WestCoast Bonanza 010910 Report Date Company Name Price / Recommendation

Report Date Company Name Price / Recommendation Rs.

th August

West Coast Paper Mills Ltd.


Company background
WCPL has announced Q results In Crore
Net Sales Other Income Total Income Raw Material Other Expenses Total Expenses PBDIT Interest Depreciation PBT Tax PAT CP Equity FV EPS CMP P/Ex Dividend PBDITM PATM Annualised . . . . . .


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QFY qoq
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Paper prices are rising Domestic paper prices are rising continuously in line with the international prices. WCPLs initiatives towards Contract for Farming scheme will ensure continuous flow of raw material and will also reduce raw material procurement distance significantly.Govts thrust on education and growing economy will also act as a catalyst for the industry growth. WCPL has completed its three year long capacity expansion process in May and now became the fifth largest paper manufacturer in the country.cr in QFY on account of higher interest and depreciation charges. WCPL is in process of acquiring FSC certification With the help of the backward farming initiatives WCPLhas taken steps to achieve the prestigious Forest Stewardship Council FSC certification. Installation of modern pulping plant part of its expansion process WCPL has increased its pulping capacity from tpd tonnes per day to tpd. India became a favorable destination for printing out sourcing projects. On account of its low cost base printing industry. WCPLs operating margins improved by bps in QFY while its PATM declined significantly on account of higher financial charges and depreciation due to expansion. WCPL has increased its production capacity by to MT from MT. which is of international standard. This certification will further promote growth and will be an added advantage to the Companys branding efforts in the copier segment. Earthquake in Chile which disrupted pulp supplies and withdrawal of subsidy by US govt per tonne for the treatment of black liquor generated during pulp manufacturing shoot up the international pulp prices leading to rise in international paper prices. Industry opportunities Paper industry is expected to grow at CAGR between FY on the back of healthy growth in industrial production . BonanzaResearchTeam . WCPL has enhanced the thermal power generation capacity to MW which would make the company self sufficient in power with MW exportable surplus WCPL is also focusing on high margin copier segment. Topline of WCPL increased by yoy while its raw material expenses up by . Result Highlights West Coast Paper mills Ltd WCPL has reported a decline in net profit by yoy to .WCPL which manufacturing most of its pulp internally would be benefited from this price rise. WCPL has a cash profit of cr a rise of yoy Investment Rationale Capacity expansion with improved technology as well as back ward integration would reduce manufacturing expenses. That creates an opportunities for overseas expansions for WCPL. New plant with latest technologies will reduce the shrinkage cost and power consumption which would soften its manufacturing expenses.

Rs in Cr in FY Gross Sales PBDIT Net Profit Cash profit PBDITM PATM Equity Face Value EPS CMP PE Total CapacityMT FY M. The paper consumption in India is set to increase as the per capital paper consumption is only kg as against world average of kg. Peer group comparisons Looking at the peers WCPL is relatively undervalued on Mkt. Higher Interest costs would affect the bottom line Dumping of paper by China and other Asian countries where raw material costs are subsidized would be a threat to the industry. Cap/capacity Total Debt BILT WCPL TNPL post expansion capacity of WCPL will be MT Risk amp concerns Paper is a cyclical commodity. BonanzaResearchTeam . due to expansion. stock prices also react accordingly with high volatility. Cap M. There is huge increment in debt. International price movement also adds volatility to the domestic prices. There are environmental issues with the paper industry.cap/capacity. Noncompliance with environment protection policies could hamper production process.

M. while entering into any transactions. The information herein may change any time due to the volatile market conditions. Disclaimer This report. employees and associates may or may not have trading or investment positions in the securities mentioned herein. Regd. Corp off Plot No. Modern technology and self sufficiency in power would reduce its operating expenses leading to a higher margin in the coming years. Further the intended recipient is also advised to exercise restraint in placing any dependence on this report. Off /C. neither claims or guarantees the accuracy of any information contained herein nor assumes any responsibility in relation to losses arising from the errors of fact. Behind The Hub Goregaon E. Recommendation WCPL with an enhanced capacity is expected to increase its top line and operating profit significantly. it contains information for the intended recipient only and no other person. and may not be accurate. New Delhi . whatsoever. Tel /. Valuation looks attractive. Madan Mohan Street. Bonanza Portfolio Limited. Cama Industrial Estate. as the sender. Further. opinions contained herein or the dependence placed on the same. Bonanza. which contains information based on research carried by or on behalf of Bonanza Portfolio Limited. Tel to BonanzaResearchTeam . is neither advice nor any offer to sell or a solicitation to buy any securities. Ansari Road. Daryaganj. Higher interest charges will reduce the bottom line to some extent. complete or exhaustive. Walbhat Road.Investors can buy at this counter for target of in medium term. the recipient therefore is advised to use his own discretion and judgment.x of FYE. Mumbai . At CMP the stock is trading at forward earning multiple of . its directors.

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