-23E. Operating margin is expected to expand 740bps to 27.8% led by better product mix, backward integration and cost efficiency. Strong sales along with healthy margin expansion would drive 57% CAGR in net profit over the same period. As per the management commentary, Gujarat expansion added debt of around Rs 1400- 1500cr and total gross debt would be around Rs 2500-2600cr by end of FY22. The brokerage is positive on JK Paper given its leadership position across its segments, diversified business and healthy balance sheet. It feels that investors can buy the stock at LTP and add more on declines to Rs 212 for base case target Rs 274 (7.8x FY23E EPS) and bull case target of Rs 292 (8.3x FY23E EPS) over the next two quarters.
Promoter/FII Holdings
Promoters held 49.52 per cent stake in the company as of 30-Sep-2021, while FIIs owned 4.59 per cent, DIIs 1.89 per cent.
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