Orient Paper & Industries Limited (OPIL)

Orient Paper & Industries Limited (OPIL)

BSE 500 BSE SMLCAP


Orient paper is a CP & GK Birla Group company. Three division: Paper, Cement and Fans & electric equipments.

EPS FY07 Rs 86
H1 FY08 Rs.65
PE multiple is just 5 considering EPS of Rs 130 for FY08

In Sep Qtr EPS jumped by 260% yoy with jump of 50% in sales

Stock split recommended 1:10.

Interim Dividend 50%


Expansion plans:
Around 750 crore with expansion in almost all the division.

Ø It plans to expand its cement manufacturing capacity to 5 million tonnes per annum (mtpa) at its plants in Devapur and Jalgaon from 2.4 mtpa by FY 2007-08

Ø It also decided to enhance the capacity of its proposed captive thermal power plant at Devapur from 30 MW to 50 MW. This will reduce power cost from 3.1 Rs to 1.2 Rs per unit

Ø It is also moving into compact fluorescent lighting (CFL) products and accessories products with an investment of 40 crore and plans to gain 5% market share in the growing industry.

Carbon credit:

Orient Paper would soon begin trading of carbon credits generated by its cement units - one in Andhra Pradesh and the other in Maharashtra.
The carbon emission reduction project of the cement division has received final approval from the United Nations Framework Convention of Climatic Change (UNFCCC) and the company received the first installment of credits for 96,310 units of certified emission reduction (CER). From 2007-08, the cement division is anticipated to generate 80,000 units of CER till 2011-12.

Paper industry:

India Vs world:
Production 7.5mn tonnes vs 325 mn tonnes.
Per capita consumption 7kg vs 40 kg (in Dev nation like US 300kgs)
These figures indicate tremendous potential for paper producers due to growing domestic demand. Industry in India is growing at 10-12% against 3-4% of global avg.

Cement Industry:
India 2nd largest producer behind China (1/8 th of China)
Growth in any sector invariably translate increased demand for Cement. Orient cement is countries one of most profitable plants due to it location advantage.

Conclusion:

Solid financial performance, robust expansion plans across segments and increased liquidity due to stock split deserves strong buy with post split target of Rs 100+ in next 12 months.
Orient Paper & Industries Limited (OPIL) Orient Paper & Industries Limited (OPIL) Reviewed by Boneless Research on 18.11.07 Rating: 5

1 comment:

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