Paper stock surges 5% after announcing 167% net profit growth in Q3

Synopsis: The shares of South India Paper Mills Ltd jumped by  5.4 percent, gaining investors’ attention after the company reported a revenue of Rs 101 crore in Q3 FY26, and the company made consistent profits for the 2nd consecutive quarter.

The shares of this company, which is engaged in the manufacturing of paper (kraft liner, fluting grades), paperboards, cartons, and power generation, are in focus after strong quarterly earnings growth.

With a market capitalization of Rs 178 crore, South India Paper Mills Limited’s shares on Friday made a day high of Rs 97.80 per share, up by 5.46 percent from its previous day’s close price of Rs 92.74  per share. The share is trading at an overvalued P/E of 45.4x, almost thrice the average industry P/E.

QoQ 

The revenue from operations declined by 9.8 percent to Rs 101 crore in Q3 FY26, corresponding to the last quarter in the same financial year. EBDIT declined by 0.77 percent to Rs 12.2 crore in Q3 FY26 from Rs 12.9 crore in Q2 FY26. Accompanied by a net profit decline of 15.6 percent to Rs 2.37 crore in Q3 FY26, resulting in an EPS decline of 16 percent to Rs 1.26 per share.

YoY 

The revenue from operations grew by 21 percent to Rs 101 crore in Q3 FY26, corresponding to the same quarter in the last financial year. EBDIT grew by 189 percent to Rs 12.2 crore in Q3 FY26 from Rs 4.22 crore in Q3 FY25. Accompanied by Net profit growth of 167 percent to Rs 2.37 crore in Q3 FY26(includes exceptional item of 0.23 crore), resulting in an EPS growth of 171 percent to Rs 1.26 per share.

As per operating segment reporting, the Company operates in a single business segment, with all activities confined to the manufacture and sale of paper and paper products.

Incorporated in 1959, The South India Paper Mills Ltd is a Karnataka-based company, established in 1959, that produces kraft paper, linerboard, and packaging materials like cartons, focusing on recycled paper processes with an integrated power plant, serving the container board industry with quality products for packaging solutions.

The Promoters of the company have reduced their stake to 30.85 percent over the quarter, with DII and the government holding a 0.40 percent stake as of September 2025. Making the public the largest shareholder with a 68.76 percent stake in the company. 

The company has an ROCE of 1.40% and a negative ROE of 5.19, representing why the company’s financial performance was up YoY but fell QoQ. A risky point about the company is that it has debt of Rs 172 crore, resulting in a debt to equity of 0.8x, almost equal to its market capitalisation.

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