Schools, colleges, offices, and courts have opened in the last one month, resulting in a shortage of paper. Analysts said paper companies are likely to deliver strong earnings growth over the next few quarters thanks to the pick up in demand and better prices. JK Paper, West Coast Paper, and Andhra Paper are among analysts’ top picks.
“Paper stocks have seen good accumulation this week as almost all players have raised prices, and traditionally the fourth quarter is always the best quarter, more so this time around in view of the opening up theme gaining momentum,” said S Ranganathan, head of research, LKP Securities.
Shares of JK Paper, West Coast Paper Mills, Seshasayee Paper, Andhra Paper, and Kuantum Papers have rallied between 20% and 25% in the past five trading sessions. TN Newsprint and Orient Paper gained over 15% during this period.
“JK Paper has recently commenced its board facility, and the outlook is promising going forward. Despite the absence of boards, West Coast Paper has large capacities and is a formidable player with a positive outlook going forward,” said Ranganathan. Prices of wastepaper have shot up in the past few months as many offices, and schools remained shut for almost two years on account of the pandemic, leading to lower collections.
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