Any current/future new fundraising through debt or equity?

No specific decision on sources of funds for the proposed Greenfield expansion has been finalized yet. The company is waiting to obtain all necessary clearances, including environmental clearance expected by the end of the financial year. Management emphasized keeping an open mind regarding fundraising options and will finalize plans once clearances are in place. Vipin Gupta mentioned that they are working on the internal IRR calculations for the expansion and will provide exact figures in the next quarter con-call. No announcement or indication of imminent debt or equity fundraising was made

Any current/future capex/capital investment/strategic investment?

Ruchira Papers is planning a Greenfield expansion project for manufacturing Writing and Printing Paper with a capacity of 1,00,000 TPA at Chamkaur Sahib, Punjab. They have acquired 109.02 acres of land and the Punjab government is finalizing the sale of an additional 75 acres expected to be registered by mid-December. Environmental Impact Assessment (EIA) clearance is expected by mid of Q4 FY19 or by the end of the financial year. Machinery purchase and fund-raising plans for this project will be finalized after obtaining clearances. The company is currently evaluating the Internal Rat

Future growth expectations in sales/revenue/volumes?

Ruchira Papers targets continued growth in production for FY19, aiming for approximately 1,33,000 MT for the full year. For H1FY19, production was 62,137 MT; higher production expected in H2FY19 to meet guidance for 55,000 tons Writing & Printing paper and 78,000 tons Kraft paper. Demand for writing and printing paper is seasonally stronger post-Diwali, indicating better sales in second half. NSR (Net Sales Realization) for Writing and Printing paper is improving, with prices moving from Rs. 58,970/PMT in Q2FY19 to Rs. 64,000/PMT currently, expected to sustain and possibly improve further. Kra

Future growth expectations in earnings/operating earnings/profits/EPS?

The company expects better realizations and margin improvement in coming quarters, especially post-Diwali, driven by increased demand for writing & printing (W&P) paper. October NSR for W&P paper has risen to Rs. 61,480/MT, with current bookings at Rs. 64,000/MT, indicating a positive pricing trend. Raw material cost pressures, notably softwood pulp and fuel, stabilized after Q2 FY19, supporting margin recovery. EBITDA margins for FY19 are projected to be in the 18.5% to 19% range, an improvement over current levels. Production is expected to increase in H2 FY19, with a target total of

Current/ Expected Orderbook/ Pending Orders?

Current order booking for Writing & Printing Paper (WPP) is at Rs. 64,000 per metric ton. For October 2018, the NSR (Net Sales Realization) for WPP was Rs. 61,480 per metric ton. Kraft Paper orders are being booked around Rs. 27,000 per metric ton. The company is optimistic that these rates (especially for WPP) will sustain and improve further with the upcoming season. The improved NSR is expected to positively impact EBITDA margins. No specific data on the volume or value of pending orders was mentioned.

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Ruchira Papers LtdQ3 FY18Paper, Forest & Jute Products

Ruchira Papers Ltd Q3 FY18 Earnings Call Analysis

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

Price: ₹109P/E: 6.6Market Cap: ₹349 CrSector: Paper, Forest & Jute Products

Management growth scorecard

Revenue

Category 3

Margin

Category 2

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→Ruchira Papers targets continued growth in production for FY19, aiming for approximately 1,33,000 MT for the full year.
→For H1FY19, production was 62,137 MT; higher production expected in H2FY19 to meet guidance for 55,000 tons Writing & Printing paper and 78,000 tons Kraft paper.
→Demand for writing and printing paper is seasonally stronger post-Diwali, indicating better sales in second half.
→NSR (Net Sales Realization) for Writing and Printing paper is improving, with prices moving from Rs. 58,970/PMT in Q2FY19 to Rs. 64,000/PMT currently, expected to sustain and possibly improve further.
→Kraft paper prices are stable around Rs. 27,000/PMT.
→Shift towards value-added Kraft products (targeting 15-20% production share) is gradual but expected to grow, potentially increasing NSR.
→Domestic demand is robust, with limited competition from imports owing to logistics and pricing dynamics.
→Greenfield expansion of 100,000 TPA writing and printing paper plant planned, subject to clearances, which will boost future capacity and growth.

Margin guidance

Category 2

→The company expects better realizations and margin improvement in coming quarters, especially post-Diwali, driven by increased demand for writing & printing (W&P) paper.
→October NSR for W&P paper has risen to Rs. 61,480/MT, with current bookings at Rs. 64,000/MT, indicating a positive pricing trend.
→Raw material cost pressures, notably softwood pulp and fuel, stabilized after Q2 FY19, supporting margin recovery.
→EBITDA margins for FY19 are projected to be in the 18.5% to 19% range, an improvement over current levels.
→Production is expected to increase in H2 FY19, with a target total of 1,33,000 MT for the year.
→Gradual shift (~15% ongoing) toward value-added Kraft products should positively impact profitability over time.
→The company remains confident in achieving its earlier guidance on top-line and EBITDA margins for FY19.

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Fundraise plans

→No specific decision on sources of funds for the proposed Greenfield expansion has been finalized yet.
→The company is waiting to obtain all necessary clearances, including environmental clearance expected by the end of the financial year.
→Management emphasized keeping an open mind regarding fundraising options and will finalize plans once clearances are in place.
→Vipin Gupta mentioned that they are working on the internal IRR calculations for the expansion and will provide exact figures in the next quarter con-call.
→No announcement or indication of imminent debt or equity fundraising was made as of this call (November 2018).

Order book

→Current order booking for Writing & Printing Paper (WPP) is at Rs. 64,000 per metric ton.
→For October 2018, the NSR (Net Sales Realization) for WPP was Rs. 61,480 per metric ton.
→Kraft Paper orders are being booked around Rs. 27,000 per metric ton.
→The company is optimistic that these rates (especially for WPP) will sustain and improve further with the upcoming season.
→The improved NSR is expected to positively impact EBITDA margins.
→No specific data on the volume or value of pending orders was mentioned.

Capex plans

Yes

→Ruchira Papers is planning a Greenfield expansion project for manufacturing Writing and Printing Paper with a capacity of 1,00,000 TPA at Chamkaur Sahib, Punjab.
→They have acquired 109.02 acres of land and the Punjab government is finalizing the sale of an additional 75 acres expected to be registered by mid-December.
→Environmental Impact Assessment (EIA) clearance is expected by mid of Q4 FY19 or by the end of the financial year.
→Machinery purchase and fund-raising plans for this project will be finalized after obtaining clearances.
→The company is currently evaluating the Internal Rate of Return (IRR) for the Greenfield expansion before deciding source of funds, to be shared in next quarter con-call.
→Ongoing investment focus includes chemical recovery, effluent treatment, and power co-generation plants.

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