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S. Vaidya Nathan

Investments can be considered in the stock of Seshasayee Paper Boards, which is set to capitalise on the firm trends in international and domestic paper prices that have stabilised at higher levels. Over the past two months, international pulp and paper prices have showed modest increases, largely on the back of European and Asian (China, in particular) demand, which has neutralised the weak trends in demand in the North American markets. The signs of recovery in the latter, and continued buoyancy in Asian demand, holds the scope for price increases in the later part of the year. It also cushions the downside risk and could extend the ongoing upturn in the paper industry, which started in January 2002, well into its third year.

Company-specific factors such as the benefits of operating at the fully expanded capacity of 1.2 lakh tonnes, steady decline in interest costs and tight rein on expenses could also bolster Seshasayee's earnings stream.

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