Broker’s call: West Coast Paper (Buy)

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Target: ₹859

CMP: ₹692

West Coast Paper Mills Ltd (WCPML) offers a diversified product portfolio of quality printing and writing paper from 52 to 140 gsm, suitable for modern print-houses requiring high-quality paper for commercial to premium printing at affordable prices. It is credited for its’ strength in value-added, customized, and niche product segments for high-end applications.

Strategic acquisitions from time to time have cemented WCPML’s position in the Indian paper market. Previously, it acquired a majority stake in Andhra Paper Ltd (Currently 72 per cent stake) in 2020. AP Paper has a capacity of 2,41,000 MTPA. In September 2023, WCPML received NCLT’s approval to acquire Uniply Décor.

WCPML has consolidated its’ position through effective strategy building in the form of acquisitions, backward integration measures and having fully integrated operations. Cost structure has been rationalized as well through having 100 per cent of its raw material requirement being sourced domestically.

The new National Education Policy and growth in e-Commerce are a positive development for the paper industry as a whole. Adoption of 5G technology is expected to boost the demand of its optical fiber business. We would recommend a Buy with a target price of ₹859 in the next 9-12 months’ time period, thus implying a rise of 27 per cent from the current levels.