ANDHRAPAP - Andhra Paper

📊 NSE: ANDHRAPAP 🏢 Paper 📅 Last Updated: 12/13/2025 18:18

💰 Financial Performance

Revenue Growth by Segment

Revenue from operations for FY 2024-25 was INR 1,541.24 Cr, representing a decline of 14.4% compared to INR 1,801 Cr in FY 2023-24. For the 9-month period ending December 2024 (9MFY25), revenue was INR 1,134 Cr, a 21% decrease from INR 1,436 Cr in 9MFY24, primarily due to softening realizations and a surge in cheaper imports.

Geographic Revenue Split

The domestic market remains the primary revenue driver, while the export share was approximately 4% in FY 2024-25, a significant decline from the 8% export share reported in previous periods.

Profitability Margins

Profitability saw a sharp decline in FY 2024-25; Operating EBITDA margin fell to 8.73% from 23.94% in FY 2023-24 (a 64% decrease), and Net Profit Margin dropped to 5.77% from 18.87% (a 69% decrease). For 9MFY25, the PAT margin was 7% compared to 20% in 9MFY24.

EBITDA Margin

EBITDA margin for FY 2024-25 was 8.73%, down from 23.94% YoY. Core profitability was impacted by a 28-day operational strike, a 22-day annual outage, and rising raw material costs which squeezed margins despite the company's resilience.

Capital Expenditure

The company has declared a planned capital expenditure of approximately INR 520 Cr for upgrading current equipment to enhance operational efficiency, streamline processes, and increase productivity.

Credit Rating & Borrowing

ICRA assigned a long-term rating of [ICRA]AA (Stable) and a short-term rating of [ICRA]A1+ in December 2025. CARE Ratings previously reaffirmed CARE AA (Stable) but the company voluntarily withdrew the CARE rating in November 2025. The interest coverage ratio moderated significantly to 7.74x in FY25 from 118.61x in FY24.

⚙️ Operational Drivers

Raw Materials

Key raw materials include virgin pulp and wood. Cost of materials consumed for 9MFY25 was INR 706 Cr, representing approximately 62.2% of total revenue.

Import Sources

The company sources wood through a farm forestry program covering 0.3 million hectares. It also faces competition from cheaper imports of finished paper from international markets, which impacts domestic pricing.

Key Suppliers

Not specifically named, but the company relies on a network of farmers for its 0.3 million hectare farm forestry coverage and benefits from synergies with its parent company, West Coast Paper Mills Limited.

Capacity Expansion

Current installed capacity is 2,55,550 TPA for paper and 2,00,000 TPA for virgin pulp. A planned INR 520 Cr investment is focused on upgrading existing equipment rather than greenfield capacity expansion.

Raw Material Costs

Raw material costs are a significant driver, with the cost of material consumed reaching INR 706 Cr in 9MFY25. Fluctuating wood and chemical costs, combined with softening paper realizations, led to a 64% decline in operating EBITDA margins.

Manufacturing Efficiency

The company achieved total sales of 2,26,288 metric tonnes in FY 2024-25 despite 50 days of combined strike and maintenance outages, demonstrating a capacity utilization of approximately 88.5%.

Logistics & Distribution

The company distributes products across India through an extensive dealer network, focusing on value-added products with higher Net Sales Realizations (NSR).

📈 Strategic Growth

Expected Growth Rate

8.00%

Growth Strategy

Growth will be achieved through an INR 520 Cr equipment upgrade to improve productivity and a strategic shift toward high-margin, value-added niche products such as cup stock, pharma print, and Hi BF Virgin Kraft. The company aims to leverage the plastic ban which aids the cup stock segment.

Products & Services

Writing paper, Printing paper, Industrial paper, Copier paper, Cup stock, Pharma print, and Hi BF Virgin Kraft.

Brand Portfolio

Andhra Paper Limited (Corporate Brand).

New Products/Services

Focusing on niche segments like cup stock (benefiting from plastic bans) and specialty pharma print, which command higher realizations and face lower threat from generic imports.

Market Expansion

The company is focusing on increasing the proportion of value-added products in its mix to diversify end-user segments and mitigate the impact of industry cyclicality.

Market Share & Ranking

One of the largest integrated paper and pulp manufacturers in India and the only paper mill using virgin pulp in Andhra Pradesh.

Strategic Alliances

Andhra Paper benefits from being part of the West Coast Paper Mills Limited (WCPM) group, which provides operational synergies and centralized treasury functioning.

🌍 External Factors

Industry Trends

The Indian paper industry is forecast to grow at a CAGR of 8.0% through 2033. Trends include a shift toward sustainable packaging (cup stock) due to plastic bans, though digitization remains a long-term threat to traditional paper segments.

Competitive Landscape

The landscape is characterized by intense competition from cheaper imports and domestic players. APL competes by focusing on virgin pulp-based high-quality niche products.

Competitive Moat

The moat is built on fully integrated operations (pulp to paper), in-house captive power, and a 0.3 million hectare farm forestry program. These provide cost leadership and high entry barriers in a fragmented industry.

Macro Economic Sensitivity

Highly sensitive to the performance of the Indian economy and global paper industry cycles. GDP growth and digitization trends directly impact demand for printing and writing paper.

Consumer Behavior

Shifts toward e-commerce and sustainable packaging are increasing demand for industrial and specialty papers, while digitization is reducing demand for traditional printing paper.

Geopolitical Risks

Global economic conditions and trade policies regarding paper imports (especially from low-cost producers) pose significant risks to domestic realizations.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to environmental standards regarding emissions and water usage. The company proactively manages regulatory compliance to avoid operational restrictions.

Environmental Compliance

The company is ISO 14001:2015 certified and invests in sustainable technologies to align with increasing regulations on emissions and water use.

Taxation Policy Impact

The effective tax rate for 9MFY25 was approximately 27% (INR 30 Cr tax on INR 111 Cr PBT).

Legal Contingencies

The company faced a 28-day labor strike in FY25 which disrupted operations. It maintains policies to comply with labor laws and prevent sexual harassment to mitigate legal risks.

⚠️ Risk Analysis

Key Uncertainties

Key risks include fluctuating raw material costs, foreign exchange volatility, and the threat of cheaper imports which could impact margins by over 60% as seen in the FY25 results.