Kay Power and Paper Limited

Basic Materials — Paper & Paper Products · BSE

₹11.19+₹0.46 (+4.29%)

DalalBaazaar Score

40 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of Kay Power and Paper Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Kay Power and Paper Limited manufactures and sells MG kraft paper in India. It also generates electricity with a capacity of 6 M.W.; and sells firewood.

IndustryPaper & Paper Products

SectorBasic Materials

Employees45

Annual revenue₹24 Cr

How does it make money?

Turns over ₹24 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation. Each of its 45 employees supports ₹54.2 lakh of revenue a year, the signature of a people-led business.

EBITDA margin11.8%

Net margin4.1%

Revenue / employee₹54.2 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, ULTRATECH CEMENT LIMITED, ASIAN PAINTS LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA STEEL LIMITEDP/E 19.8x · ROE 10.8%

JSW STEEL LIMITEDP/E 12.0x · ROE 24.7%

ULTRATECH CEMENT LIMITEDP/E 37.6x · ROE 11.1%

ASIAN PAINTS LIMITEDP/E 46.9x · ROE 22.3%

What is its competitive advantage?Little sign of one

Returns on capital of 1.3% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE1.3%

ROE1.3%

Peer median ROE22.3%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved -44% while net margin moved +28% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-44%

Margin effect+28%

DalalBaazaar Score

40/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 17.5% a year
✗ Profit has declined at 10.5% a year

Quality vs. Valuation

Company Quality

37/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

52/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

33.9x

3Y Median

10.6x

40 monthly readings · mean 15.4x · range 5.4x–34.4x

Sector Median

28.7x

median of 4 sector peers

⚠️Current valuation is approximately 219% above its 3y median of 10.6x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 18% above the peer median of 28.7x.

vs. its own history

Expensive

10.6x median over 40 months · +219%

vs. sector peers

Fair

28.7x median of 4 peers · +18%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

33.9x

P/B

0.50x

EV/EBITDA

13.5x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 4.9% to 11.8% over 3 years.
Debt is being paid down
Total debt is down 99% over 3 years.
Very low debt
Debt/Equity of 0.22x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention5

Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 71.7% to 1.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 4.4% to 1.3% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 141% against revenue growth of -44% — customers are taking longer to pay.
Valuation above its historical average
At 33.9x the stock trades 219% above its own median of 10.6x.

Red Flags

4 items require attention · 1 high · 3 watch

🔴Receivables growing faster than salesFinancial
Receivables up 141% against revenue up -44% — sales are being booked faster than they are collected.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹28 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 28% over 3 years.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 228% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 4.9% to 11.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 99% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 141% against revenue up -44%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
The price already assumes success
The stock trades 219% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 71.7% to 1.3%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 10%✓ 11.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹28 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 0.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 8%✗ 1.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Valuation vs its own median of 10.6x✗ 33.9x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

6 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✗ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 3 neutral · 4 weak

Market Cap

₹39 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

33.9x

Fair

Fairly valued against the generic band

P/B Ratio

0.50x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.33

Profitable

Profitable on a per-share basis

ROE

1.3%

Weak

Weak capital efficiency

ROCE

1.3%

Weak

Low return on total capital employed

Debt/Equity

0.22x

Low

Conservative leverage

Revenue Growth (YoY)

-17.2%

Shrinking

Sales are contracting

Profit Growth (YoY)

300.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹28 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹11.19

Operating Margin

1.4%

Weak

Thin margins leave little room for error

Net Margin

4.9%

Average

Average bottom-line conversion

Current Ratio

6.43

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.89

Market-like

Moves roughly in line with the market

52W Range Position

43%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

10.1 / 9.8

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

72.3

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹43 Cr	₹36 Cr	₹40 Cr	₹24 Cr	-17.5%
EBITDA	₹2 Cr	-₹0 Cr	-₹1 Cr	₹3 Cr	+10.4%
EBITDA Margin	4.9%	-0.0%	-3.1%	11.8%	—
PAT (Net Profit)	₹1 Cr	₹2 Cr	₹1 Cr	₹1 Cr	-10.5%
EPS	₹1.32	₹1.41	—	—	—
ROE	71.7%	43.4%	2.3%	1.3%	—
ROCE	4.4%	-0.7%	-1.7%	1.3%	—
Total Debt	₹27 Cr	₹27 Cr	₹1 Cr	₹0 Cr	-81.4%
Free Cash Flow	-₹11 Cr	₹3 Cr	-₹19 Cr	-₹28 Cr	—

🔴 Revenue has shrunk at 17.5% a year over 3 years.

🟢 EBITDA has grown at 10.4% a year over 3 years.

🟢 EBITDA Margin has risen from 4.9% to 11.8% over 3 years (+6.9 pts).

🔴 PAT (Net Profit) has shrunk at 10.5% a year over 3 years.

🔴 ROE has fallen from 71.7% to 1.3% over 3 years (-70.4 pts).

🔴 ROCE has fallen from 4.4% to 1.3% over 3 years (-3.2 pts).

🟢 Total Debt has shrunk at 81.4% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹83 Cr

Total Liabilities

₹3 Cr

Total Debt

₹0 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹23 Cr

Capex

-₹5 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

65.8%

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
ULTRATECH CEMENT LIMITED	37.6x	11.1%
ASIAN PAINTS LIMITED	46.9x	22.3%

Recent News

1 positive1 mixed1 negative3 general

Kay Power and Paper incorporates wholly owned subsidiary Kay Pulp

scanx.trade, 16 Jul

Top 15 Low-Price Stocks In India To Buy In October 2026

Samco, 17 Oct

Kay Power & Paper posts ₹13.42 crore Q1FY27 profit, revenue falls 17%

scanx.trade, 12 AugResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Lenskart Solutions consolidated net profit rises 269.24% in the June 2026 quarter

Business Standard, 12 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Kay Power & Paper closes trading window for Q2FY27 results declaration

scanx.trade, 26 SeptResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Kay Jay Forgings files draft papers with Sebi for Rs 360-cr IPO

The Economic Times, 01 Apr

Watch Items

Revenue growth is negative (-17.2%) on the latest reported period — check if this is one-off or a trend.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

🔴Business QualityWeak5.9/20

🟢Financial HealthStrong15/20

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak4.6/15

🟡ValuationFair7.5/15

🟡RiskModerate4.8/10

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 10%11.8%
✗Free cash flow remains positive-₹28 Cr
✓Debt / EBITDA stays below 2x0.1x
✗ROCE stays above 8%1.3%
✗Valuation vs its own median of 10.6x33.9x today