Paper Stocks: Flying High On Robust Demand

Paper stocks have gained momentum, of late. Lohit Bharambe and Nikita Singh identify paper stocks that one can bet on at the current juncture.

- Lohit Bharambe and Nikita Singh

The Modi government’s perseverance towards Digital India has paved the way for growth for most of the industries, except the paper industry. The push towards a cashless economy followed by the GST roll-out has aggravated the pessimism in paper industry. However, considering traditional practices still followed in allied sectors and industries such education, print media, tissue papers and packaging, the paper industry still holds some scope for growth. Indian paper industry has created sustainable livelihood in rural areas and has helped generate employment for the local populace, especially for women, who earn their livelihood through this industry. The paper industry employs about 20 lakh people, including those employed directly and indirectly. According to Indian Paper Manufacturers Association (IPMA), the Indian paper industry accounts for about 3% of the world’s production, with the turnover of the industry estimated at ₹50,000 crore.

The paper industry is fragmented into writing and printing paper (WPP), industrial paper (IP), newsprint (NP) and specialty paper (SP), out of which IP caters to 50% of total demand majorly for corrugated boxes. The WPP caters to 30% of the demand. The derived paper printing industry is termed to be the second most employable industry in India after China and has posted a growth of 15-17%, while commercial printing grew by about 4% in FY2017.

India’s per capita consumption of paper and board, which stands a little over 13 kg, is way behind the global average of 57 kg. India’s consumption is lower than not only most of the developed countries but also considerably lower than many of the emerging countries.