~ INVESTMENT PICK ~
RUCHIRA PAPERS LTD
CMP : 27.00
Bse Code : 532785
Target : 60 / 80
Time- Frame : 1 Year
The BULL-RUN has Started you feeling left behind ? One more Stock for Our Readers!
1. History of the Company :
Ruchira paper is engaged in manufacturing of Kraft Paper and Writing & Printing Paper.The special feature of its Kraft Paper is load bearing Capacity and tensile Strength which makes its most suitable for Corrugated packing application. Writing & Printing Paper is used for multiple purposes.The Company initially set up Agro Waste Paper Mill for manufacturing of Kraft Paper and commenced its operations with a small 2310 TPA Capacity. Over the Years, the Company has undertaken several phases of expansion and the Production Capacity of Kraft Paper since then has increased from 2310 TPA to 52800 TPA.The company had set up 33000 TPA unit for manufacturing of writing & printing paper adjoining to its existing unit in March,2008.
2. Financials of the Company :
(I) The Company which was Debt ridden 5 years back has made a turnaround. The total debt of the company has reduced to Rs 74 Cr from 141 Cr in time span of 4 years.
(II) During the same period turnover of the Company has increased by 60% from 200 Cr to 320 Cr.
(III) The Company which was reporting loss 4 years back has turned profitable and has reported profit after tax ( PAT ) of Rs 15.28 Cr for year ended on 31st March , 2014.
(IV) Company has started paying dividend for FY 13 and FY 14 @ 10% and 12% Respectively.
(V) This all Indicates that financial Position of the Company is showing recovery trend.
3. Investment Rationale- WHY TO INVEST IN THIS STOCK ??
A. Shareholding of the promoters is 59.45% as on 30th Sep , 2014 which strongly indicates interest of promoters in growth of the Company.
B. Company operates in State of Himachal Pradesh and has been given 100% INCOME TAX EXEMPTION for first five years with effect from Assessment year 2008-09 and there after 30% exemption for next five years.
C. Power ( Electricity Charges) in Himachal Pradesh is cheaper comparatively than neighboring states which gives company COMPETITIVE ADVANTAGE over other paper sector stocks.
D. At current price of Rs 27.00 per share and EPS of Rs 7 per share as at 31st March , 2014 the stock is merely trading at a P/E ratio of 3.86.
E. The Stock should trade atleast at a moderate P/E ratio of 10-12 giving it a target of 70 to 84 Rs per share @ Rs 7 EPS.
4. RECOMENDATION:
We recommend readers of this Report that Ruchira Papers Ltd. stock can be bought in price range of Rs 25 to 30 per share for Investment purpose with a target of Rs 60 and Rs 80 respectively.
Our last Stock Recommendation ie. COMPETENT AUTOMOBILE is presently trading @ 90 which we advised @ 60 levels.( 50% GAIN) Hold the same for more returns to come.
Disclaimer : We shall not be liable for any Loss/Gain arising from our opinion expressed above. It is purely based on our own analysis and it does not infringe any copyrights and report is prepared on the basis of information available in public domain.
