Tamil Nadu Newsprint & Papers Limited — Credit Ratings, 06-01-2025: Credit Rating

**Consolidated Financial Results:**

Total operating income (TOI) for FY24 declined by approximately 9% to ₹4,720 crore compared to ₹5,199 crore in FY23. This drop can be attributed to subdued demand and increased raw material prices, particularly for wood, reflecting broader industry challenges. Notably, the earnings before interest, taxes, depreciation, and amortization (EBITDA) margin fell from 18.79% in FY23 to 16.47% in FY24, influenced by decreased paper selling prices and higher operational costs.

Net profit for FY24 stood at ₹208.16 crore, a reduction of approximately 46% year-over-year from ₹387.87 crore. The earnings per share (EPS) for FY24 was ₹29.93, down from ₹56.00 in FY23. This decline indicates significant pressure on profitability, driven by a volatile market environment and rising operational costs.

Operational costs have seen a noticeable increase, attributable to higher raw material prices and ongoing capital investments. The company's overall gearing ratio improved to 1.13x from 1.32x in FY23, though the capital structure remains moderately leveraged.

**Strategic Position and Outlook:**

TNPL maintains a robust operational foundation, underpinned by strong sourcing capabilities and a well-established distribution network. The projected capital expenditure of ₹600 crore over the next few years aims to enhance production capacity and operational efficiency. Market sentiment is cautiously optimistic, anticipating a rebound in demand and price stabilization, especially with plans for a new tissue paper machine.

**Investor Insight:**

Given the recent performance and strategic initiatives aimed at growth and efficiency, a hold position may be prudent as the company navigates through current challenges while positioning itself for potential recovery. Future performance improvements will depend on demand recovery and successful cost management strategies.