Shree Ajit Pulp and Paper Ltd(538795):

*Achche Din due to E-commerce boom*

Gujarat based SAPPL is engaged in production of Multi Layer Test Liners and M G Kraft paper with installed capacity of 90,000 tonnes. SAPPL has been doing well and stock looks undervalued at PERatio of 5.50xFY16Eeps of Rs 22(co has already achieved Eps of Rs 17.30 for 9 months:

            

            9m/FY16. FY15

Sales     166.       189

Dep.      3.86.       5.11

Interest  3.03.      4.48

PBT.       13.61.    9.88

PAT.        9.26.      7.12

Equity.                   5.35

BV.                         141

EpsRs.   17.30   13.30

SAPPL uses waste paper to produce Kraft paper which is mainly used by packaging industry including corrugated box mfrs. 

SAPPL has been doing extremely well in current year as *NP of 9 months is higher than NP of entire FY15*

*Stock is trading at 5.50xFY16Eeps and .85 Book Value*

MAIN TRIGGER/BRIGHT FUTURE: Due to unprecedented E-commerce boom, demand for corrugated boxes has zoomed which in turn had led to surge in demand of Kraft Paper. As a result,  *price of Kraft paper have risen 20% in last 2-3 months*

Recently Mr Dey, President of EICBMA had stated that " Recent hike of 20-25% in Kraft paper is unjustified due to shortage as production cost of Kraft paper have not gone up"

Co like SAPPL will be main beneficiary of sharp rise in Kraft paper prices.

*SAPPL can report Eps of 28 for FY17*

Stock is highly undervalued considering:

1) Trading@ 5.50xFY16Eeps

2)Quoting @.85Book Value

3) Book Value should further rise to Rs 160 as on 31st March2016

4) *Stock is tdg @4.30xFY17Eeps*

By all parameters, Shree Ajit Pulp is highly undervalued. If stock gets modest PERatio of just 8, it's share price should cross Rs 200 in next 6-9 months