Geojit Financial Services has maintained ‘Buy’ rating on Tamil Nadu Newsprint & Papers Limited stock to achieve a short-term target of Rs 140.

According to Geojit, investors can purchase the stock between Rs 92-95 with a strict stop loss of Rs 85.

Today (June 3), the company’s shares opened at Rs 96.45, as against its last closure at Rs 98.45 on Monday (June 2), on the Bombay Stock Exchange (BSE). The total volume of shares traded at the BSE was 1559248. Current EPS and P/E stood at 15.66 and 6.30 respectively. The share price has seen a 52-week high of Rs 147 and a low of Rs 83 on BSE.

The outlook for the stock is really very strong, and it is expected to rise on the back of huge volumes.

TNPL has registered creditable performance for the year ended March 31, 2008. The company has completed Rs 5.65 billion mill development

plan (MDP). The benefits of MDP in form of increased pulp capacity to 720 tpd (500 tpd), rise in paper manufacturing capacity from 230,000

mtpa to 245,000 mtpa and increase in power generation capacity to 81.12 MW (61.12 MW) will start accruing from May 2008.

The closing of pulp mill growth also backs up TNPL in its next major phase of expansion, establishing 3rd paper machine at cost of Rs 7.65

billion. This would add another 155,000 tons of production capacity taking its total capacity to 400,000 tons, making TNPL one of the largest

players in printing and writing paper segment in the country. The additional capacity will be available from June 2010.

To further de-risk the company’s exposure to volatile wood pulp rates, TNPL has raised its pulpwood plantation in 29,962 acres under farm

forestry and captive plantation schemes including 10,616 acres added during current year.

TNPL is already self-reliant for entire power needs including additional power requirements for anticipated growth for the next few years.

Moreover, it is also setting up a mini cement plant with a capacity of 400 tpd at capex of Rs 400-450 million for producing high grade cement

using the lime sludge and fly ash generated in the process of manufacture of paper.

Other stocks from the same sector that looks good for short-term and long-term trading includes Ballarpur Ind, JK Paper and AP Paper Mills.