On the BSE, shares of Seshasayee Paper and Boards have increased by 7 percent, Andhra Paper by 6.2 percent, Tamil Nadu Newsprint & Papers by 4.62 percent, and Satia Industries by 4.62 percent since June 30.
Paper sector stocks have risen in response to a ban on some Single-Use Plastic (SUP) goods that went into effect on Friday.
Among others, Star Paper Mills increased by 4.14 percent, Emami Paper Mills increased by 3.92 percent, West Coast Paper Mills increased by 3.83 percent, Orient Paper & Industries increased by 3.10 percent, JK Paper increased by 2.93 percent, and Astron Paper & Board Mill increased by 2.93 percent (2.64 per cent).
Earbuds, plastic sticks for balloons, flags, candy sticks, ice-cream sticks, polystyrene (thermocol), plates, cups, glasses, forks, spoons, knives, straws, trays, wrapping or packaging films around sweets boxes, invitation cards, cigarette packets, plastic or PVC banners less than 100 microns, and stirrers are among the SUP items identified.
“While technically, paper firms should profit from this prohibition,” said Deepak Jasani, Head of Retail Research at HDFC Securities. “However, most paper companies do not produce any of these things and may not wish to enter into these in the short future.”
With the ban on plastic straws taking effect on Friday, leading FMCG and agro-food firms have eliminated integrated plastic straws from tiny tetra packs of fruit juices and dairy products, in favour of paper-based straws and other alternative sustainable options.
Leading firms such as Parle Agro, Dabur, Amul, and Mother Dairy have substituted alternative sustainable options for integrated plastic straws in tetra packs.
“Finally, the ban on single-use plastic… is taking effect. Although the impact on listed paper stocks is minimal, it is worth noting that prominent paper makers are witnessing strong demand “According to S. Ranganathan, Head of Research at LKP Securities.
According to a research by Kotak Institutional Equities, India’s ban on specified single-use plastic goods beginning in July 2022 is a positive start.
“The existing restriction will have little effect on the financials of publicly traded companies. However, extending this prohibition to additional SUP goods such as sachets/pouches/wrappers/laminated tubes in the medium term might have an impact on the quantities or profitability of several consumer good categories “it was added
According to the paper, the present restriction applies to goods with limited use and a significant littering risk. Because they are not commonly employed by big consumer enterprises, their influence will be restricted for the time being