The IPO of Gujarat based Kraft paper manufacturer, Astron Paper and Board Mill Ltd to raise up to Rs 70 crore, got subscribed by 5.11 times as at the end of second day of bidding, backed by strong demand from retail investors. The issue received bids amounting to 7.15 crore shares as against the size of 1.4 crore shares implying subscription of 5.11 times. Notably, the retail investors bid for a total of 6.55 crore shares as against 46.5 lakh shares reserved for them implying demand of more than 14 times. QIB portion registered the next highest demand, as institutions subscribed for a total of 1.7 times reserved for them.
QIBs bid for a total of 23.96 lakh shares as against 13.3 lakh shares reserved for them. Employee portion registered muted demand as the company’s staff bid for a total of 4.03 lakh shares as against 7 lakh shares reserved for them, implying a subscription of nearly 60%. Non-institutional portion saw the least demand, as the portion reserved for the category saw bids for a total of 32.55 lakh shares as against 73.15 lakh shares reserved for them, implying a subscription of 44%.
The public offer consists of a fresh issue of 1,40,00,000 equity shares of face value of Rs 10 each to raise up to Rs 70 crore. The issue also comprises of reservation of up to 7,00,000 equity shares for subscription by eligible employees. The company has fixed a price band of Rs 45-50 per equity share for the ongoing public offer. Post issue, the promoter share is seen reducing to 43.8%. Notably, the issue will remain open on Tuesday, 20th December. The issue size (Rs 70 crore) being lower than Rs 250 crore, the shares will be listed in “T” group, thus there will be some restrictions on the price movements.
According to the company’s prospectus, the proceeds will be used for setting up of additional facility for manufacturing of Kraft Paper with lower GSM; part payment of unsecured loan amounting to Rs 8.1 crore; funding the working capital requirement of the company and general corporate purposes.
In its report on the company, Choice Broking has a “Subscribe” rating on the issue, given the long-term fundamentals. “ Revenue grew by a CAGR of 62% to Rs 1,832.7 million during FY13-FY17 with average EBIDTA margin at 11%. Average RoIC over the last three fiscals remained at 31.1% and RoE at 17.8% higher than peers. Considering all these parameters, at P/E at 12.3(x) on FY18E annualized EPS, the issue looks reasonable considering the growing business, expanding margins and strong growth drivers. Thus, we assign ‘Subscribe’ rating to the issue,” said the firm in its report.