At a Glance
Emami Paper Mills (EPML) just printed its Q1 FY26 results, and the ink isn’t exactly golden. Revenue dipped 8.7% YoY to ₹460 Cr, operating margins improved slightly to 8.2%, and PAT scraped through at ₹6.3 Cr. Stock trades at ₹97, a P/E of 30, and at 0.86× book value. The dividend payout is decent at 21%, but debt overhang (₹769 Cr) and contingent liabilities of ₹180 Cr keep investors cautious.
1. Introduction
EPML is the biggest newsprint producer in India and the lone ranger in Eastern India. But with newsprint demand shrinking faster than Twitter’s ad revenue, the company leans on packaging boards to stay afloat. Despite being part of the mighty Emami Group, the financials haven’t exactly wowed investors lately.
2. Business Model (WTF Do They Even Do?)
EPML manufactures newsprint, writing & printing paper, and multilayer coated packaging boards.
- Revenue Split: Newsprint & W&P (legacy cash cows), Packaging Boards (growth driver).
- Clients: Publishers, FMCG, and packaging companies.
- Moat: Regional dominance and backward integration.
The problem? Paper demand is cyclic, raw material costs volatile, and margins as thin as tissue paper.
3. Financials Overview
Q1 FY26 Snapshot:
- Revenue: ₹460 Cr (↓8.7%)
- EBITDA: ₹37.7 Cr (OPM 8.2%)
- PAT: ₹6.3 Cr (↑50% QoQ)
- EPS: ₹1.04
FY25 Recap:
- Revenue ₹1,928 Cr | PAT ₹26 Cr | EPS ₹4.3
4. Valuation
- P/E Valuation: EPS ₹4.3 × fair P/E 15 = ₹65
- EV/EBITDA: EBITDA ₹136 Cr × 7 = ₹950 Cr → per share ₹75
- DCF: Assumes slow recovery → ₹70–₹80
Fair Value Range: ₹65 – ₹80
CMP ₹97 implies optimism that isn’t backed by growth numbers.
5. What’s Cooking – News, Triggers, Drama
- Focus on packaging boards to offset declining newsprint.
- Court injunction delays arbitration—no material impact yet.
- Debt reduction in focus, but high interest costs persist.
- Dividend policy remains shareholder-friendly (rare in paper sector).
6. Balance Sheet
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Assets | 1,976 | 1,714 | 1,817 |
| Liabilities | 874 | 384 | 370 |
| Net Worth | 455 | 518 | 666 |
| Borrowings | 1,102 | 850 | 769 |
Comment: Debt heavy, but leverage is reducing slowly.
7. Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating | 32 | 351 | 44 |
| Investing | -24 | -10 | -17 |
| Financing | -9 | -336 | -32 |
Takeaway: Cash flows are inconsistent—FY24 was good, FY25 weak again.
8. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE | 10% | 12% | 4% |
| ROCE | 10% | 12% | 7% |
| P/E | 17x | 20x | 30x |
| PAT Margin | 3% | 4% | 1% |
| D/E | 1.3 | 0.9 | 1.1 |
Verdict: Low profitability, high valuation—investors are betting on a turnaround.
9. P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 2,381 | 1,994 | 1,928 |
| EBITDA | 222 | 236 | 142 |
| PAT | 69 | 84 | 26 |
Comment: Revenue falling, margins under pressure.
10. Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| JK Paper | 6,679 | 351 | 17 |
| West Coast Paper | 4,062 | 311 | 11 |
| Seshasayee Paper | 1,718 | 88 | 20 |
| Emami Paper | 1,928 | 26 | 30 |
Verdict: EPML trades at premium P/E while peers have stronger earnings.
11. Miscellaneous – Shareholding, Promoters
- Promoters: 74.98% (rock solid)
- FIIs: 0.54%
- DIIs: 0%
- Public: 24.5%
- Dividend: Healthy payout (~21%) despite weak profits.
12. EduInvesting Verdict™
EPML’s Q1 FY26 numbers show tiny profit growth but shrinking revenue. The packaging board segment offers hope, but newsprint decline and high finance costs weigh heavily.
SWOT Analysis
- Strengths: Largest newsprint maker, good dividend track record, strong promoter backing.
- Weaknesses: Declining sales, high debt, poor ROE.
- Opportunities: Shift to packaging boards, cost optimization.
- Threats: Rising pulp prices, competition from JK Paper, digital media eating newsprint.
At ₹97, EPML is priced for a turnaround that hasn’t turned yet. Risk-averse investors may prefer peers with better margins.
Written by EduInvesting Team | 29 July 2025
SEO Tags: Emami Paper Mills, Q1 FY26, Paper Industry, Packaging Boards
