Star Paper Mills Ltd: From Firefighting to Paperfighting
1. At a Glance
Founded in 1938, Star Paper Mills Ltd (SPML) is old enough to have supplied paper for your grandfather’s love letters. Part of the Duncan Goenka Group, this Saharanpur-based company churns out packaging, cultural, and industrial papers. Market cap? A tiny ₹276 Cr. Current price? ₹176. Valuation? Trading at 0.4× book value — basically the stock market’s version of a clearance sale at Big Bazaar. But here’s the spicy bit: promoters have pledged 47.2% of their holding. That’s like mortgaging half your house while telling the bank “don’t worry, business is solid.”
2. Introduction
Star Paper is that old uncle who has seen everything: wars, liberalisation, demonetisation, even Jio launching free data. Yet it soldiers on, producing paper. The company is ISO-certified in every alphabet soup you can imagine (9001, 14001, 45001). It even has an R&D centre recognised by the Ministry of Science & Technology. Translation: “we make paper, but with lab coats on.”
Its product mix is broad — diaries, scrapbooks, greeting cards, bidi wrappers, even cooler pads. If it can be printed, wrapped, or smoked, Star has a paper for it. Installed capacity = 75,000 MTPA. FY23 sales volume = 28,052 MT writing/printing + 36,226 MT packaging.
But recent years weren’t smooth. Two fires (Nov 2022 and Dec 2023) caused losses of ₹11 Cr. Despite this, operations are back at full tilt. Still, sales growth is crawling at 5% CAGR over 5 years — more like a slow bicycle race than a sprint.
3. Business Model (WTF Do They Even Do?)
Think of Star Paper as the Kirana store of papermaking:
Cultural papers → used for printing, calendars, diaries, security papers.
Others → multipurpose colour papers (yes, those bright pink ones teachers use to make charts).
Revenue mix FY23: Products 94%, Scrap 2%, Other Income 4%. No jazzy diversification — just a steady “pulp → paper → profit (sometimes).”
But here’s the catch: paper is a commodity. Prices swing with pulp costs, demand cycles, and tender politics. Without strong brands or backward integration, mills like Star are forever at the mercy of raw material and forex swings.
4. Financials Overview
Quarterly Snapshot (Q1 FY26 vs Q1 FY25 & Q4 FY25):
Metric
Latest Qtr (Q1 FY26)
YoY Qtr (Q1 FY25)
Prev Qtr (Q4 FY25)
YoY %
QoQ %
Revenue
₹101 Cr
₹114 Cr
₹114 Cr
-11.4%
-11.4%
EBITDA
₹6 Cr
₹10 Cr
₹10 Cr
-40.0%
-40.0%
PAT
₹13 Cr
₹14 Cr
₹5 Cr
-7.1%
+160%
EPS (₹)
8.2
8.9
3.2
-7.1%
+156%
YoY: Revenue down, PAT down. A classic case of “selling less, earning less.”
QoQ: Revenue collapsed but PAT shot up 160% — courtesy “Other Income” (₹12 Cr) bailing them out. Without it, this quarter looked like wet tissue.
Annualized EPS = ₹33. P/E at CMP ₹176 = 5.3. Cheap on paper (pun intended).
