Comments
₹IDBI Capital
Oreint Paper (Reduce)
Target: ₹18
CMP: ₹18.30
Orient Paper and Industries Ltd (OPIL) reported another weak quarterly result, marred by subdued demand due to nationwide lockdown amid Covid-19. The company reported net sales of ₹80.60 crore, down 46.2 per cent y-o-y. Negative operating leverage weighed on EBITDA at negative ₹16.10 crore, while net loss stood at ₹17.40 crore.
Our interaction with the management suggests that writing and printing paper demand is still subdued in Q2 and there is no improvement in net sales realisation as well. On a positive note, OPIL has forayed into copier paper, which should partially support sales volume going forward.
Considering unpredictable business environment, the management has refrained from giving sales volume guidance for FY21E. However, we believe extended lockdown in key cities and closure of schools and colleges would dent demand as well as pricing in near term.
We believe FY21 would be a miss for OPIL led by lower production and sales realisation and recovery is expected in FY22 as things get back to normalcy. We have broadly kept our earnings estimates for FY21/FY22 and maintain Reduce with a TP of ₹18 (unchanged).
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.