Paper Stocks Cool After Monday’s 17% Rally; Government’s Minimum Import Price Seen as Long-Term Positive
- 26th August 2025
- 01:00:00 PM
- 3 min read
Summary
Paper stocks slipped on Tuesday after Monday’s 17% rally sparked by the government’s minimum import price of ₹67,220/MT on paperboard. TNPL and JK Paper fell over 4%, West Coast 3%, and Orient 4%. ITC saw modest gains but is projected as the biggest long-term beneficiary.
Mumbai | August 26 – Paper stocks witnessed profit-taking in Tuesday’s session after a strong rally on Monday, triggered by the government’s move to impose a minimum import price (MIP) on virgin multi-layer paper board (VMPB). While mid-cap paper companies recorded double-digit intraday gains yesterday, frontline counter ITC posted modest upside, but analysts expect it to be the largest structural beneficiary of the policy shift.
Monday’s Rally vs Tuesday’s Dip
The Directorate General of Foreign Trade (DGFT), in a notification dated August 22, 2025, fixed an MIP of ₹67,220 per metric tonne (CIF basis) for VMPB under select HS Codes. Imports priced below the threshold will now be classified as “restricted” and require DGFT approval, while stock-lot imports have been prohibited. The regulation remains in force until March 31, 2026.
The decision triggered strong buying on Monday (August 25):
- Tamil Nadu Newsprint & Papers (TNPL) jumped nearly 17% intraday to ₹179.90
- JK Paper surged 15%
- West Coast Paper Mills gained 13.7%
- Orient Paper & Industries advanced 8.2%
- Smaller names like Malu Paper Mills, Andhra Paper, and Emami Paper Mills rose between 8–12%
- ITC, India’s largest paperboard producer, registered only a minor gain, reflecting its large-cap nature but still drawing investor interest on the policy news
On Tuesday (August 26), profit-booking set in across the board:
- TNPL and JK Paper fell over 4% each
- West Coast Paper Mills slipped around 3%
- Orient Paper & Industries declined 4%
- ITC bucked the trend with a marginal upside, reflecting steady buying interest despite broader sector weakness
Despite the correction, most paper stocks remain above last week’s levels, reflecting sustained investor optimism after the MIP announcement.
Also Read: India’s Rupee Push: BRICS Shift from Dollar Gains Speed
Why the Minimum Import Price Matters
Virgin multi-layer paper board is widely used in packaging across FMCG, pharmaceuticals, liquor, cosmetics, publishing, and electronics. Domestic producers have long flagged concerns about low-cost imports from Indonesia and China, which had compressed margins and reduced capacity utilisation.
By imposing a floor price, the DGFT move makes imported supplies less competitive, effectively giving Indian producers more pricing power and demand stability. The Indian Paper Manufacturers Association (IPMA) had earlier sought anti-dumping duties against Indonesian supplies, and this notification is being viewed as a step in that direction.
PL Capital View: ITC to Gain Big
According to PL Capital, the government’s policy will reprice the market for paperboard and drive a margin recovery for leading producers.
“The government has imposed a minimum import price of ₹67,200/MT on paperboard till March 2026. This is in line with our expectations of anti-dumping duty. We expect prices to rise from ₹50,000/MT to ₹60,000–65,000/MT. ITC will gain significantly, given its 700,000 MT+ capacity excluding the recent Century Paper acquisition. Paperboard margins, which had fallen from a peak of 21% at EBIT levels to 7.3% in Q1 FY26, are set for recovery. We estimate a potential ₹10 billion EBIT boost by FY27. We retain ITC as a high conviction pick.”
Outlook: Positive Despite Near-Term Volatility
While Tuesday’s decline highlighted short-term profit-taking, the structural outlook for the industry has strengthened. With demand for sustainable packaging growing and imports turning costlier, Indian paper makers are expected to post better capacity utilisation, stronger earnings, and improved pricing power in the coming quarters.
PL Blog
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
