RAMA PAPER MILLS LTD - Q1 FY 19 Results review

RAMA PAPER MILLS LTD

Q1 FY 19 Results review

HISTORICAL PERSPECTIVE

To manufacture Newsprints Duplex Board and producing Writing and printing paper by recycling waste paper

Established Rama Paper Mills Limited in 1985 at Kiratpur, Distt. Bijnor in Uttar Pradesh.

In 1988, Company acquired installed capacity of 3,300 TPA through its duplex manufacturing unit.

Diversified into writing & printing paper and newsprint by installing a capacity of 8250 TPA

Gradually escalated its overall installed capacity of 3 units upto 44000 TPA. 

in 2007-08, the Company had undertaken massive expansion plan of installing Imported Paper Manufacturing Machine to manufacture value added products with installed capacity of 16320 TPA.

Thus enhancing the overall output to an enormous 61000 TPA.

The site of the unit is easily accessible by roadways as well as railways.

Easier to procure of raw material and inputs but also brings finished products’ markets in proximity.

The company has an independent 33 KVA electricity feeder from UPPCL (Uttar Pradesh Power Corporation Ltd. This feeder is used to export/import power from the grid, depending on the need.

  Sh. Pramod Agarwal (Managing Director)

  Sh. Arun Goel (Executive Director)

The Q1 FY 19 results of the company are hereunder :

RAMA PAPER MILLS	Jun '18	Mar '18	Jun '17	YOY	QOQ
Net Sales	41.02	40.76	25.73	59.42	0.64
Raw Materials	19.21	36.63	13.01	47.66	-47.56
Increase/Decrease in Stocks	-0.66	-1.26	0.74	-189.19	-47.62
Employees Cost	1.8	2.95	1.13	59.29	-38.98
Depreciation	0.8	--	0.78	2.56
Other Expenses	14.17	8.4	13.09	8.25	68.69
P/L Before Other Inc. , Int., Excpt. Items & Tax	5.7	-5.97	-3.03	-288.12	-195.48
Other Income	19.84	0.01	0		198300
P/L Before Int., Excpt. Items & Tax	25.54	-5.96	-3.03	-942.9	-528.52
Interest	0.02	-12.23	1.84	-98.91	-100.16
Net Profit/(Loss)	25.53	6.27	-4.87	-624.23	307.18
Equity Share Capital	7.58	7.58	7.58	0	0
Basic EPS	26.41	6.48	-5.04	-624.01	307.56
Diluted EPS	26.41	6.48	-5.04	-624.01	307.56
MP	28
PE	0.27
VOLUME	7025
FV	10
52 Wk Low/High 8.15 28.80

Net Sales have gone up by 59.42% YoY and by 0.64% QoQ.

Net profits have gone up by 624% YoY and  307% QoQ.

EPS is 26.41 on a Face Value of Rs.10.

The market price is around 28 and on that, the PE Ratio is very LOW.

But, this is the first quarter in which the company has hoisted such impressive results and there is no way of predicting if this sort of excellent results will be repeated or not in future quarters.

In the previous quarter, the sales were similar to this quarter but net profits was considerably lower. One reason is the much higher other income in the current quarter which, at Rs.19.84 cr, is unlikely to recur in future quarters.

The last 2 quarters, the company has clocked better sales than earlier but the better profits have come due to other reasons like these:-

Last quarter was aided by a negative interest expense of over Rs.12 crores. 

This quarter is aided by huge other income. 

If these are removed, the results are still better than earlier quarters but not very impressive.

I understand that, on the basis of this result, Rama Paper mills is “Buyers only” in the market, for quite some time.

Investors must understand the results clearly and in detail before taking their investment decisions. 

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