Paper stocks that could gain from Maharashtra’s plastic ban

The plastic ban in Maharashtra is likely to boost prospects of some paper companies as industriesNSE -0.22 % which use plastic move to alternatives.

The state-wide ban which came into effect on Saturday has had everyone from large companies to restaurateurs to shopkeepers in a fix, and paper bags, bubble wraps, jute bags and tin foils are coming up as alternatives. These businesses risk a fall in sales unless they make the transition. Analysts said paper is fast emerging as a key alternative
and that’s a boon for paper manufacturers.

“This is an opportunity for paper and paperboard units in Maharashtra, also other adjoining states would meet the demand. Production capacity may increase and that will positively affect the industry,” said Ajay Srivastava, associate VP-research at Stewart & Mackertich Wealth Management. ET takes a look at companies that are likely to benefit from the move.

Stewart & Mackertich said in a recent note that market leadership in branded copier paper, focus on value-added products, improving profitability, implementation of GST, and robust outlook for the Indian paper industry bodes well for the company. Edelweiss, which has a ‘buy’ rating on JK Paper expects the performance of the company to remain strong over the next 2-3 years due to favourable pricing environment in the global market and sharp rupee depreciation in the past few months rawmaterial cost is expected to remain well under control. Technical analysts said buying support may come in for the stock near Rs 102.

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