The Hindu Business Line : Block deal in AP Paper stock

THE AP Paper stock today had a block deal of 2.51 lakh shares on the BSE. The deal was done at Rs 77.10 and was between Mr Chandravadan Desai, broker-investor, and CD Equisearch, his securities outfit.

The stock is on a downward mode for the last few sessions and today with a mild stir after the deal, closed 3.75 per cent lower at Rs 77.05.

Mr Desai told Business Line that the stock was under-priced and the deal was not a reflection on its outlook. According to him, recent rise in pulp and newsprint print prices in the domestic and international markets have changed the outlook for the paper stocks in general and AP Paper in particular, which has planned to modernise its pulp, paper and newsprint units.

It is understood that the L.M. Bangur-controlled AP Paper is on the threshold of getting an IFC funding at a cost of around 4 per cent (including rupee-dollar rate fluctuation coverage) shortly for modernisation-cum-expansion plan.

The project is expected to be in two phases and the work on the first phase is scheduled to begin sometime later this fiscal. The project is to install equipment, which can both handle manufacturing of paper and newspaper. After two years from the commencement, when the project is to be completed fully, the company is expected to reap both cost and quality benefits.

Mr Ketan Thacker of Anagram Stockbroking said paper companies were expected to do better in the coming months as demand was projected to rise steadily in India and China. Domestic demand is estimated to rise to 15 million tonnes in next 10 years from the current 6.5 million tonnes.

The pulp price has gone up around 30 per cent in the last three months or so, industry observers said. Even though input costs have gone up by about 15 per cent in the past one year, it left room for decent margin improvement. Newsprint prices have also firmed up in the last six months.

At today's closing price, the stock is trading at just 3.9 times its 2003-04 earnings per share. The company has increased the dividend recommendation to 35 per cent from 25 per cent in the previous fiscal.

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