Paper Sector Thesis: Backward Integration and Indonesian Pulp Supply
Formed an independent contrarian call on paper stocks by connecting a regulatory change to domestic supply chain advantages
Parth Mandavgane
Institutional Equity Research Associate at IDBI Capital Markets & Securities Ltd.
From their time as
Institutional Equity Research Associate
IDBI Capital Markets & Securities Ltd. • 2025
Overview
Parth's paper sector thesis started with a simple observation: paper stocks had been depressed for a couple of years, and the valuations of players like JK Paper and West Coast Paper looked disconnected from their underlying supply chain positioning.
The Story
Parth's paper sector thesis started with a simple observation: paper stocks had been depressed for a couple of years, and the valuations of players like JK Paper and West Coast Paper looked disconnected from their underlying supply chain positioning.
The catalyst came from a Bloomberg report on Indonesia banning the felling of trees, a regulatory move that would restrict the export of paper pulp from one of India's primary import sources. Indian paper companies are heavily dependent on Indonesian pulp, and Parth recognized that backward-integrated domestic players, those who produce their own pulp, would be structurally insulated from the supply shock while competitors faced margin pressure.
To pressure-test the thesis, he spoke directly with promoters of Indian paper companies. They confirmed the directional logic without disclosing material non-public information. That validation gave him the conviction to act.
He initiated coverage on JK Paper and West Coast Paper and took a personal position in the sector. The thesis played out: JK Paper posted strong quarterly results, and the stock rallied approximately 10 to 15 percent in the month following.