paper stocks: Paper stocks rally on likely plastic ban

Mumbai: Paper stocks outshone in a choppy market on Tuesday following the government’s draft regulation under which there can be a ban on single-use plastic for candy and ice cream sticks as well as film wraps around sweet boxes and cigarette packets.

Astron Paper & Board Mill, West Coast Paper Mills, Tamil Nadu Newsprint, Star Paper Mills, Orient Paper and Industries and Emami Paper ended up 4-20 per cent. Malu Paper Mills gained 5.2 per cent and Seshasayee Paper & Boards gained 3.6 per cent.

Analysts said the surge in these stocks over the last few days is on the back of investors shuffling across sectors that had not participated in the record-setting rally in the past year.

“There is a sector shift no doubt but paper demand has gone up now, because of which paper prices have gone up. One of the better stocks in this space is JK Paper,” said independent market expert Ambareesh Baliga. “JK Paper is one of the larger companies and there’s a 10-12 per cent upside more in the stock,” said Baliga. Shares of JK Paper have surged 89 per cent in the last year.

However, Kotak Securities said in a note last month that JK Paper’s current valuations factor in lower volume in the writing and printing paper segment in FY21 and with the opening of school, colleges and educational institutions, demand is expected to rebound. The brokerage has a reduce rating on the stock with a target of 148.