After a subdued performance through the latter half of 2024 and the first half of 2025, stocks of pulp and paper companies are showing early signs of recovery. The turnaround is largely the result of a low base effect — with many counters trading at depressed valuations — coupled with government support and a favourable commodity cycle. Optimism around improved pricing power has also triggered fresh investor interest in the sector.
A key driver of the revival has been the government’s decision to impose curbs on cheaper imports effective until March 31, 2026. Industry players, who had been under pressure from rising imports, have welcomed the move, saying it provides breathing space to recalibrate strategies.
Shares of leading paper manufacturers such as JK Paper, ITC, West Coast Paper Mills, Star Paper Mills, ITC, Emami Paper Mills, and Seshasayee Paper & Boards have gained traction in recent weeks.
ended Monday at ₹396.95 ( down 0.92 per cent from its previous close) but yielded a 6-month return of 27.8 per cent. Star Paper Mills closed the day at ₹176, with a 0.11 per cent gain while its 6-month return of 5.25 per cent. traded at ₹267 (0.34 per cent) but fell around 6 per cent in the last six-month period. The dark horse is , which was at ₹103.50 (up 0.29 per cent) and is nearing its 52-week high of ₹131. The stock gave a 6-month return of 7.97 per cent.
At a turning point
Industry experts say the paper sector is at an inflection point. Despite lingering headwinds such as raw material volatility, import pressures, and the structural challenge of digitisation, the outlook for FY26 is encouraging. Stabilising pulp prices, supportive policies, and surging demand for sustainable packaging are expected to power a rebound.
India’s packaging sector — the fifth-largest contributor to the economy — has emerged as a key growth engine. At its core is the paper industry, which consists of over 900 units with a combined installed capacity of nearly 5 million tonnes. Of these, 526 mills are currently operational, supplying paper products to packaging, FMCG, education, and printing sectors.
Opportunities and Risks
The structural story for paper remains positive. Rising environmental awareness, a ban on single-use plastics, and rapid e-commerce growth have propelled packaging and paperboard into the fastest-growing category. This segment contributed 55 pre cent of the industry’s revenues in FY24, expanding by more than 8 per cent.
Government initiatives such as Make in India and Atmanirbhar Bharat are also boosting domestic manufacturing. Companies aligning with ESG goals through recycled paper production are finding favour among institutional and sustainable investors.
That said, risks persist. Fluctuations in wood pulp and wastepaper prices can erode profitability. Environmental regulations, particularly around emissions and resource usage, are becoming more stringent and pushing up compliance costs. Meanwhile, the industry continues to face stiff competition from global players and digital alternatives.
Growth Outlook
According to Crisil, the overall paper market is projected to grow 6-8 per cent annually by FY26. The paperboard segment is expected to expand by 7-9 per cent, led by demand from FMCG, apparel, e-commerce, and pharmaceuticals. The wood-free printing and writing paper segment is forecast to rise 2-3 per cent, reflecting hybrid usage in a digitalising environment. Specialty papers, including tissues, tea bags, and labels, are projected to grow 11-13 per cent, though from a smaller base.
India’s per capita consumption of paper — at 16 kg — is far below the global average. In contrast, per capita usage stands at 320 kg in the US and 75 kg in China. Analysts estimate that even a one-kilogram increase in India could generate an additional one million tonnes of demand, underscoring the sector’s growth potential. Segment-wise, packaging and paperboard account for 47 per cent of consumption, followed by printing and writing paper at 31 per cent, and newsprint at 18 per cent.
Transition to sustainability
The industry is also shifting towards a circular economy model. By 2047, higher recycling rates, adoption of alternative fibres such as agricultural residues, and stricter sustainability standards are expected to reshape the sector. Several companies are already investing in technologies to reduce water and energy consumption, cut emissions, and improve overall efficiency.
Currently, capacity utilisation hovers around 80 per cent, constrained by outdated technology in smaller mills. Analysts expect further consolidation, with a handful of stronger players set to dominate the industry by the end of the decade — a trajectory similar to the cement sector.
Investor sentiment
Market experts remain cautiously optimistic about paper stocks. “Government intervention on imports has given domestic players much-needed breathing space,” said Arpit Jain, Joint Managing Director, Arihant Capital Markets. “The industry is likely to consolidate further, with stronger players gaining market share.”
Jain pointed to JK Paper and International Paper Company as standout performers, noting their robust balance sheets and operational efficiency. Analysts also expect operating margins for the industry to improve by up to 200 basis points in FY26, aided by easing pulp prices and strong packaging demand.
While digitisation and raw material volatility remain structural challenges, the broader outlook is upbeat. As India transitions to a consumption-driven economy, the paper industry is positioned to benefit not only from sustainable packaging but also from its critical role in education and e-commerce. Experts agree that the sector’s future success will depend on balancing profitability with environmental responsibility — a shift that is already underway.