Hidden gem "Rama pulp & papers limited” (BSE code: 502587) at 11/- target of 19/- & 35/-

Hidden gem " Rama pulp & papers limited” (BSE code: 502587) AT 11/- target of 19/- & 35/-


CMP : 11/-

Target : 19/- to 35/- in Short term and Medium terms;

Equity : 11 Cr

Reserves : 23.43 Cr (Per share Rs. 22/-).

Promoters Holding : 19.31% ;

Body Corporate : 35%;

Public Only 43%

Face Value : 10/-

EPS : 2.35/- for 2011-12 and 2012-13 Expecting 4/- as per the Order Book.

Book Value: 34/-

Every Year Dividend Paying company.

Dividend History :
2011 --- 5%; 2010 --- 5%; 2009 --- 5%; 2008 --- 5%; 2007 --- 10%

Dividend Yielding per Year 4.55%.

RAMA PULP & PAPERS LIMITED Having Good Land Bank and Valuable Assets.

RAMA PULP & PAPERS LIMITED Stock Will go 19/- to 35/- range in Short term and Medium Term., Like SE Investment (Call Given at 175/- Now including Bonus and Stock split 1250/-) and Bihar Tubes Ltd (Call Given at 57/- Now 165/-).

For 2011-12 Year Net Income of 70.9 Cr and Net Profit was 2.528 Cr EPS 2.35/-.

For 2012-13 Full Year Estimating Net Income of 97 Cr and Net Profit of 4 Cr As per this EPS was 4/- above. Stock Trading at 11/- PE just 3 Industry PE is 11. As per this Stock will zoom to 35/- levels in 6 Months to 1 Year Time.

Given its low debt-equity ratio of 0.35:1, a dividend yield of 4.47% and a healthy ROE of 32% , the stock`s valuations appear to be quite attractive.

Rama Pulp & Papers Limited (RPPL) is a certified ISO 9001-2000 Company, engaged in manufacturing various types of papers mainly cultural and specialty grades.

Rama Pulp preservation of environment is an objective. The products are manufactured from 100% recycled indigenous and imported waste paper, thereby preserving the environment. Company has given extra focus on its effluent treatment and is successful to keep clean environment and almost zero discharge mill.

RPPL has firmly positioned itself among prominent paper manufacturing groups based in India. Rama Pulp and paper is a midsized player in the Indian paper industry. The company currently operates with a capacity of 21,000 tpa with the capability to manufacture various paper varieties like writing-printing and carbon base paper, poster and wrapping paper, napken grade tissue paper etc. RPPL is expanding its capacity to 30,000 MT's. p.a. The company has a strong distribution network that enables it to market its products in various regions. Today RPPL has grown from strength to strength with its diversified product mix and strategic marketing plan.

With further expansion programs on hand, RPPL is now looking ahead to meet the emerging challenges both in domestic as well as overseas market. Keeping in view to take the company to the next level, company is planning to acquire an existing Industrial Chemical Unit to produce various industrial grades of chemicals, especially Sulfonated products like Sulfur Dioxide, Sulfur Trioxide etc. This new venture will give the company a new lease of life. As the paper industry requires lot of steam and power, the high pressure steam being vented out of the manufacturing process of these chemicals can be used for running the steam based power plant and then the extracted steam will be used for manufacturing of paper. Hence, the paper mill will self sufficient for its requirement of energy like steam and power. The will make the company very high on its bottom line. RPPL has a strong product mix that would enable it to cater to the demands of various customer segments.

The new value added products introduced by the company are well accepted by the dealers as well as the end users, which ultimately gave a forward thrust to the company to emerge as a key player in this segment. The Carbon base paper being manufactured by the company has a market share of more than 50%, which places the company among the top players in this segment. The company is exporting its products to a very reputed chain of departmental stores like WALLMART and its specialty grade paper is very well accepted globally. The demand of paper as a whole is in a growing spree. The demand of paper is directly linked to the literacy of a particular country and in India, with implementation of educational policy, the literacy rate is growing and paper consumption is also in upward. Therefore, a steady growth in the demand of paper, especially writing printing, newsprint etc., is expected.

RPPL is expected to register robust growth in revenues and earnings going forward. It is currently quoting at compelling valuations of 3x FY12E earnings. Capacity expansion and growing demand for paper from various segments like education, industrial and specialty, in addition to its inorganic growth in Sulfonated chemicals will drive revenue and earnings growth for RPPL. The stock has potential to deliver handsome returns to the investors over a period of next one year. Investors can enter into the stock at current level considering the huge growth potential, which would enable investors to earn a healthy return on their investment.

Strength of the Company 

Company is strategically located in the Industrial Area at Vapi, Gujarat with modern infrastructure & facilities. 

Flexibility of manufacturing Industrial and Tailor made paper in 16 Gsm. to 180 Gsm range. 

Industrial grade products qualities at par with global standards with Substantial market share. 

Capacity to produce value added and specialty grade papers. 

Excellent distribution network. 

Dedicated and competent technical /marketing team. 

Rama Pulp has got an elaborate R&D set-up, focusing on the individual needs of our customers and providing them with specific solutions to their particular needs. We attempt to understand the processes of our customers, as well as their end usages and to supply them with specialized qualities which best fulfill their needs.

The company does seem undervalued significantly based on even conservative measures.

Market Cap: 12 Crores.

Reserves : 23.43 Cr means per share 22/- Now trading at 11/- Almost 50% discount.

Sales: 70 Crores.

Profits: 2.528 Crores.

Last 3 year average profits: 4 Crores.

P/E: 3.xx.

Avarage PE for this Industry is 11/-.

As per this stock Valuation is up to 35/-.

RAMA PULP & PAPERS LIMITED having Lot Expansion Plans in Fututre. It's a Multibagger stock. Just buy and hold 1 year will get 5 times Return like NATCO Pharma (Call given in 2009 at 40/- levels Now 450/-) and SE Investments Ltd (This Stock I have Recommended at 175/- levels after that reached 1200/- levels including Bonus and Split).

Positive Points for this stock for Up moving:

1) Company is in Paper Business; company Circle people and Operators are accumulating at current price. Because Company Stock Good Value at 11/- Good Profit making company and Book Value at 34/- and Good dividend paying company.

2) Equity is very small at 11 Cr

3) Company Having Good reserves at 23.487 Cr means per share 22/- Stock Trading at 11/- So 50% discount with reserves.

4) Good Profit Making Company for 20011-12 EPS 2.528/- Annualized and Expecting EPS for full year 2012-13 is above 4/-because Good Order Book.

5) Company having Good Book Value 34- and Good Land Bank and Good Assets.

6) Good Dividend Paying company every year 5% to 10%, So Dividend yielding is 4.56%.
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