First of all we apologize for not providing the immediate update post Ruchira Papers’ second quarter results.
We continue to believe in the story after reviewing the recent results. September’14 ending quarter results were one of the best in recent times. The company not only reported the all time high quarterly sales of Rs.92 crores but also had one of the lowest quarterly interest expense of Rs.2.69 crores. Both these figures point to the strength of the fundamentals of our investment thesis, which is – Ruchira is a durable growth and continuing deleveraging story. Promoters know this and that’s why they are quietly buying the stock and increased their holding by 0.60% in the second quarter.
The current stock price may be up about 15% since we recommended this stock but again we don’t believe that this is what we are looking for from Ruchira. Our first target is that the stock should at least close the gap between its current price (Rs.25) and the current book value (Rs.43) in next 12 months, which is about 70% return on top of 4.5% dividend yield.
Below is the copy of the results. Feel free to question our thesis and share the knowledge with others. Also, you are welcome to review our other investment idea – Talbros Auto, which we continue to like and recommend to buy.
superinvestors of india 
I am holding shares of Talbros Auto n Ruchira Papers before ur recommendation but doubled my holding after ur recommendation.
Sir,I want to know the reason for your bullish views on paper sector as lot of other companies like kauntum paper are also deeply undervalued with huge promoter holding.
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Hi Abhishek:
Thank you for sharing your thoughts. We encourage you to review our earlier post on Paper and Pulp industry from 16th October.
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Sir I brought both after your recommendation,
I have RattanIndia power(60%)%) apart from Talbros(20%) and Ruchira(20%)
Will add more when funds available. Thanks for finding fundamentally strong company.
I will hold all 3 for next 3 years.
Planning to add aimico pesticides , whats your view on aimico
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Hi Siva,
Thank you for sharing your views. We will comment on Aimico or any other investment idea if we have formed an opinion, which we haven’t yet.
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Sir Talbros going nowhere….. Instead coming Down? What’s your outlook sir?
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Hi Rakesh:
Out outlook has not changed. There is no change in company’s sound and solid fundamentals. If you are in this stock for less than 24 months then it’s not for you.
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Hi, With regards to Ruchira, I found out that they are operating at 100%+ capacity levels, which is good. However, do you foresee any major capex in the near future and its implications on the returns thereon?
Also, I tried connecting to the management, however, was not successful. Have you talked to them? How did you feel about them? Thanks in advance.
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We have not spoken to Ruchira’s management. Actually we prefer we don’t talk to a company’s management. In their latest annual report, Ruchira has not mentioned any major capex investments but with much lower debt they have enough room for capex investment from current high levels of operating cashflows.
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Hi ,
First of all thanks for educating with nice articles and pointing out the stocks that are worth for investment . I am learning paper sector and I have few questions . Could you please help in clarify the same .
I believe Ruchira (52k MTA) is picked because of Kraft paper usage going forward (15% growth) and its advantage in the location in availability of raw material . Could you please advise the comparison with south India paper mills (58K MTA + 25K MTA in expansion). I learnt it uses waste paper and weak rupee can increase RM cost.However the OPM seems to be better in case of south India paper mills. Logistics access wise does the south India paper has advantages?
Also I have one more paper stock in my mind i.e Shreyans and the RM is Agro based . It is learnt that it is in writing and paper segment . Despite the growth is flat in that segment , doesn’t this company can grow at high single digits as the govt. interest towards education (or) do u think there are several players in this segment and can crush small players in growth ?
Your reply is highly appreciated and I can take some decision based on ur reply. Kindly advise
Thanks
Sridhar
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Hi , Talbros is definitely interesting . But when it is compared with motherson sumi , obviously thats shows huge potential . When I started looking for its peers in auto ancillary players , I end up no where because a too many stocks available in auto ancillary and that too it is categorized like (Engines,Lights,Brakes , Wheels, 2/3-4 wheeler, Lorry etc) .
If you could able to help me on the peers that I can take a look at or some guidance to start off , that would be great help.
Thanks
Sridhar
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you will not find exact peer using Talbros product line especially now it has diversified portfolio. It is better to treat it as any other auto ancillary company due to its underlying business profile and customer profile. Motherson was a pure wiring harness company just 10 years ago and now it is in mirrors, plastics, injection molding etc.
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