The paper stocks have been seeing a fair bit of buying interest. The share price of Andhra Paper has zoomed over 20% in the last 5 days, whereas for Seshasayee Paper & Boards and West Coast Paper Mills, it has grown over 17% and 14%, respectively, over the same period. Among other Paper stocks, JK Paper added 8.73%, Orient Paper and Industries added 10.24%, Tamil Nadu Newsprint & Papers added 8.50%, and Emami Paper Mills added 7.46% in the last 5 days.
Prashanth Tapse, Research Analyst, Sr VP Research at Mehta Equities points out “Upcoming festival season on cards, paper stocks have witnessed a strong rally mainly on the back of increasing demand and consumption due to rising paper packing from e-commerce shopping, FMCG, ready-to-eat and packaged foods.”
India is among the fastest-growing market for paper globally and it presents an exciting scenario and industry stakeholders see scope for paper consumption poised for a big leap in sync with economic growth. An increase in consumption by one kg per capita would lead to an increase in demand of 1 million tonnes, according to the Indian Paper Manufacturers Association (IPMA).
Tapse added that, “Historically we have also seen a good correlation between economic growth and paper consumption which if it is said to be true, Indian economic growth is expected to accelerate, which means that paper consumption is also expected to increase 2x of the country’s growth. Hence considering the rationale, we continue to remain optimistic on the sector for medium to long term growth prospects.”