Ruchira Papers Limited (RPL) manufactures writing paper, printing paper and Kraft
paper. The companys white writing and printing paper is used in making notebooks
and writing material, while the colored paper is used in the fabrication of spiral
notebooks, wedding cards, shade cards, childrens coloring books, etc. Its Kraft paper
is utilised in the packaging industry for making corrugated boxes/cartons and for other
packaging requirements. The company’s writing and printing paper and Kraft paper is
manufactured by using agricultural residues like wheat straw, bagasse, sarkanda and
other materials.

Outlook and Valuation: We forecast RPL to report healthy top-line of ~13% CAGR over
FY17-20E on the back of healthy demand growth in printing & writing paper and Kraft
paper. On the bottom-line front, we estimate ~16% CAGR owing to strong
improvement in operating performance. Further, improvement in manufacturing
efficiency and benefits from increasing global finished paper prices (ban in China)
would aid margins. We initiate coverage on the RPL with a Buy recommendation and
target price of `244 (11x FY2020E EPS), indicating an upside of ~30% from the
current levels.

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