The Hindu Business Line : Paper sector: Banking on capex plan

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Paper sector: Banking on capex plan

Top players in the domestic paper industry are known to have drafted a huge capex plan, which marketmen say will be spread over the next three or four years. This capex is to mainly finance the sector's rightsizing plans, meet environment standards and co-generate power and set up chemical recovery units. Resultantly, a sizeable increase in EBITDA margins is likely. Some of these companies are expected to start harvesting benefits from 2007-08.

The triggers in future will include superior product mix, higher backward integration and better operational efficiencies. Moreover, the industry will gain from strong demand for paper, which should help improve realisations, analysts indicate. Some brokers are seen to be going `overweight' on the sector.

Ballarpur Industries gained close to three per cent since last week at Rs 103.25 while Seshasayee Paper surged 8 per cent in a week's time.

Nilanjan Dey

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