Several paper stocks witnessed strong buying interest in intraday trade on Monday, August 25, after the Indian government fixed a minimum import price for some paper boards. Shares of Tamil Nadu Newsprint & Papers, JK Paper, Emami Paper Mills, and West Coast Paper Mills surged up to 17 per cent in the morning session. Stocks such as Malu Paper Mills, Andhra Paper, Sangal Papers, Pudumjee Paper Products, and Ruchira Papers jumped up to 13 per cent.
Why are paper stocks rising?
Paper stocks are rising after the central government introduced a minimum import price (MIP) for Virgin Multi-layer Paper Board (VPB).
VPB is widely used in the packaging of products in the pharmaceutical, FMCG, electronics, cosmetics, liquor, and publishing sectors.
An ANI report highlighted the August 22 notification issued by the Directorate General of Foreign Trade (DGFT), which stated that the import of VPB under HS Codes 48059100, 48059200, 48059300, 48109200, and 48109900 will now be subject to a MIP of ₹67,220 per metric ton on a cost, insurance, and freight (CIF) basis. This minimum import price on VPB will remain in effect till 31 March 2026.
Paper stocks have seen an uptrend in the last few months on stable raw material prices and increased demand ahead of the start of the festive season.
According to credit rating agency Crisil, due to improvement in realisations and volume, the revenue of writing and printing (W&P) paper manufacturers may recover by 4-5 per cent in FY26 after declining 7 per cent last fiscal.
Realisations, which declined nearly 12 per cent last fiscal, will improve 2-3 per cent, driven by better demand-supply dynamics due to no material increase in imports of low-cost W&P into India, which contributes to 18-20 per cent of total volume, Crisil said.
“Operating profitability may rebound 200-250 bps as prices of hardwood, which is a key input to make pulp, the primary raw material, ease with improving supply. Continued focus on process efficiency will also support profitability. The consequent increase in accruals, along with low capital expenditure (capex), will keep credit profiles stable,” said Crisil.
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