Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
BILT Vs TN Newsprint: The better investment? - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Dec 22, 2011

    BILT Vs TN Newsprint: The better investment?

    In our earlier articles we reviewed the business models of Ballarpur Industries and Tamil Nadu Newsprint as well as compared these paper companies based on their financial strengths. In this last article of the series, we will continue with our financial analysis. A final look at the current valuation parameters will help us in decide which paper company is a better stock investment.

    Return ratios for players in the paper sector are not that attractive. On an average a paper company earns a return of 9-10% on equity (ROE) and return on capital employed (ROCE). For BILT, in the past decade ROE and ROCE have been close to 12.5% and 11% respectively. TNPL on the other hand has generated better return in the form of ROE equaling 15% and ROCE of 13%.

    (Since data for the year 2002 is not available for BILT, we have considered return ratios for the last 9 years instead of last 10 years (a decade) for both the companies.)

    Source: Company data

    BILT is currently trading at consolidated trailing twelve month (TTM) Price to Earnings ratio (PE) of 6 times and TNPL is trading at TTM PE of 6.7 times. This implies that TNPL and BILT have more or less similar valuations at present.

    We observed that even though BILT has had its share of extraordinary growth periods, TNPL has been more or less consistent with its growth. At current price too, TNPL seems to be more fairly valued than BILT. In fact, TNPL has grown quite in line with the GDP of the country. With GDP growth expected to rise in the future, it will be quite challenging for paper companies to match up to the same. Paper stocks are considered to be defensive stocks and demand for paper in all forms will always be there. But, how much would the demand grow with a growing economy remains to be seen.

    BILT Vs TN Newsprint - Previous article | Next article



    Equitymaster requests your view! Post a comment on "BILT Vs TN Newsprint: The better investment?". Click here!


    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms