The Hindu Business Line : Paper sector remains subdued

The stock price of paper companies such as TNPL, BILT, JK Paper and AP Paper has been range bound in the recent past. Marketmen maintain that while the outlook in the long run is positive, these counters are not likely to see any sharp run up in the near term. The sluggish demand-supply scenario could see margins for paper companies remain subdued for some time to come, say analysts.

Rising raw material costs and the lag time between the raw material price increase and a rise in the price of finished product is said to be impacting operating margins. Given that the companies are already running to optimal capacity, volume growth will not be there. One will see new capacity come up by mid 2007.

Industry sources said prospects might improve only after the festive season, during which time companies are likely to raise prices. The stock of BILT ended at Rs 105.60, while TNPL closed at Rs 89.75, down 6.07 per cent, JK Paper at Rs 44.40, down 2.63 per cent, and AP Paper at Rs 104.65, down 2.52 per cent, on the BSE.

Deeptha Rajkumar

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