Stock of JK Paper was 4% up on Tuesday morning and made high of 436. It closed near 415.20 after the profit-booking by traders. This intraday rally in stock was a response to the news that came on Monday evening about J K Paper’s acquisition of HPPL and SPPL. Here is the full story.
On Monday, in the filing with SEBI, J K Paper said that it is acquiring Mumbai based Horizon Packs Pvt Ltd and Uttarakhand based Securipax Packaging Pvt Ltd. 85% acquisition will take place immediately and remaining 15% will take place over 3 years duration. J K Paper has entered in separate Share Purchase and Shareholder’s Agreements with both the companies. Accordingly it informed that the purchase consideration of for acquisition of 85% equity shares of HPPL will be Rs 19.33 per equity share of 10 Rs each and for acquisition of 85% equity shares of SPPL it will be Rs. 1256.95 per equity share of 100 Rs. each. J K Paper will acquire 26.92 Crore share of HPPL and 4.63 Lac shares of SPPL under the considerations mentioned above.
E-Commerce based-delivery businesses brought golden days to Paper Industry. Corrugated Brown Boxes are widely used by many E-Commerce players for delivery of products to their customers. JK Paper already manufactures and supplies corrugated packaging papers to various industries. It’s upcoming Ludhiana facility will also focus more on manufacturing of packaging papers. With acquisition of HPPL and SPPL, J K Paper will now become the largest Corrugated Packaging Manufacturer in India. Horizon Packs Pvt Ltd has six manufacturing plants across India while Sucuripax Packaging has facility in Roorkee where Corrugated Packaging or Brown Boxes papers are manufactured. J.K Paper is spending Rs 578 Crores for these acquisitions to become leader in this segment.
I have already done detailed Fundamental Analysis of J K Paper on this stock and recommended it for long term when it was consolidating between 130-160 range few years ago (Iin the year 2019). You can read it here. Now stock it above 400+ levels. It has already given 180% returns from its 52 week low. Hence, I feel that fresh entry in this stocks should be avoided. Stock is over-valued and need to be cooled down considering the dream run it has given. If you already have it, you can hold it by keeping your Stop Loss at 398.
Disclaimer: Please note Stocksbaazigar Mr Deepak Doddamani is not a SEBI Registered Advisor. He is NSE’s Certified Investment Analysis Professional and NSE’s Certified Marketing Professional Level – 4, Authorized Person at IIFL Securities, AMFI registered Mutual Funds Distributor having 10+ years of experience in the market. Please consult your Financial Advisor before taking any Investment decisions. This post is an Educational post and Stocksbaazigar is not responsible for your Gains/Losses. Thank You.
