Review

In this edition, we have reviewed JK Paper Limited and Bajaj Finance. We suggest our reader-investors to HOLD in JK Paper Limited and Bajaj Finance.


We had previously recommended JK Paper Limited in Volume 35, Issue No. 07, dated March 2 – 15, 2020, under the ‘Low Scrip’ segment. The stock was then trading at Rs121.05 and was recommended based on the company’s market leadership position and large distribution network. JK Paper Limited, a pulp and paper company, engages in the manufacture and sale of branded papers, fine papers, and packaging boards in India and internationally. The company provides various office documentation papers, including photocopy and multi-purpose papers for use in fax machines, photocopiers and multifunctional devices.

On a consolidated quarterly front, net sales declined by 34.19 per cent to Rs469.24 crore in Q1FY21 from Rs713.06 crore in the corresponding period for the previous fiscal year. Operating income fell by 64.97 per cent to Rs89.79 crore in Q1FY21 from Rs256.35 crore in Q1FY20. The company’s net profit came down to Rs2.66 crore in Q1FY21 from Rs123.45 crore in Q1FY20.

Looking at the annual trends, net sales fell to Rs3,060.19 crore in FY20 from Rs3,256.71 crore in FY19, a decline of 6.03 per cent. Operating profit was reported at Rs975.17 crore in FY20, up by 6.21 per cent from Rs918.12 crore in FY19. Net profit increased by 10.23 per cent to Rs468.41 crore in FY20 from Rs424.94 crore in FY19. The pandemic crisis and ensuing lockdown have had long-term impact on sales volumes led by the closure of plants and muted demand. JK Paper is however better placed than other organised players owing to its better product mix and backward integrated operations and as a result, should continue to outperform industry growth rate as things start to revive. The company’s copier and maplitho paper segments are likely to show stronger performance once the education and service sectors recommence normal operations. Our recommendation is to HOLD the scrip.



We had previously recommended Bajaj Finance in Volume 35, Issue No. 02, dated December 23, 2019 – January 5, 2020. The stock was recommended as part of our cover story. The stock was then trading at Rs4,135.20 and was recommended based on the company’s strong financial performance and expected AUM growth. Bajaj Finance is engaged in lending across retail, SME, and commercial customers and accepts public and corporate deposits.

On the consolidated quarterly front, the company reported total income of Rs6,649.74 crore in Q1FY21, up by 14.5 per cent from Rs5,807.76 crore in Q1FY20. AUM growth moderated to 7 per cent YoY due to lockdown. It stood at Rs138,055 crore in Q1FY21. Net profit declined by 19.49 per cent to Rs962.32 crore in Q1FY21 from Rs1,195.25 crore in Q1FY20. Looking at the annual trends, total income increased significantly by 42.62 per cent to Rs26,385.63 crore in FY20 from Rs18,500.18 crore in FY19. The company reported AUM of Rs147,153 crore in FY20, increasing by 26.98 per cent from Rs115,888 crore in FY19 Net profit increased by 31.76 per cent to Rs5,263.75 crore in FY20, up by 31.76 per cent to Rs3,994.99 crore in FY19.

While the near-term outlook may seem lacklustre at times due to the overarching impact of the ongoing pandemic, the company’s long-term prospects appear to remain reasonably intact owing to its strong liquidity position, healthy CRAR, cost control measures, strong geographical presence, growing AUM and well-established parentage. Our recommendation is to HOLD the scrip.
(Closing price as of August 21, 2020)