Andhra Paper Dividend 2026 — ₹0.50 Final, Record Date 4 Aug, 0.82% Yield

At its board meeting held on 14 May 2026 (2:45 PM to 4:14 PM), the Board of Directors of Andhra Paper Limited recommended a final dividend of ₹0.50 per equity share of ₹2 face value each, fully paid up, representing 25% of face value, for the financial year 2025-26.

The recommendation was disclosed under Regulation 30 of SEBI (LODR) Regulations, 2015. The dividend is subject to the approval of members at the ensuing 62nd Annual General Meeting. If approved, it will be paid within the statutory time limit prescribed under the Companies Act, 2013 (i.e. within 30 days of declaration at the AGM).

In the same set of results, the Board also approved the re-appointment of Mr. Saurabh Bangur as Managing Director for five years from 1 October 2026, subject to shareholder approval.

Sourcing note: Dividend quantum, face value and board timing are taken directly from the company's BSE/NSE intimation dated 14 May 2026. The record date of 04 August 2026 was later confirmed via the 62nd AGM notice / exchange corporate-action data and should be re-verified against the exchange circular before publishing.

Andhra Paper split its shares 1:5 in May 2024 (face value ₹10 → ₹2). Naive year-on-year comparison of the raw rupee dividend would be misleading, so the table below restates every year on a split-adjusted ₹2 face-value basis (per Ind AS 33) for a like-for-like view.

Historical raw dividends compiled from public dividend records (TipRanks / Simply Wall St / exchange data). Adjusted column computed by ShareBazaar Online. Raw figures Not Independently Verified against each year's original filing.

Verdict — Cyclical / Irregular Payer. Adjusted dividend climbed from ₹1.00 (FY21) to a peak of ₹2.50 (FY23), then fell for three straight years: ₹2.00 → ₹1.00 → ₹0.50. This is not a consistent, growing payout. It tracks the paper cycle: the FY23 peak coincided with a super-normal EBITDA margin near 37%, and the FY26 low coincides with margins compressed to ~9%. Investors should treat Andhra Paper as a cyclical dividend, not an income stock.

The core tension: record volumes, collapsing profit. FY26 saw the company's highest-ever paper production (2,59,266 MT) and sales (2,60,438 MT), yet profit fell off a cliff.

Operating-leverage red flag. Revenue rose +10.4% but EBITDA fell -32.4% and PAT fell -79.1%. That is negative operating leverage — the business sold more paper but earned far less on it. The two culprits:

1. Margin compression. EBITDA margin nearly halved from ~14.5% to ~8.9%, driven by high input costs (wood, pulp, chemicals), weak paper pricing and competitive import pressure.
2. A depreciation surge. Depreciation jumped +21.5% to ₹107.31 Cr as the recently completed modernisation assets began to be charged. This is a real, non-cash but recurring drag on reported profit.

The finding most wire services will miss — profit quality. Screener flags that FY26 earnings include other income of about ₹82.4 Cr. Reported profit before tax was only about ₹25.4 Cr. Strip out that other (largely treasury/investment) income and the core paper operations were loss-making at the PBT level — an estimated ₹(57) Cr. In other words, other income was roughly 325% of reported PBT. The headline "profit" is essentially interest and investment income; the actual paper business did not cover its own depreciation and interest this year.

The ₹82.4 Cr other-income figure is a Screener.in flag; the exact split of operating vs non-operating profit is an ShareBazaar Online estimate and is Not Independently Verified against the audited segment/notes.

Reported profit is an accounting opinion; cash is a fact. On the cash statement, operating profit before working-capital changes fell to ₹91.30 Cr in FY26 from ₹141.67 Cr in FY25 — a -35.6% decline, consistent with the EBITDA drop and confirming that the earnings weakness is a real cash-generation weakness, not just a non-cash accounting artefact.

Is the dividend funded by cash the business earned this year? Only partly. The company is in a heavy investment phase: capital work-in-progress ballooned from ₹29.82 Cr to ₹278.96 Cr during the year (roughly a 9x jump) as it builds a new 35,000-TPA tissue & hygiene facility and completes modernisation. When capex of that scale runs against operating cash flow, free cash flow is very likely negative for FY26 — meaning the ₹9.94 Cr dividend is effectively being funded out of the company's accumulated cash reserves, not this year's surplus cash generation.

Exact operating cash flow and free cash flow figures for FY26 are Not Independently Verified from the full audited cash-flow statement at time of writing; the FCF-negative conclusion is inferred from the scale of CWIP additions versus operating cash generation.

Why the dividend is still affordable: the distinction that matters is "affordability" versus "earned this year". Andhra Paper can easily afford ₹9.94 Cr because it holds a large cash and investment balance (the source of that ₹82 Cr other income). But affordability from the balance sheet is not the same as a dividend funded by current free cash flow — and this year it is the former.

We test sustainability on four independent measures. A dividend can pass on the balance sheet yet fail on cash generation — both matter.

Overall verdict — Sustainable (but small by design). The ₹0.50 dividend is comfortably covered by earnings, by operating cash flow and by a huge cash cushion. The single amber flag is free cash flow: with capex running hard, the dividend is not funded by this year's surplus cash. The bigger message is what the 50% cut itself signals — management deliberately kept the payout tiny to protect cash for its capex programme. The dividend is safe precisely because it was set low; it is the earnings recovery, not the dividend, that is the real question.

Peer metrics are indicative and drawn from public sources (Marketsmojo, Whalesbook, Simply Wall St, Screener) as of mid-2026. Blank cells indicate data not verified from a primary source. Dividend yields move with price and must be re-checked at publish time.

Where Andhra Paper stands: it has the lowest dividend yield and by far the highest P/E in the group — but the high P/E is a symptom of a depressed "E" (earnings), not a rich valuation; on price-to-book (0.63x) it is the cheapest. On returns it lags badly: JK Paper earns ~17.8% ROE and Seshasayee >20% ROCE, versus Andhra Paper's ~5–6% ROE. The peer set makes the point cleanly — Andhra Paper is currently a turnaround/asset play, not a dividend or quality-compounder play. (Note: West Coast Paper shares the Bangur promoter lineage and the same chairman, S K Bangur.)

Since the abolition of the Dividend Distribution Tax (from FY21), dividends are taxable in the hands of the investor at their applicable income-tax slab rate. Key rules:

• Dividend is added to "Income from Other Sources" and taxed at your slab rate (5% / 20% / 30% etc.).
• TDS under Section 194: the company deducts 10% TDS only if your total dividend from that company in the year exceeds ₹5,000. Below that threshold, no TDS.
• Form 15G / 15H can be submitted to avoid TDS if your total income is below the taxable limit.
• NRIs face a higher TDS (typically 20% plus surcharge/cess, subject to DTAA relief).

Worked example — retail investor holding 1,000 shares, 30% slab:

Illustrative only, not tax advice. To actually cross the ₹5,000 TDS threshold at ₹0.50/share you would need to hold more than 10,000 shares of Andhra Paper. Consult a tax professional for your situation.

1. Margin / commodity cycle risk. EBITDA margin has swung from ~37% (FY23) to ~9% (FY26). Paper is a cyclical commodity; realisations depend on pulp costs and import competition, both outside the company's control.

2. Labour unrest / production disruption. A lockout at the Kadiyam unit from 01 May 2026 (following an illegal strike by contract workmen) can disrupt output and hit early FY27 results. Operations were only progressively restored (capacity back to ~93% by late July 2026).

3. Profit-quality / other-income dependence. With core operations at a PBT loss ex-other-income this year, reported profit leans heavily on treasury income — a soft foundation for the payout if investment yields or cash balances fall.

4. Heavy capex execution risk. CWIP jumped ~9x to ₹278.96 Cr. The new tissue/hygiene line (35,000 TPA, targeted Q2 FY27) must deliver the promised higher-margin returns; delays or cost overruns would keep ROE depressed.

5. Rising depreciation drag. Depreciation rose 21.5% and will stay elevated as new assets are capitalised, structurally lowering reported profit until volumes and margins scale up.

6. Low free float / liquidity risk. With ~72.45% held by the promoter, the free float is thin, which can amplify price volatility for minority holders.

1. EBITDA margin trajectory. Watch whether the margin recovers from ~9% toward historical mid-teens levels in FY27 quarters — the single most important driver of earnings and future dividends.

2. Tissue & hygiene plant ramp-up. Track the Q2 FY27 commissioning of the 35,000-TPA facility and management commentary on realised margins from it — this is the thesis for higher future returns.

3. Kadiyam labour situation. Confirm full, stable resumption of operations and whether the FY27 opening quarter absorbed any lasting production loss.

4. Core vs other income mix. In FY27, monitor whether operating profit (ex-other income) turns positive — the clearest sign the paper business itself is healing.

5. Capex-to-cash-flow balance & FCF. As CWIP converts to operating assets, watch for free cash flow turning positive; that is the pre-condition for any dividend growth from here.

6. Record-date & AGM confirmation. Verify the exchange corporate-action circular and AGM outcome; the dividend only becomes payable after members approve it.

Andhra Paper's FY26 final dividend of ₹0.50 is a small, safe payout wrapped around a much bigger story. The positives are on the balance sheet: net cash, an 18% reduction in financial liabilities, zero promoter pledge, and a valuation below book (P/B ~0.63x). The dividend is comfortably covered by earnings, operating cash flow, and a large cash cushion.

The negatives are on the profit statement: revenue rose 10% but profit fell 79%, margins nearly halved, depreciation surged, free cash flow is likely negative under heavy capex, and — the finding most coverage will miss — the paper business ran at a core operating loss this year, with reported profit propped up by ~₹82 Cr of investment income. The dividend has now been cut two years running (₹1.00 → ₹0.50), which is management telling you plainly that cash is being kept back for the tissue/hygiene expansion.

For an income-seeking investor, a 0.82% yield offers little. For a value or turnaround-minded investor, the real question is not the dividend at all — it is whether the new capacity lifts margins and ROE back toward peer levels. We present the facts; the decision is yours.