Shreyans Industries Ltd (SIL) is engaged in the manufacturing of writing and printing
paper. It has two plants i.e. Shreyans Papers and Shree Rishabh Papers, both located
in Punjab. The company’s products include high brightness paper, cream wove,
coloured paper, duplicating paper, surface sized printing paper, azure laid paper,
maplitho paper, stamp paper, inland letter paper, postal envelope paper, super
printing paper, etc. SIL offers its products in various grades ranging from 44 grams
per square meter (GSM) to 200 GSM. SIL’s combined capacity for the manufacturing
of writing and printing paper is ~85,000MT pa.

Outlook and Valuation: We forecast SIL to report healthy top-line CAGR of ~9% to
`545cr over FY17-20E on the back of healthy demand growth in printing. On the
bottom-line front (reported PAT), we estimate ~14% CAGR owing to strong
improvement in operating performance. Further, improvement in manufacturing
efficiency and benefits from increasing global finished paper prices (ban in China)
would aid margins. We initiate coverage on SIL with a Buy recommendation and
target price of `247 (10x FY2020E EPS), indicating an upside of ~20% from the
current levels.

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