IDBI Capital: Orient Paper Q2 Results Review - Another Disappointing Quarter
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IDBI Capital Report
Orient Paper (OPIL) reported another disappointing quarterly performance led by subdued demand for writing and printing paper and further softening of prices. The management took a prudent call to cut down production owing to lower demand in Q2 FY20, which resulted in lower sales volume.
The company reported net sales of Rs898 million, down by 43.4% YoY. Negative operating leverage weighed on Ebitda at negative Rs158 million, while net loss stood at Rs147 million. Our interaction with the management suggests that production has picked up from October, 2020 in anticipation of demand revival for writing paper.
The company’s newly launched copier paper witnessed good traction and the management expects it to do better as demand improves. We have cut our net sales/PAT estimates for FY21E/FY22E and introduce FY23E financials in this report.
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