By Malvika Gurung
Investing.com -- Over the past few sessions, stocks of paper manufacturers are buzzing in trade, surging up to 24% in the past five sessions. The stock rally is led by a rise in prices and higher demand.
With offices, schools and organizations reopening, the demand for paper has spiked, exceeding the pre-pandemic levels, resulting in a shortage.
Moreover, the prices of top paper companies like JK Paper (NS:JKPA), West Coast Paper Mills (NS:WSTC) and Andhra Paper (NS:ANDA) have rallied over 20% in the past few sessions.
Earlier, due to digitization and the pandemic, the demand for paper had fallen, resulting in quite low collections of waste paper, which is a key raw material for producing recycled paper. Besides, in October 2021, the European Union had banned the export of waste paper.
As a result, the prices of waste paper have shot up, due to which paper manufacturing companies have risen the prices, with the wholesale printing and writing paper prices surging to Rs 75-80/kg in under a year.
Also, according to Centrum Broking, for the first time in 4 decades, the prices of recycled paper exceeded the mills’ paper prices. This is because recycled papers are made up of waste paper, the prices of which have risen.
Analysts expect paper companies to deliver strong earnings growth over the next few quarters, led by increased demand and prices, and also due to the easing restrictions of the Covid-19 pandemic, noted LKP Securities (BO:LKPS).