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International Paper APPM being a MNC company is well placed to
take advantage of the growth in paper industry. On numbers front, it
reported pretty damn good results with EBITDA soared 61 %
during Q4 FY 19 driven by higher sales volume, record produc-
tion levels, lower cost of raw material and improved operational
efficiencies. Besides, sharp fall in interest charges added to the
company’s profitability, registering 83 % PAT growth in Q4.
In addition, Debt has been significantly dwindled from ` 180 crores
to `12.54 crores in FY 19 and is expect to be brought down further
moving forward. Despite its plant running at 95 % capacity utili-
zation, it has not yet announced any significant capacity expan-
sion plans for subsequent years. Moreover, China’s ban on im-
ports of low grade recovered paper are expected to keep global
pulp prices elevated, resultant increase in global paper prices
which has improved its realizations, thereby supporting its
high margin ahead.
By investing in fiber-based markets, controlling costs, manag-
ing capital spending and focusing on deliberate improvement
efforts to increase productivity and efficiency, expects company
generating strong set of numbers, and free cash flow in years to
come.
LEAD RATIONALE
BUY | CMP 428| TARGET 520 | POTENTIAL UPSIDE 21%
01 JULY 2019
POSITIONAL CALL
RUDRA SHARES &
STOCK BROKERS LTD
INTERNATIONAL PAPER LTD
Index Detail
Sensex 39686.50
Nifty 11865.60
Index S&P BSE Small
Cap
M.Cap (` in cr) 1702
Equity ( ` in cr) 39.77
52 wk H/L ` 591.15/308
Face Value ` 10.00
NSE Code IPAPPM
BSE Code 502330
Stock Data
P/E 8.36
EV/EBITDA 4.25
P/BV 2.23
RONW(%) 27%
Valuation Data
Better operational efficiencies, cost rationalization & better productivity - could help to
report better production growth going forward
During the year, the company recorded the highest ever sales volume which grew by 3.4% to
238,729 MT, as compared to 230,894 MT in 2017-18. Of the revenues, 16% were from exports
(previous year 19%) with domestic sales accounting for the balance 84%. IP APPM also recorded
highest ever production of 238,724 MT of paper in the year ended March 2019 as against 228,900
MT in 2017-18.

2. www.rudrashares.com 2
Company has continued to take up initiatives and this has led to improved operational effi-
ciencies, productivity, reduction in operational costs, and sizeable increase in savings,
thereby substantially improving the bottom-line. IPAPPM has reported better numbers with
productivity, higher volumes of premium quality paper products like copier and surface sized pa-
per, and increased sales realizations.
Its continued and consistent efforts in implementing and executing the programme helped in im-
proving pulp productivity and overall paper machine efficiency (OME). The Company also made
significant gains in fiber, energy and chemical costs. As in the earlier years, deliberate and con-
tinuous efforts were made to become a low cost producer, raising the operating efficiencies and
optimizing material consumption. Overall, the Manufacturing Excellence initiatives helped im-
prove the mill reliability, increase the productivity, reduce the overall cost and improve profitabil-
ity. While focusing on improving the reliability, initiatives in production planning and scheduling
helped secure continuous runs and lower down time, this helped improving On Time In Full
(OTIF) performance above 92%
POSITIONAL CALL
RUDRA SHARES &
STOCK BROKERS LTD
INTERNATIONAL PAPER LTD
International Paper to Sell Stake in IPAPPM to West Coast Paper Mills
International Paper Co., the world’s biggest producer of pulp and paper, is selling a ma-
jority stake in its Indian unit– International Paper APPM Ltd, to West Coast Paper Mills
for at least `557 crore (USD 80 million), bidding adieu to the country eight years after
becoming the only top-league paper company ever to enter India.
International Paper has entered into an agreement with West Coast Paper Mills Limited to sell its
controlling interest in International Paper APPM Ltd., an India-based paper business. International
Paper currently owns approximately 30 million shares, or 75 % of the outstanding shares, of Inter-
national Paper APPM Ltd. The transaction is expected to be completed by the end of the year
subject to satisfaction of customary closing conditions. Pursuant to Indian securities law re-
quirements, WCPM will launch a tender offer to acquire up to all of the APPM shares owned by
public shareholders, which represents 25 %of APPM’s outstanding shares.
The closing of IP’s transaction with WCPM will occur following the completion of the tender of-
fer and receipt of antitrust clearance. Depending on the results of that tender offer, WCPM will ac-
quire from IP between 51 % and 60 % of the outstanding APPM shares at a price per share of `
275. Once this transaction closes, WCPM will be responsible for the operations of APPM,
and International Paper will be a passive investor until such time that IP has sold its remain-
ing shares in APPM.

3. www.rudrashares.com 3
Particulars Q4 FY 19 Q4 FY 18 Variation %
Revenue 375.38 339.73 10.49
EBITDA 111.86 69.65 60.60
PBT 92.76 46.95 97.57
PAT 59.90 32.73 83.01
EPS 15.06 8.23 82.99
Key Financials (` in crores)
EV 1647.64
Net Worth 763.81
BV 192.06
EPS(TTM) 51.20
Key Financial Data
` In crores except EPS
POSITIONAL CALL
RUDRA SHARES &
STOCK BROKERS LTD
INTERNATIONAL PAPER LTD
Government of India sounded for Digital India and Paperless India program to increased efficiency
and productivity. Each and every business process is captured on the portal, and then electronic
workflow takes over. These initiatives could hit paper demand in India. With digitization and
e-commerce, the demand for paper is poised to grow further.
In the recent past, state governments have taken a series of measures to ban plastic and ensured
strict compliance in plastic industry. This move has helped gain traction for paper packaging in-
dustry, though not fully scaled up yet, and would increase its demand in the coming years. Also, a
robust demand in food industry, mono cartons in the pharma sector, and multiple orders online is
expected to drive substantial demand for paper packaging.
Secondly, China has banned import of certain waste grade of paper owing to environmental con-
cerns resulting in decrease of waste paper prices. India which imports around 40 % of waste paper
stands to benefit out of the same. As already India has scarcity of Pulp wood, the raw material
used for manufacturing paper, and in the coming years owing to environmental concerns this scar-
city is expected to shoot up further, giving pricing power to this industry
Also, the “Going digital” slogan was expected to be major slowdown in the paper sector. But, nev-
ertheless, it should be known that paper packaging would be a boon for this industry.
Government’s focus on digital and paperless initiatives

4. www.rudrashares.com 4
Company spends more than 25% of its total cost on procurement of fi-
ber viz. casuarina, subabul, mixed hard wood, eucalyptus etc. Keeping
in view the criticality of this factor, the Company has been expanding
farm forestry program to secure fiber supply The paper industry is be-
coming intensely competitive with the expansion of capacities by the
existing players and lower import duties. To mitigate this risk, the Com-
pany is leveraging on its expertise and experience by enhancing its
brand equity/visibility and product portfolio.
Paper industry has a positive correlation to economic development and
lower GDP growth could affect business fortunes of the players in the
industry. The demand for paper in India depends upon government
spending on literacy and general economic activity in the country. The
paper industry market is extremely volatile, and is susceptible to risks
that arise from changes in demand, price, competition, customers, sup-
pliers and raw materials.
POSITIONAL CALL
RUDRA SHARES &
STOCK BROKERS LTD
INTERNATIONAL PAPER LTD
KEY CONCERN
Valuation and Outlook:
Company recorded a significant improvement in business performance through strong operational
performance, better revenue management and generating better cash flow & continued to execute
initiatives for reducing the cost of production, improve the customer satisfaction, continued focus
on safety environment and productivity. These initiatives will also create long-term value for
the stakeholders and help position the company as a leading supplier of premium grade
products in the domestic market.
IPAPPM is financially robust, with ample cash on hand and short-term investments to meet up-
coming liabilities. This implies that IPAPPM manages its cash and cost levels well, which is a cru-
cial insight into the health of the company. Further, company has maintained a healthy capital
structure as is evident from its debt to equity ratio. Improved business, optimization of operating
costs and lower finance costs resulted in improved net margins and consequently improved return
on net worth.
Moreover, The Chinese government’s move to ban waste paper amidst environment concerns is
expected to benefit the Indian paper manufacturers, indirectly benefitting the company & further
expected to improve margins on account of falling waste paper prices

5. www.rudrashares.com 5
There is a long term support at the levels of `384 and short term resistance at level of
`439; If it will cross this resistance, then may reach to next resistance of `452 in medium
term and thereafter reach `542.25
POSITIONAL CALL
RUDRA SHARES &
STOCK BROKERS LTD
INTERNATIONAL PAPER LTD
TECHNICAL CHART

6. www.rudrashares.com 6
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and information that are considered true, correct and reliable. The information is obtained from publicly
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pose and does not constitute an offer document or solicitation to buy or sell or subscribe for securities or
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Indirect financial interest in the subject company. NO
Rudra or its research analysts, or his/her relative or associate has any other
material conflict of interest at time of publication of the research report. NO
Rudra or its research analysts, or his/her relative or associates have actual
ownership of one per cent or more securities of the subject company. NO
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Rudra or its associates have received any compensation from the subject
company in the past twelve months. NO
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securities for the subject in the past twelve months. NO
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from the subject company or third party in connection with the
research report . NO
POSITIONAL CALL
RUDRA SHARES &
STOCK BROKERS LTD
INTERNATIONAL PAPER LTD

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Other Disclosures:
The research analyst has served as an officer,director,employee of the
subject company. NO
Rudra or its research analyst has been engaged in market making activity
for the subject company. NO
Rudra or its or associates have received any compensation from the
subject company in the past twelve months. NO
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rities or derivatives thereof, of Company mentioned herein or (b) be engaged in any other transaction involving such
securities and earn brokerage or profits.
POSITIONAL CALL
RUDRA SHARES &
STOCK BROKERS LTD
INTERNATIONAL PAPER LTD