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

Current CAPEX of Rs. 45 crores planned in two phases, focusing on upgradation and modification of the Writing & Printing Paper unit (first phase) and Kraft Paper unit (second phase, FY21). Investments include size press installation, turbine efficiency and capacity enhancement, recovery unit improvements, and better paper quality; mainly aimed at margin and efficiency improvements, not production capacity increase. Earlier planned Rs. 70 crores CAPEX for cup stock production related to expected plastic ban is on hold until government enforces single-use plastic ban. CAPEX funding expected to b

Future growth expectations in sales/revenue/volumes?

The company expects an improvement in business from December onwards, coinciding with the seasonal demand from schools and colleges and government tenders. They are hopeful that the paper prices, especially for writing and printing paper, will appreciate starting December. Production growth is moderate, with first half production at 69,406 MT vs. 62,137 MT last year; full-year targets remain unchanged. Planned CAPEX of Rs. 45 crores in the first phase aims at improving efficiency and quality, not volume expansion; potential margin improvements anticipated. Larger CAPEX and capacity expansions

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

The company expects margin improvement from the ongoing ₹45 crore CAPEX phase 1, mainly through efficiency gains (size press, turbine and recovery unit upgrades), not capacity expansion. Value-added product share in writing and printing paper remains steady at ~30%, providing slightly better realization (₹1500/tonne extra), supporting margins. Price appreciation in writing and printing paper is expected from December due to seasonal demand (schools/colleges) and government tenders, potentially improving NSR. Raw material costs may soften with the arrival of bagasse, though there is uncer

Current/ Expected Orderbook/ Pending Orders?

The company indicates that some government tenders are in the pipeline but have been delayed. Several tenders, including those from NCERT, MP government, and Rajasthan government, are at final stages. Arrival of these tenders is expected to improve Kraft paper prices and market conditions starting next month (December 2019). The company is hopeful of a good season ahead with school and college demand, anticipating price appreciation from December. Overall, the management expects the market and order inflow to improve starting December 2019, marking the beginning of a positive phase.

Any current/future new fundraising through debt or equity?

Ruchira Papers Limited plans a CAPEX of Rs. 45 crores in the first phase, primarily funded through a 1:1 debt to internal accrual ratio. Expected debt component for this CAPEX is around Rs. 20 crores. Management has no immediate plans for large-scale CAPEX beyond this phase; any further big investments will depend on market improvements. No mention of new equity fundraising during this period. The company is cautious about market conditions before undertaking further expansions or raising additional funds.

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Ruchira Papers LtdQ3 FY19Paper, Forest & Jute Products

Ruchira Papers Ltd Q3 FY19 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 4

Margin

Category 2

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 4

→The company expects an improvement in business from December onwards, coinciding with the seasonal demand from schools and colleges and government tenders.
→They are hopeful that the paper prices, especially for writing and printing paper, will appreciate starting December.
→Production growth is moderate, with first half production at 69,406 MT vs. 62,137 MT last year; full-year targets remain unchanged.
→Planned CAPEX of Rs. 45 crores in the first phase aims at improving efficiency and quality, not volume expansion; potential margin improvements anticipated.
→Larger CAPEX and capacity expansions are on hold until market conditions improve.
→Value-added products (around 30% of writing & printing segment) expected to maintain their current mix, contributing slightly higher realizations.
→Market demand remains subdued but recovery is expected with government actions on plastic bans affecting product lines like cup stocks and paper bags.

Margin guidance

Category 2

→The company expects margin improvement from the ongoing ₹45 crore CAPEX phase 1, mainly through efficiency gains (size press, turbine and recovery unit upgrades), not capacity expansion.
→Value-added product share in writing and printing paper remains steady at ~30%, providing slightly better realization (₹1500/tonne extra), supporting margins.
→Price appreciation in writing and printing paper is expected from December due to seasonal demand (schools/colleges) and government tenders, potentially improving NSR.
→Raw material costs may soften with the arrival of bagasse, though there is uncertainty around overall raw material price trends.
→Larger CAPEX for diversification (e.g., cup stocks) is on hold awaiting government action on single-use plastic ban, so growth from new product lines is deferred.
→No specific quantified guidance on EPS or absolute profit growth; management cautiously optimistic on margin improvement and top-line growth from H2 FY20 onward.

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Fundraise plans

Yes

→Ruchira Papers Limited plans a CAPEX of Rs. 45 crores in the first phase, primarily funded through a 1:1 debt to internal accrual ratio.
→Expected debt component for this CAPEX is around Rs. 20 crores.
→Management has no immediate plans for large-scale CAPEX beyond this phase; any further big investments will depend on market improvements.
→No mention of new equity fundraising during this period.
→The company is cautious about market conditions before undertaking further expansions or raising additional funds.

Order book

→The company indicates that some government tenders are in the pipeline but have been delayed.
→Several tenders, including those from NCERT, MP government, and Rajasthan government, are at final stages.
→Arrival of these tenders is expected to improve Kraft paper prices and market conditions starting next month (December 2019).
→The company is hopeful of a good season ahead with school and college demand, anticipating price appreciation from December.
→Overall, the management expects the market and order inflow to improve starting December 2019, marking the beginning of a positive phase.

Capex plans

Yes

→Current CAPEX of Rs. 45 crores planned in two phases, focusing on upgradation and modification of the Writing & Printing Paper unit (first phase) and Kraft Paper unit (second phase, FY21).
→Investments include size press installation, turbine efficiency and capacity enhancement, recovery unit improvements, and better paper quality; mainly aimed at margin and efficiency improvements, not production capacity increase.
→Earlier planned Rs. 70 crores CAPEX for cup stock production related to expected plastic ban is on hold until government enforces single-use plastic ban.
→CAPEX funding expected to be 1:1 ratio of debt and internal accruals, with maximum debt around Rs. 20 crores.
→Larger scale expansion or new CAPEX depends on market recovery and resolution of land acquisition issues; no immediate big investment planned.
→Company remains cautious given current volatile demand and price conditions before pursuing major strategic investments.

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

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1Ruchira Papers Ltd

Rev 4Mar 2

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