Paper Industry

Material cost:- Decline in material cost lead to increase in margin

West coast paper having the highest ROE and ROCE in industry
Some key highlights are:-

ROE - DUPONT EQUATION ROE was driving from Net profit

Mar-20 Mar-21 Mar-22 Mar-23
NET PROFIT ? 406.49 ? -4.38 ? 345.87 ? 1,087.01 Margins and we have to see that
REVENUE
NET PROFIT MARGIN (A)
? 2,492.85
16.31%
? 2,244.53
-0.20%
? 3,377.67
10.24%
? 4,920.76
22.09%
how management was going to
deal with it.
REVENUE ? 2,492.85 ? 2,244.53 ? 3,377.67 ? 4,920.76
AVERAGE TOTAL ASSETS ? 2,552.00 ? 3,126.59 ? 3,163.82 ? 3,715.63
ASSET TURNOVER RATIO (B) 0.98 0.72 1.07 1.32 ROCE was also driving from Net
AVERAGE TOTAL ASSETS ? 2,552.00 ? 3,126.59 ? 3,163.82 ? 3,715.63
Profit Margins.
AVERAGE SHAREHOLDERS EQUITY ? 1,245.83 ? 1,387.17 ? 1,534.76 ? 2,130.70
EQUITY MULTIPLIER (C) 2.05 2.25 2.06 1.74 Because these margins was driving
RETURN ON EQUITY (A*B*C) 32.63% -0.32% 22.54% 51.02% from decline in material cost and
ROIIC Profiling it was not sustainable.
Cumulative Net Income 2,354.2 Company have the opportunity to
Incremental Capital Deployed 2,733.96 grow at the rate of 46.17% and
Reinvestment Rate 116.13%
their ROIIC was 39.76%
ROIIC 39.76%
Intrinsic Compounding Rate 46.17%
ROCE - DUPONT EQUATION
Mar-20 Mar-21 Mar-22 Mar-23
NOPAT ₹ 430.07 ₹ 5.34 ₹ 349.70 ₹ 1,071.89
REVENUE ₹ 2,492.85 ₹ 2,244.53 ₹ 3,377.67 ₹ 4,920.76
NOPAT MARGIN (A) 17.25% 0.24% 10.35% 21.78%

REVENUE ₹ 2,492.85 ₹ 2,244.53 ₹ 3,377.67 ₹ 4,920.76

AVERAGE CAPITAL EMPLOYED ₹ 1,692.88 ₹ 1,945.77 ₹ 1,845.76 ₹ 1,792.91
CAPITAL TURNOVER RATIO (B) 1.47 1.15 1.83 2.74

RETURN ON EQUITY (A*B*C) 25.40% 0.27% 18.95% 59.79%