At a Glance
Ruchira Papers Ltd is a midcap paper manufacturer from Himachal Pradesh that makes kraft paper and writing & printing paper — you know, the kind your school notebooks were printed on before PDFs killed trees. Despite sluggish sales, the company is posting juicy margins, healthy ROEs, and a sweet 3.6% dividend yield. Is this a stealth value stock hiding in plain sight?
1. 📦 WTF Do They Even Do?
Ruchira Papers operates in two segments:
- Kraft Paper: For packaging applications — boxes, cartons, etc.
- Writing & Printing Paper (WPP): Used in publishing, notebooks, forms, and office stationery.
They’re not doing anything revolutionary, but:
- They’ve got low debt,
- Self-sufficient operations,
- And they’ve been quietly paying dividends and compounding profits.
This is the textbook example of a “boring but cash-rich” business.
2. 💰 Financials – Who Said Paper Doesn’t Have Margins?
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 415 | 613 | 803 | 658 | 659 |
| Net Profit (₹ Cr) | 5 | 33 | 68 | 49 | 67 |
| EPS (₹) | 1.87 | 11.95 | 22.66 | 16.48 | 22.56 |
| OPM (%) | 6% | 10% | 14% | 12% | 16% |
| ROCE (%) | 4% | 14% | 24% | 16% | 18.7% |
| ROE (%) | – | – | 24% | 16% | 15.3% |
🧠 Takeaways:
- EPS grew >10x in 3 years
- Margins are stable, not fluke-based
- FY24 dip in revenue = post-COVID correction in paper prices
- FY25 bounce = margin comeback
3. 📉 Valuation – Cheap, Cheaper, Ruchira
| Metric | Value |
|---|---|
| CMP | ₹139 |
| EPS (TTM) | ₹22.56 |
| P/E | 6.17x 😲 |
| Book Value | ₹156 |
| P/B | 0.89x (below book!) |
| Dividend Yield | 3.59% |
| ROCE | 18.7% |
📊 Fair Value Range (conservative method):
- EPS ₹22
- Assign P/E = 8–10x for paper stocks with margin consistency
👉 Fair Value Range = ₹176 – ₹220
So at ₹139, it’s undervalued by 25–35%.
4. 💨 What’s Cooking – Dividend Drama & Boardroom Chai
- 💰 Declared 30% payout ratio in FY25
- 🎯 Re-appointed auditors and chairman for 2 years
- 📈 Profit growth (YoY) ~37%
- 📊 Margins improved to 16% in Mar 2025 quarter
- 📦 FY25 Capex = ₹114 Cr investing cash outflow — likely brownfield expansion
No flash, but solid, sustainable execution.
5. 📟 Balance Sheet – Debt Khatam, Dividend Shuru
| FY25 Snapshot | ₹ Cr |
|---|---|
| Equity Capital | ₹30 |
| Reserves | ₹436 |
| Debt | ₹86 |
| Cash & Investments | ~₹1 |
| Net Worth | ₹466 |
| Debt/Equity | 0.18x ✅ |
They added ~₹42 Cr debt in FY25 (from ₹44 → ₹86), likely to fund new capacity. Still, capital structure is safe.
6. 💸 Cash Flow – Sab Number Game Hai
| Year | CFO | Capex | FCF | CFF |
|---|---|---|---|---|
| FY24 | ₹41 Cr | ₹26 Cr | ₹15 Cr | ₹-16 Cr |
| FY25 | ₹92 Cr | ₹114 Cr | ₹-22 Cr | ₹23 Cr |
FY25 saw heavy capex, so FCF turned negative. But with operating cash doubling, it’s not alarming.
7. 📊 Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROCE | 18.7% |
| ROE | 15.3% |
| OPM | 16% |
| Interest Coverage | >10x |
| Cash Conversion Cycle | 122 days (high) |
| Dividend Payout | 22% |
📌 Working capital is tight (CCC >100 days), but that’s typical in this industry.
8. 📋 P&L Breakdown – Show Me the Money
- Operating Profit FY25 = ₹107 Cr
- Net Profit FY25 = ₹67 Cr
- Net Margin = 10.2%
- Other income = negligible → no “treasury profit” masking
This is pure operating profit, no financial tricks.
9. 👥 Shareholding – Steady as She Goes
| Category | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| Promoters | 68.67% | 68.67% | 68.67% ✅ |
| FIIs | 0.91% | 1.03% | 0.91% |
| Public | ~30.4% | ~30.3% | ~30.4% |
🗓 Promoter holding stable, no pledging, no dilution. Retail is quietly compounding.
🧐 EduInvesting Verdict™
“Ruchira Papers is that PSU-like stock that gives you 3.6% dividend, prints 22 bucks per share, and still trades at a P/E of 6. It’s not a breakout artist, but it’s a compounding tortoise — and tortoises win bear markets.”
📌 Not flashy
📌 Not overvalued
📌 Not risky
🟢 Definitely underappreciated
︎✍️ Written by Prashant | 🗓 27 June 2025
Tags: Ruchira Papers, dividend yield stocks India, undervalued paper stocks, kraft paper companies, Himachal industrials, boring but profitable, ROCE >15%, deep value picks, smallcap paper multibaggers
