The West Coast Paper Mills Q2FY19: Total income increased by 20% y-o-y; Buy

SKP Research | Dec. 4, 2018, 11:54 a.m.

Valuation

Ban on single use plastic products and their replacement by paper products have just started in a couple of states in India. If this trend were to extend to the rest of the country, which it should in line with the global trend, this could give a major boost to companies like WCP, which already produces products like paper cups. Although the long term big picture of the paper sector and WCP appear to be quite positive, we have currently valued the stock on the basis of EV/EBIDTA of 5.5x of FY20E EBIDTA and recommend a “Buy” with a target price of Rs 446 (32% upside) in 15 months.



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