Markets price are driven up & down with emotions, business is performing well but I think prices will go up only once fed interest rate up cycle is over.
Demand for paper in India will be strong, problem is always with supply side.
Many companies started doing capacity expansion with availability of cheap money,
most of these less efficient players will find themselves in difficult time ahead.
Satia has no demand issue as it is backward integrated, efficient, one of the lowest cost producer. with increasing interest rates most commodities are expected to decrease in prices, paper is no exception. I think this downcycle will be short lived because-
- World can not afford inflation same way they can not afford recessions, with all the experience of previous credit cycles, central banks are now more wiser to handle such situations.
- Balance sheet of Indian corporates are strong, banks are in better shape
- Satia’s state boards business will only grow from here as gov wants to reduce weight on child’s shoulder & they have found a solution (give writing pages in book itself and eliminate notebooks) a big positive for Satia.
- Rural economy is coming back, green shoots are visible in commentary of many companies. (WPP market is saturated in urban, but growing in rural)
- China coming back.
You are right, with commodities going down revenue will also go down a bit but with increasing demand from text book boards it will be compensated & with completion of recent capex efficiency expected to increase.
I think prices may go up as soon as emotions for equities turn positive globally. until then let the intrinsic value run up.
Do not pay much attention to prices in fact I see prices only once a week so that it wont affect me much emotionally.
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