Ruchira Papers Ltd Research Report By Angel Broking

During 3QFY2018, Ruchira Papers (RPL) posted results in-line with our expectations on top-line and bottom-line fronts. Revenue grew by 15% yoy to Rs 118cr, driven by strong realisation growth of ~15%. On the operating front, margins expanded by 340bps yoy due to lower raw material cost and other expenses. This led to an increase in PAT by 47.7% yoy to Rs 11.9cr.

Top-line driven by strong realisation growth: Revenue grew by 15% yoy to Rs 118cr, driven by strong realisation growth of ~15%. On the segmental front, sales volume of writing & printing paper segment fell by 2.5%, while that of kraft paper increased by 3.5%.

Higher revenue, better operating performance propelled profitability: On the operating front, margins expanded by 340bps yoy due to an increase in sales and lower raw material cost and other expenses as compared to the year ago quarter. This led to PAT growth of ~48% yoy to Rs11.8cr.

Outlook and Valuation: We forecast RPL to report healthy top-line CAGR of ~13% over FY17-20E on the back of healthy demand in printing & writing paper and kraft paper segments. On the bottom-line front, we estimate ~16% CAGR over FY17-20E owing to strong improvement in operating performance. Further, enhanced manufacturing efficiencies and benefits from increasing global finished paper prices would aid margins. We maintain our Buy recommendation on the stock with a target price of Rs 244 (11x FY2020E EPS).