Seshasayee Paper and Boards - Fundamentals - DCF - Insights

 Seshasayee Paper and Boards - Fundamentals - DCF - Insights

 

Seshasayee Paper and Boards Ltd is part of SPB-ESVIN Group(Tamil Nadu based), founded in the year 1960 and doing business in the Paper Segment. It is engaged in the business of Manufacturing and sale of Printing and Writing Papers, Paper boards. The company has an integrated pulp, paper and paperboard mill at Erode and another one paper mill at Tirunelveli, Tamil nadu.

SPB-ESVIN Group's other companies are Ponni Sugars, High Energy Batteries, SPB Projects and Consultants, SPB-ESVIN Advanced Technologies. From there, SPB-ESVIN Advanced Technologies is engaged in the fundamental research in Bio-Technology, Membrane Cell Technology and Technology for gassification of Bio-waste or fuel.

High Energy Batteries are doing business in manufacture of Silver Zinc and Nickel Cadmium Batteries, especially for Army, Navy and Airforce in India. Ponni Sugars is a part of this group, engaged with Sugar manufacturing.

SPB Projects and Consultants is a engineering consultancy company offering a comprehensive range of engineering and technical services in the pulp and paper, sugar, industrial power generation and environment management sectors. It is noteworthy that this company had done on successful planning and implementation of TNPL (Tamil Nadu Newsprint and Papers Limited) which is the first bagasse based newsprint in the world.

Seshasayee Paper and Boards has a network of more than 70 plus distributors for distributing it's products across India and 11 International agents globally. The company is also exports it's products to various countries like USA, Sri Lanka, Nepal and to the middle east countries.

As per the recent FY2024, the company is selling around 88 percent in Domestic and 12 percent through Exports. The company have two manufacturing plants - Erode and Tirunelveli. Erode plant has a full capacity utilization and 84 percent in Tirunelveli with an aggregate capacity to produce 2.55 Lakh tonnes per annum(FY24).

Recently, the company acquired Servalakshmi Paper limited under the IBC (Insolvency and Bankruptcy Code) in 2023 and this unit is expected to add a capacity of 75,000 tonnes of paper per annum. The company were also invested around Rs.700 Crore for Mill Development Plan to increase it's Production Capacity in Erode plant.

Here are few and important Fundamental Parameters of this company (as on Oct 2024 with FY24),

  • Market Capitalization:Rs. 2,048 Cr
  • Stock Price: Rs. 325 per Share 
  • Face value: Rs.2 per share (Split from Rs.10 to Rs.2 in the year 2019)
  • Book value: Rs.299 per share
  • Recent P/E: 11.2 Times
  • Recent PEG: 1.75 Times
  • Interest Coverage Ratio(ICR): 69 Times
  • Debt to Equity: 0.04 Times
  • Promoter Holding: 43% (FII: 13% and Govt: 14.27%)
  • 5 Yrs ROE(Return on Equity): 15%
  • 5 Yrs ROCE(Return on Capital Employed): 21%
  • Price to Sales: 1.12 Times
  • 5 Yrs Compounded Sales Growth: 6%
  • 5 Yrs Compounded Profit Growth: 6%


 

Few insights on Balance Sheet and Cash Flow(FY24):

The company has a reserves with an amount of Rs.1,876 Crore in it's Balance Sheet as per Sep, 2024. It has an amount of Rs.82 Crore as Short Term Borrowing and there is no long term borrowings at all. Company has a fixed assets of Rs. 763 Crore and Cash Equivalents were stood at Rs.741 Crore.

The Capital Work in Progress(CWIP) is around Rs.39 Crore and the Inventories were stood at Rs.334 Crore as per the recent Sep Quarter, 2024. The Trade Payables are around Rs.192 Crore and the Receivables were around Rs.89 Crore.

 The Cash flow from operating activities seems positive in the recent past financial years and it has a Free Cash Flow of Rs.630 Crore in the past 3 years(Without Averaging). Seshasayee Paper and Boards were worth between Rs.571 to Rs.714 per share as per the Discounted Cash Flow Valuation at the end of FY2024 Report.

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