TNPL Revenue Growth at 22%, Despite Lower Volumes

TNPL – the Tamil Nadu based paper production company has reported 22.10% increase in its revenue along with an profit growth of 18.56% of YoY. The higher revenue growth is not because of volume growth but due to higher revenue from its energy division. Its energy segment got 30% more revenue compared to Q2FY16. Paper production for the quarter decreased by 1.35%. In Q2FY17, total paper production for the company stood at 1,00,730 Mts(In Q2FY16 – 1,02,116 Mts).
TNPL is into paper production along with energy and cement. But major source of revenue has been paper – contributing nearly 82.77% of the total revenue. TNPL has been maintaining “Zero Stock” policy, which has been a major driver in its operating performance. The company is also largest exporter of printing and writing paper.
Operating margin has remained flat at 17%, though the power and fuel cost has reduced but it has been offset by raw material cost, which has increased over time.

However TNPL’s finance costs has significantly increased by 61% YoY, on the contrary the growth in its borrowings (Non-current + current) is at 1.2%. The borrowings for the period ending September 30 2016 is at Rs 2324 Crs.
TNPL in its press release has stated its maintaining its stance of slowly ramping up its production along with its sales.
TNPL stock is currently trading at a trailing P/E of 8.66 at a price of Rs 353.85