Stock Review: Orient Paper & Industries

Orient Paper & Industries has a presence across different segments such as cement, paper and electrical consumer durables. However, the cement segment is its key division. The company's major markets for cement include Andhra Pradesh and Maharashtra. Cement prices in the south have been declining since March as producers in the region are grappling with substantial cement capacity coming on stream when demand is falling. In its electrical consumer durables unit, the company has benefited from a broad revival in demand especially from the residential sector. Its loss-making paper division has been a drag on the company's profitability. However, the company's performance in the quarter ended December has indicated a turnaround in this division. Its paper division has posted profits after eight quarters and its cement realisations have also improved. The stock is trading at 7.8 times its earnings on a trailing 12 month basis. It has been falling steadily since November last year. Given its low valuations, investors can look at buying the stock ahead of a full recovery in its cement and paper businesses.