If you thought making paper was boring, wait till you see South India Paper Mills’ (SIPM) quarterly results — ₹112 Cr in sales, ₹2.81 Cr in profit, and a market cap that can barely buy one Mysore palace chandelier: ₹147 Cr. After years of being the forgotten cousin in India’s pulp fiction, the company is now trying to stage a comeback. EPS for Q2FY26 came in at ₹1.50 — which might not make headlines, but it sure beats the string of red ink from the past.
Debt is ₹172 Cr (Debt/Equity: 0.8x), ROCE limps at 1.4%, and ROE hides its face behind -5.2%. The stock trades at ₹78 — less than the company’s book value of ₹115, making it one of those rare cases where the paper is worth more than the company itself.
But wait, there’s drama too — a fire accident, delayed plant ramp-up, and a preferential allotment that brought in ₹45 Cr just in time to douse financial flames. Like a phoenix with corrugated wings, SIPM is now crawling back from years of operational smoke.
2. Introduction – The Paper Chase Nobody Asked For
Imagine running a paper mill in 2025. Global paper demand is flat, e-commerce is switching to “eco-packaging,” and your best clients (Nestlé, Britannia, Reckitt) negotiate prices like your dadi bargaining for vegetables. Yet, here’s South India Paper Mills — churning out Kraft liners, test liners, and corrugated boxes like it’s the 1990s.
Founded in 1959, this Mysore-based relic has seen every economic cycle from the License Raj to ChatGPT. It’s survived import duty shocks, demonetization, and even a warehouse fire — though profits often vanish faster than subsidies.
To be fair, SIPM isn’t clueless. It runs an 11 MW captive power plant, produces 1.15 lakh MT of paper annually, and even consumes 40–45% of that in-house for its packaging unit. It’s vertically integrated — which sounds sexy on paper — but when utilization drops, it just means vertically integrated losses.
Can this mid-cap underdog finally unbox some profits? Or will it continue to gift-wrap disappointments every quarter?
3. Business Model – WTF Do They Even Do?
Let’s break it down, Desi Sherlock style.
SIPM has two main businesses:
Paper Division: The OG money pit — manufacturing Kraft liner substitutes, test liners, white Kraft liners, and other grades between 70 and 400 GSM. If you’ve ever unboxed an Amazon parcel, chances are, you’ve held their sweat and pulp.
Printing & Packaging Division: Think of brown corrugated boxes, multicolor flexographic printed cartons, and micro-fluted boxes. It’s where dull cardboard gets dressed up for retail shelves.
They sell 99% domestically — only 1% is exported, possibly by mistake. Major clients? Nestlé, Britannia, Reckitt Benckiser, Parle Agro — basically, India’s snack royalty. But with high bargaining power customers and volatile input costs, margins crumble faster than Parle-G in chai.
The power division (11 MW) is supposed to help reduce energy costs. But given the low utilization and rising finance cost, it sometimes feels like a luxury generator for losses.
4. Financials Overview
Metric
Latest Qtr (Sep’25)
YoY Qtr (Sep’24)
Prev Qtr (Jun’25)
YoY %
QoQ %
Revenue
₹112 Cr
₹101.8 Cr
₹106.9 Cr
9.6%
5.0%
EBITDA
₹12.9 Cr
₹6.4 Cr
₹10.4 Cr
102%
24%
PAT
₹2.81 Cr
₹0.8 Cr
₹0.98 Cr
251%
187%
EPS (₹)
1.50
0.40
0.52
275%
188%
Commentary: Revenue growth is modest, but profits have made a heroic comeback — probably because the plant finally ran without catching fire. The operating margin at 11.6% is the highest in two years, signaling that SIPM might have finally found the “on” button on its new kraft paper line.
5. Valuation Discussion – Fair Value Range Only
Method 1: P/E Method Annualized EPS = ₹1.5 × 4 = ₹6.0 Industry P/E = ~18x → Fair Value = ₹108. Given lower scale and volatility, discount by 20–30%. ➡ Fair range via P/E = ₹75–₹90 per share.
Method 2: EV/EBITDA EV = ₹317 Cr; TTM EBITDA = ₹34 Cr → EV/EBITDA = 9.3x. Industry average = 8–12x. ➡ Fair EV range: ₹272–₹408 Cr. Subtract ₹172 Cr debt → equity value ₹100–₹236 Cr → per share ₹53–₹125.
📘 Fair Value Range: ₹70 – ₹110 (Educational only, not investment advice)
6. What’s Cooking – News, Triggers, Drama
🔥 The Fire of 2023: 690 MT of paper went up in smoke at the PM5 stock warehouse. The company blamed “unknown causes,” which in India usually means a wire, a spark, and bad karma.
🧾 Preferential Allotment (FY23): ₹45.37 Cr raised via 37.5 lakh shares to Mr. & Mrs. Modi (no relation to the PM). Money used for working capital and debt repayment — or as SIPM calls it, “preventing insolvency.”
💸 Fundraising: Because when profits don’t flow, equity does.
🏭 Capacity Woes: New kraft paper unit faced stabilization issues for over a year. Management claims it’s
