TNPL - T N Newsprint

📊 NSE: TNPL 🏢 Paper 📅 Last Updated: 12/14/2025 14:05

💰 Financial Performance

Revenue Growth by Segment

Total Operating Income (TOI) declined 9.4% YoY in FY24 to INR 4,692.8 Cr from INR 5,179.9 Cr in FY23. H1 FY25 revenue further declined 8.4% YoY to INR 2,033.4 Cr. The Print and Writing Paper (PWP) segment accounts for ~74% of revenue, while the packaging board segment contributes ~26%.

Geographic Revenue Split

Domestic sales account for ~80% of total revenue, with ~20% of PWP sales specifically directed to the Government of Tamil Nadu (GoTN) for textbooks. Exports contribute the remaining ~20% of sales.

Profitability Margins

Net profit (PAT) margins declined from 7.5% (INR 387.9 Cr) in FY23 to 4.4% (INR 208.2 Cr) in FY24, and further dropped to 1.2% (INR 24.5 Cr) in H1 FY25. The company reported a net loss in Q1 FY26 due to a 16.5% reduction in sales realizations and high raw material costs.

EBITDA Margin

Operating Profit Margin (OPBDIT/OI) moderated from 18.8% in FY23 to 16.1% in FY24 and 13.5% in H1 FY25. This 530-bps compression over 18 months was driven by low-priced ASEAN imports and a sharp rise in pulpwood prices.

Capital Expenditure

Planned capex of INR 600-650 Cr over FY25 and FY26. This includes setting up a tissue paper plant and revamping steam/power systems. Funding is structured at an 80:20 debt-to-equity ratio, with INR 240 Cr specifically identified as new debt.

Credit Rating & Borrowing

Long-term rating maintained at ICRA A+ (Stable) and CARE A+ (Stable). Borrowing costs are competitive due to financial flexibility as a state-promoted entity; however, interest coverage ratio (ICR) declined from 5.4x in FY23 to 2.06x in FY25.

⚙️ Operational Drivers

Raw Materials

Principal fiber sources include Bagasse (sugar cane residue), Wood Pulp, and De-inked Pulp. Raw material costs increased significantly in FY24/FY25 due to a shortage of domestic pulpwood plantations.

Import Sources

Sourced domestically from Tamil Nadu through a farm forestry scheme covering 282,321 acres. Bagasse is sourced via long-term tie-ups with sugar mills in Tamil Nadu. Hardwood and pulp are also impacted by global pricing and ASEAN import dynamics.

Key Suppliers

Primary suppliers include various sugar mills in Tamil Nadu for bagasse and local marginalized farmers for pulpwood under the captive plantation scheme.

Capacity Expansion

Current PWP capacity is 4.40 lakh MTPA and Paperboard capacity is 2.00 lakh MTPA. Planned expansion includes a new tissue paper machine to diversify the product mix by FY26.

Raw Material Costs

Raw material costs as a percentage of revenue rose in FY24/FY25. Pulpwood prices saw a sharp rise due to inadequate plantations in previous years. Procurement strategy focuses on backward integration and farm forestry to mitigate price volatility.

Manufacturing Efficiency

PWP mill utilization was high at ~97% in FY25. The company can produce up to 4.8 lakh TPA from existing facilities without major additional capex by optimizing machine speeds.

Logistics & Distribution

Distribution is managed through a network of non-exclusive dealers accounting for 45% of PWP sales, while 35% is handled through direct sales to government and private corporations.

📈 Strategic Growth

Expected Growth Rate

Growth Strategy

Growth will be driven by the commissioning of the new tissue paper plant, focusing on high-margin products like copier paper, and leveraging the Government's Minimum Import Price (MIP) on virgin multi-layer paper board to regain market share from imports.

Products & Services

Newsprint, Printing and Writing Paper (PWP), Copier Paper, Folding Box Board (FBB), Solid Bleached Sulphate (SBS) board, and High-grade Cement (from waste by-products).

Brand Portfolio

TNPL (Tamil Nadu Newsprint and Papers Limited).

New Products/Services

Tissue paper production is the primary new launch, expected to contribute to revenue post-FY26 following the INR 600 Cr investment.

Market Expansion

Targeting the high-growth packaging segment (FMCG, Pharma, E-commerce) which benefits from the shift away from plastic and low per-capita paper consumption in India.

Market Share & Ranking

TNPL is one of the largest integrated paper players in India and operates the largest single-location paper plant in the country.

Strategic Alliances

Promoted by the Government of Tamil Nadu (35.32% stake) and originally IDBI; maintains strong banking relationships for debt refinancing.

🌍 External Factors

Industry Trends

The industry is shifting toward packaging and specialty papers (tissue) as digitization impacts traditional PWP. Domestic demand remains favorable due to low per-capita usage compared to global averages.

Competitive Landscape

Faces intense competition from large domestic players and low-cost imports from ASEAN countries which benefit from lower raw material costs.

Competitive Moat

Moat is built on 'Cost Leadership' through bagasse-based manufacturing (cheaper than wood pulp) and 'Backward Integration' via captive power and plantations. Sustainability is high due to the 35% government ownership providing financial flexibility.

Macro Economic Sensitivity

Highly sensitive to domestic GDP growth and education sector spending. Demand for packaging is linked to FMCG and e-commerce growth rates.

Consumer Behavior

Increasing consumer preference for eco-friendly packaging in food and cosmetics is driving demand for TNPL's high-grade boards (FBB/SBS).

Geopolitical Risks

Trade dynamics with ASEAN countries are critical; the influx of low-priced imports from China and Indonesia has historically forced TNPL to cut prices by over 6%.

⚖️ Regulatory & Governance

Industry Regulations

Beneficiary of the Government of India's Minimum Import Price (MIP) on virgin multi-layer paper board, which restricts low-cost competition. Subject to strict environmental norms for chemical pulping.

Environmental Compliance

High compliance focus; uses lime sludge and fly ash to produce cement, effectively managing industrial waste. ESG policy includes a farm forestry scheme for marginalized farmers.

Taxation Policy Impact

Standard corporate tax rates apply; profitability decline has reduced the absolute tax outflow in FY25.

⚠️ Risk Analysis

Key Uncertainties

Volatility in global pulp prices and the sustainability of the Minimum Import Price (MIP) protection are the primary uncertainties impacting margins by an estimated 2-3%.