Ruchira PapersQ1 FY19

Ruchira Papers Q1 FY19 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹104.1P/E: 9.3Market Cap: ₹311 CrSector: Paper, Forest & Jute Products

Management growth scorecard

Revenue

Category 2

Margin

Category 1

Fundraise

N/A

Order

N/A

Capex

Yes

2 of 3 growth signals are positive.

Full analysis

Revenue guidance

Category 2
  • Total production for FY19 expected to be about 133,000 MT (78,000 MT Kraft, 55,000 MT Writing & Printing)
  • Targeted annual production: 78,000 MT Kraft; 55,000 MT Writing & Printing paper
  • Topline guidance for FY19: Rs. 500 crore plus
  • Writing & Printing papers expect price improvements beyond Rs. 58,000 per MT
  • Kraft paper realization expected to improve; export to China increasing, positive outlook
  • Value-added products (e.g., higher BF Kraft) expected to grow, shifting 12-15% of Kraft capacity to value-added products
  • Value-added Kraft products projected to reach 20% of Kraft production by end of FY19, priced Rs. 4,000-5,000 higher than regular Kraft
  • EBITDA margin targets: 11-12% for Kraft, 19-19.5% company-wide
  • New greenfield plant planned with 100,000 TPA capacity to further expand Writing & Printing segment over next 2-3 years

See what Ruchira Papers management said on margin guidance — free account, 30 seconds.

Fundraise plans

  • The company is working on cost estimates related to its new expansion plan.
  • Fundraising details (debt or equity) will be shared once the cost evaluation is complete.
  • Currently, there is no finalized plan on how the funds for expansion will be raised.
  • They have purchased 107 acres of land and awaiting government approvals for an additional 78 acres.
  • They expect to complete land acquisition and environment clearance by December 2018.
  • CAPEX details for the greenfield project will be shared by the end of the year after finalizing costs.
  • No explicit mention of immediate fundraising through debt or equity was made during the call.

See what Ruchira Papers management said on order book — free account, 30 seconds.

Capex plans

Yes
  • The company is implementing a greenfield project at Chamkaur Sahib, Punjab.
  • They have acquired 109.02 acres of land and are in the process of obtaining Environmental Impact Assessment (EIA) clearance expected by the end of 2018.
  • The greenfield project will have a capacity of 100,000 TPA producing Writing and Printing Paper (WPP).
  • Project implementation timeline is 24 to 36 months with an aim to complete in good time leveraging prior greenfield experience.
  • CAPEX for the new project is being worked out, expected to be shared by end of 2018.
  • Current modernization cost was Rs. 32 crores encompassing Kraft paper and writing & printing paper upgrades including chemical recovery plant improvements (~Rs. 12 cr).
  • Expansion beyond current capacities includes developing value-added product lines with higher realizations.
  • Land acquisition pending for an additional 78 acres with governmental approvals underway.

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How does Ruchira Papers rank vs peers in Paper, Forest & Jute Products?

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