Andhra Paper to exploit opportunities in Paper Board Segment through expansion and capacity addition

1. Video : https://youtu.be/gLae-CNb5bs?si=PDkGv-iZ2jcaowwa

2. Video: https://youtube.com/shorts/ZsyDs8rLX9o?si=xUjwNxd_zmbR4c4Q

When i first looked at this paper company, my first reason was low PE. Company was showing results that was not comparable to previous year's results. In such cases, it is difficult to digest on how the company is performing so well

Then, i spent good amount of time in understanding the industry point of view where i found majority companies were showing similar lines results. 

Paper industry as a whole has fundamentally changed and we can expect Re rating in these paper companies

Video of paper industry: https://youtu.be/dmLuhBOU8pw?si=oScyPiNbsNDmGzEV

  • FY 2023 Vs 2022
    • EPS: 131 and CMP is 400
    • Net profit after tax :   522 Cr Vs 139 Cr 
    • Investments: 800 cr and Market cap is 1600 cr
    • Cash flows: 535 cr Vs 202   
  • Expansion plan:
    • Andhra Paper at its meeting held on 26 August 2022 approved a capital expenditure amounting to Rs 400 crore to re-build and upgrade the existing Pulp plant to improve the reliability and efficiency of the Pulp Mill
      • This will help sustain the current levels of production, improve efficiency in Pulp Mill processes and lend flexibility in operations, augment pulp production capacity from existing 550 Tonnes per day to 600 Tonnes per day
      • The expected completion timeline is November 30, 2023. The proposal shall be funded through mix of debt and internal accruals
    • Board of Directors at their meeting held on January 31, 2023 have accorded an in-principle approval to prefeasibility report to exploit opportunities in Paper Board Segment through expansion and capacity addition by setting up an integrated Green Field Project at Unit Kadiyam 
      • It is proposed to install approximately 175,000 Ton per annum board machine (KA#4) along with ancillary and support infrastructure concerning the project
      • The existing production capacity is 87,000 TPA. The proposed capacity addition is 2,21,000 TPA (Pulp) and 1,56,000 TPA (Paper Board)
      • In this regard, the Company will file necessary applications with the Ministry of Environment & Forest for Climate Change (MOEF) for Environment Clearance and further approvals concerning the project shall be sought from concerned regulatory authorities including local, state and central authorities as may be necessary for the proposed project
      • Investment required :  INR 2,000 Crores approximate

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