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Astron Paper IPO review (Subscribe)

Astron Paper and Board Mills Ltd. (APBM) is engaged in manufacturing of kraft paper and catering to packaging industry. It has current capacity of 96000 mt p. a. Post proposed expansion plans, its total installed capacity will stand increased to 129000 mt p. a. Its manufacturing and dispatch process has been assessed and certified ISO 9001:2015 and ISO 14001: 2015 by SGS United Kingdom Ltd. It is using waste paper as its main raw material and thus saving usage of wood, thus following green initiative. APBM’s kraft paper is used by packaging industry in manufacturing corrugated boxes, liners, sacks and composite containers.

To part finance its plans for setting up of additional facility for manufacturing kraft paper with lower GSM, part repayment of debts, working capital and general corpus fund needs, APBM is coming out with a maiden IPO of 14000000 equity shares of Rs. 10 each via book building route. It has fixed the price band of Rs. 45-Rs. 50 per share and mulls mobilizing Rs. 63 to Rs. 70 crore (on the basis of lower and upper price bands). Issue opens for subscription on 15.12.17 and will close on 20.12.17. Post allotment, shares will be listed on BSE and NSE. Minimum application is to be made for 280 shares and in multiples thereon, thereafter. Issue constitutes 30.11% of the post issue paid up capital of the company. APBM has reserved 700000 equity shares and offering Rs. 2.50 per share discount to its eligible employees. Issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Average cost of acquisition of shares by the promoters ranging from Rs. 2.77 to Rs. 9.10 per share. It issued equity shares at par on inception and between March 2013 and March 2015. It also raised further equity at a price of Rs. 30 per share between May 2011 and March 2012. It has issued bonus shares in the ratio of 2 for 1 in March 2013. Post issue its current paid up capital of Rs. 32.50 crore will stand enhanced to Rs. 46.50 crore.

On performance front, APBM has posted turnover/net profits of Rs. 106.20 cr. / Rs. – (3.02) cr., (FY14), Rs. 152.14 cr. / Rs. 4.13 cr. (FY15), Rs. 157.85 cr. / Rs. 6.09 cr. (FY16) and Rs. 184.59 cr. / Rs. 9.96 cr. (FY17). For first half of current fiscal it has earned net profit of Rs. 9.46 cr. on a turnover of Rs. 110.96 cr. Thus its top and bottom lines have shown growing pattern. Issue is priced at a P/BV of 3.01 on the basis of its NAV of Rs. 16.62 as on 30.09.17. For last three fiscals it has posted an average EPS of Rs. 2.38 and average RoNW of 19.07 (on an equity base of Rs. 32.50 crore). If we annualize latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 12 plus against industry average of 22 plus and its peers trading at a P/E ranging from 15.05 to 36.11.

On merchant banker’s front, this is the first main board IPO from its stable and has no past track record on this front. It has handled over 50 IPOs for SME listings in last three fiscals.

Conclusion: Investors may consider investment for medium to long term. (Subscribe).

Conclusion / Investment Strategy

Investors may consider investment for medium to long term. (Subscribe).

Review Posted On: Dec 7, 2017

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda (SEBI registered Research Analyst-Mumbai), a freelance journalist for more than 25 years, is a stock market analyst and news article writer. Since 1985, he has contributed to print media, electronic media and often appears on TV channels as visiting stock analyst. His articles are regularly publishes in Smart Investment (English and Gujarati weekly published from Ahmedabad), Free Press Journal and many other news papers & magazines. He is also a visiting stock analyst on DD News TV Channel.



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