JK Paper Ltd Q1 FY26 (Jun’25) – Margins Pulped, Acquisitions Rolling, Debt Slimming
1. At a Glance
JK Paper is the desi printer paper king who went from supplying your chacha’s Xerox shop to packaging your Zomato cutlery box. In Q1 FY26, revenue stood at ₹1,674 Cr with PAT ₹85 Cr, down 42% YoY—basically profits evaporated faster than ink on cheap exam sheets. Yet, management is busy buying packaging firms like they’re on Big Billion Day, hoping packaging boards will save them from the slow funeral of writing paper.
2. Introduction
Established in 1962, JK Paper is that old veteran who once ruled classrooms, offices, and government tender files with its copier sheets. But the world has changed: offices went digital, schools went online, and government babus discovered PDF. The result? Demand for writing & printing paper fell harder than attendance in 8 am college lectures.
So what did JK Paper do? They pulled a classic jugaad. Instead of fighting the dying photocopy machine, they pivoted to packaging boards—because no matter how much AI advances, your pizza still needs a box. From 24% revenue share in FY22, packaging zoomed to 40% in FY24. Copier paper declined from 42% to 35%. Writing paper fell to 15%. Clearly, paper for pens is out, but paper for paneer tikka is in.
Margins, though, are sweating. EBITDA margins fell from a fat 33% in FY23 to a lean 13–15% by FY25. Rising raw material costs, energy shocks, and global pulp price swings turned their balance sheet into a diet plan. And yet, they’re on an acquisition spree—buying Horizon Packs, Securipax, Borkar Packaging, and even a veterinary healthcare company (because… why not?).
This is the story of JK Paper: from notebooks to noodle boxes, from high ROEs to mid-single digits. Buckle up, we’re auditing this pulp-to-packaging rollercoaster.
3. Business Model – WTF Do They Even Do?
JK Paper is basically a tree-to-tray operation. They cut down wood (responsibly, they claim), turn it into pulp, process it into different paper products, and then flog it to everyone from corporates to chaiwallahs.
Packaging Board (40% share FY24): Virgin board for pharma, FMCG, and food. Think Maggi sleeves, Colgate cartons, or that fancy soap box. Market share: 17%.
Copier & Office Paper (35%): JK Copier, Easy Copier—basically the reason every stationery shop aunty says “sirf JK hi milega.” Market share: 28%.
Writing & Printing Paper (15%): Maplitho, coated papers. Used for books, envelopes, and sketching sheets your cousin never used. Market share: 8–10%.
Capacity-wise, they have 761,000 TPA saleable paper and 475,000 TPA pulp. Utilisation hit 105% in FY24—basically like Indian trains, overbooked but still running.
Future bet: a ₹650 Cr BCTMP mill in Gujarat (FY26 completion) to reduce dependence on imported pulp. If that succeeds, margins may stop behaving like Sensex on budget day.
Question for you: Do you think cartons and packaging boards will offset the death of copier paper, or will this pivot end up like Nokia’s shift to Windows phones?
Commentary: Revenue flat, margins squeezed, PAT halved. QoQ looks slightly better, but YoY is an obituary. P/E at 20 is asking investors to pay a premium for packaging dreams while earnings reality looks more like wastepaper.
5. Valuation Discussion – Fair Value Range Only
Let’s audit three methods:
(i) P/E Method
EPS annualised: ₹19.2
Industry P/E: ~15
Fair value range = 15× to 20× = ₹290–₹385
(ii) EV/EBITDA
FY25 EBITDA ~₹895 Cr
EV = ₹8,446 Cr → EV/EBITDA = 9.4×
Fair range = 7×–9× → EV ~₹6,265–₹8,055 Cr
Per share value = ~₹315–₹405
(iii) DCF (back-of-envelope)
FCFF ~₹1,000 Cr (normalised)
Growth 5%, discount 12%
PV = ₹14,000–₹16,000 Cr EV
Per share = ₹370–₹420
Fair Value Range (Blended): ₹310–₹405
Disclaimer: This is for educational purposes only. Not investment advice. Don’t blame us if your portfolio behaves like wet paper in the rain.
6. What’s Cooking – News, Triggers, Drama
Acquisitions: Bought Borkar Packaging (₹393 Cr turnover), Quadragen Vethealth (because packaging alone was boring?), and BPPL stake. Clearly, expansion mode ON.
Debt Reduction: Paid down ₹548 Cr in FY24, net debt now ₹910 Cr. Respect where due—they’re cleaning up.
Capex: BCTMP plant at Gujarat with 125k ADMT capacity. FY26 completion, expected IRR ~15%. Translation: margins ka jugaad.
Troubles: Strike at CPM unit in Mar’25 caused 20% production loss. Also, GST demand of ₹12 Cr (because taxman never sleeps).
Dividends: ₹5/share for FY25. Not bad, but not enough to make shareholders forget
