West coast paper mills ltd

• West Coast Paper Mills Ltd (WCPML), incorporated in 1955 is the flagship company of S.K. Bangur group. The company is among India’s top five paper &paper board’s manufacturer in terms of total capacity of 320000 mtpa. WCPML operates in two business segments; Paper/Paperboard (including Duplex Board)
  at Dandeli and Telecommunication Cables at Mysore. WCPML also has Wind Mills of 1.75MW capacity in Tamilnadu for power generation. WCPML has a more than 15% in the domestic share in value paper product.
  
  WCPML is amongst India’s 5th largest paper producers having a total capacity of 3.30 lac tpa and present largely in the value added segment like copier segment, coated segment and packaging board segments.
  WCPML enjoys a market share of over 15% in the copier segments and almost 75% of its topline comes from the value added segment. To mitigate its raw material procurements it has already put a
  captive plantations facility which has taken care of its increased production. These product segments accounted for almost 75% of WCPML’s total product mix in FY 17. Given the underlying demand drivers for these segments, they are expected to grow at a higher rate than overall industry average.
  
  recently the promoter has increased the stake in open market and sk bangur is a very decent promoter with a huge experience in paper industry. the best part of west coast paper mill is the product mix in copier and writing segment they are in high value mapithilo and cream wove and there cup stock variety is a high margin niche product commands good market from retail segment
  
  presently they are operating at nearly full capacity of around 3.20 l tpa now with the raw material price stablising at 870 usd for wood chips internationally and paper prices in this high value segment has shown good growth they will be able to maintian around 1800 cr rev from paper segment with 18/20 percent ebita margin with debt reduction the debt to equity has come down to less than 0.8 and reduction of interest out go and the deprication expected to come down the bottom line will be healthy we could expect 175/200 cr bottom line
  
  with operating cash flow improving to 425 cr in this fy we can expect a good cash flow forward.
  with good monsoon and kali river having good inflow there will be no water problem. having planted enough trees under the plantation scheme they can meet the raw material requirement.
  only concern being the import of paper from south asian countries increasing offlate and the erratic paper price
  but around 1200 cr m.cap at the cmp 0f 185 trading at less than 10 pe and with less than 5 evebita with expected head winds in paper sector we can expect a good growth.
  also they are planning to increase there capex in tissue paper and become debt free in two years the down side from here is limited upside potential visible good management having own skin in the buisness reduced debt increased cash flow seems like a good bet.
  please kindly post your views
  
  disl invested
  

 

There are three reports from hdfc, joined tree and satcodirect direct all giving target of 250/260

https://www.satcodirect.com/UploadR...West Coast Paper Mills Ltd. (29-07-2017)..pdf

https://www.hdfcsec.com/uat.hsl.research.pdf/west.pdf

https://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=9776761&num=0