1. At a Glance
Once the prince of premium paper and packaging boards, JK Paper now finds itself juggling falling margins, rising costs, and—wait for it—a Rs. 3.08 crore stamp duty penalty (just for some legal flair). But is it still a wise long-term bet? We investigate.
2. Introduction with Hook
Imagine you’re running a paper company in a digital age where kids submit homework on Google Docs, love letters are typed on WhatsApp, and even wedding invites are PDFs. Enter JK Paper—a legacy pulp giant trying to stay relevant while margins bleed like a leaky ink pen.
- FY23 Net Profit: ₹1,208 Cr
- FY25 Net Profit: ₹412 Cr (Ouch. That’s a 66% drop)
The question isn’t what they’re printing. It’s if the profits are still worth printing.
3. Business Model (WTF Do They Even Do?)
JK Paper is a vertically integrated paper manufacturing giant. Their product portfolio spans:
- Office Papers – Copier paper, notebooks
- Packaging Boards – Folding boxboards for food, pharma, FMCG
- Coated Paper – For magazines, catalogues, glossy stuff
- Writing & Printing Paper – A segment being eaten by the digital monster
Their mills are located in Odisha, Gujarat, and Telangana. They also control raw material sourcing through captive plantations and long-term wood supply contracts.
JK Paper isn’t just selling paper. It’s selling legacy in a rapidly digitizing world.
4. Financials Overview
Let’s not sugarcoat it—the trend is crumpling like wet cardboard:
| FY | Revenue (₹ Cr) | EBITDA (₹ Cr) | PAT (₹ Cr) | OPM % | EPS (₹) |
|---|---|---|---|---|---|
| 2023 | 6,437 | 2,012 | 1,208 | 31% | 70.6 |
| 2024 | 6,659 | 1,616 | 1,133 | 24% | 66.2 |
| 2025 | 6,718 | 928 | 412 | 14% | 24.2 |
Yikes Alert: EBITDA fell 54% over 2 years. Net profit collapsed by nearly two-thirds. Input costs (wood, chemicals) and power costs rising. The real paper cut is on margins.
5. Valuation
Current Price: ₹390
Book Value: ₹319
P/E: 16.2x (Median for peers: ~16x)
P/B: 1.26x
Fair Value Range (based on historical P/E, P/B and DCF): ₹330 – ₹460
That means at ₹390, the stock is fairly priced—but offers no huge discount. Unless pulp prices rebound or demand spikes, there’s no “multi-bagger smell” yet.
6. What’s Cooking – News, Triggers, Drama
- Q1FY26 Disaster: Net profit collapsed to ₹77 Cr vs ₹279 Cr YoY
- Stamp Duty Penalty: ₹3.08 Cr slapped by Gujarat authorities; company says it’s immaterial and will fight it
- Falling OPM: Q-o-Q operating margins down to 13%
- Promoter Holding: Steady at 49.64%, which is a green flag
- New Mills or Capex? Not recently. Most cash going toward debt repayment.
TLDR: Not exactly a thriller script, but there’s slow burn tension.
7. Balance Sheet
| Metrics | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital | 169 Cr | 169 Cr | 169 Cr |
| Reserves | 3,865 Cr | 4,900 Cr | 5,238 Cr |
| Borrowings | 2,803 Cr | 2,204 Cr | 1,885 Cr |
| Net Worth | 4,034 Cr | 5,069 Cr | 5,407 Cr |
| Debt/Equity | 0.69x | 0.43x | 0.35x |
Key Points:
- Balance sheet is de-leveraging (yay!)
- Reserves are growing but not as fast as they used to
- Fixed Assets grew to ₹6,264 Cr—probably prepping for the next capacity cycle
8. Cash Flow – Sab Number Game Hai
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| CFO | 1,762 | 1,376 | 613 |
| CFI | -948 | -410 | -2 |
| CFF | -787 | -938 | -656 |
| Net Flow | 27 | 28 | -45 |
Highlights:
- Operating cash flows almost halved in 2 years
- Investing slowed down—no mega expansions
- Financing cash outflow due to debt repayments
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 28% | 20% | 9% |
| ROE | 21% | 17% | 8% |
| OPM | 31% | 24% | 14% |
| Working Capital Days | 50 | 57 | 97 |
| Debtor Days | 20 | 20 | 23 |
| Inventory Days | 105 | 100 | 112 |
Analysis:
ROCE and ROE halved. Working capital shot up like a teenager on Red Bull. Clearly, efficiency is under pressure.
10. P&L Breakdown – Show Me the Money
| ₹ Cr | FY | Revenue | OPM % | PAT | EPS |
|---|---|---|---|---|---|
| 2023 | 6,437 | 31% | 1,208 | 70.6 | |
| 2024 | 6,659 | 24% | 1,133 | 66.2 | |
| 2025 | 6,718 | 14% | 412 | 24.2 |
The topline is growing, but the bottomline looks like a thin line drawn with a pencil that’s run out of lead.
11. Peer Comparison
| Company | P/E | ROE | Div Yield | OPM | Market Cap (₹ Cr) |
|---|---|---|---|---|---|
| JK Paper | 16.2 | 7.8% | 2.13% | 14% | 6,610 |
| West Coast | 11.8 | 9.2% | 0.88% | 11.8% | 3,691 |
| Seshasayee | 17.1 | 5.6% | 0.83% | 6.4% | 1,872 |
| Pudumjee | 12.1 | 17.8% | 0.5% | 15.3% | 1,160 |
Observation: JK Paper is not the cheapest, not the highest margin, and definitely not the fastest growing. It’s… average.
12. Miscellaneous – Shareholding, Promoters
- Promoter Holding: 49.64% (steady since 2022)
- FIIs: 11.86% (slightly declined)
- DIIs: 5.5%
- Retail: 33% and rising—over 1.56 lakh shareholders now
- No Pledges: That’s good
- Credit Rating: CRISIL & Fitch both stable (last updated Jan 2025)
13. EduInvesting Verdict™
JK Paper is not dying—it’s just quietly struggling through a margin crush and cyclical slowdown. If you’re a value investor looking for dividend income and a possible long-term upcycle in packaging paper, this could be worth watching.
But don’t expect fireworks in FY26 unless raw material prices cool off and demand picks up.
This one’s for the patient monks, not the dopamine-hungry traders.
Metadata
– Written by EduInvesting Research | July 18, 2025
– Tags: JK Paper, Pulp & Paper, Packaging Boards, Margins, Manufacturing, EduInvesting Premium
