Reblog: Astron Paper IPO review
Astron Paper and Board Mills Ltd. (APBM) is engaged in manufacturing of kraft paper and catering to the packaging industry. It has a 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 the 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 the 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). The 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. The issue is solely lead managed by Pantomath Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. The 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 the 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).