Paper stocks abuzz again on D-Street. Here's why

New Delhi: Shares of paper companies were in strong demand on Monday after the Ministry of Finance issued a notification to continue anti-dumping duty on uncoated paper. India imports uncoated paper imported from countries like Indonesia, Thailand, Korea and Singapore.

Shares of Orient Paper & Industries zoomed 9 per cent to Rs 30.05, whereas Shree Rama Newsprint advanced 7 per cent to Rs 20.30 on Monday. JK paper jumped 4 per cent to Rs 249.75.

Santosh Meena, Head of Research, Swastika Investmart, said it is a positive trigger for many paper companies but it was largely expected. "We can see some profit booking after the initial reaction."

Konndor Industries, Ganga Papers India, Star Paper Mills, Pudumjee Paper Products, Ballarpur Industries and Emami Paper Mills added up to 5 per cent each.

Indian paper companies operating across the uncoated paper segment had filed an application before Directorate General of Trade Remedies (DGTR) for the initiation of the investigation, and anti dumping duty was announced back in 2018 for 3 years.

Recently, paper stocks have been in demand as unlock theme rolls out. India is looking to reopen schools, colleges, offices and other institutions gradually.

"The decision to ban single use plastic has made industries rethink their positions and, in this case, paper is the next best alternative," said Likhita Chepa, Senior Research Analyst at CapitalVia Global Research. "Paper has proved to be an effective material for packaging and other purposes."

Also, the central government has notified the ban on single use plastic from next year. A sharp decline in raw material prices has added to the euphoria over the stocks.

Analysts are positive that the domestic paper industry remains favorable, driven by increasing literacy levels, growth in print media, higher government spending on education sector, changing urban lifestyles as well as economic growth.

JK Paper is Meena's top pick from the sector. Chepa of Capitalvia expects JK paper and Star Paper to deliver double-digit gains in the next one year.