The IPO of Gujarat based Kraft paper manufacturer, Astron Paper and Board Mill Ltd to raise up to Rs 70 crore, got subscribed by more than 12 times as at the end of last day of bidding, backed by strong demand from retail investors. The issue received bids amounting to 17.13 crore shares as against the size of 1.4 crore shares implying subscription of 12.24 times. Notably, the retail investors bid for a total of 15.62 crore shares as against 46.5 lakh shares reserved for them implying demand of more than 33.57 times.
QIB portion registered the next highest demand, as institutions subscribed for a total of 5.7 times reserved for them, bidding for a total of 76.31 lakh shares as against 13.3 lakh shares reserved for them. Employee portion too registered a strong demand, as their portion was subscribed 1.6 times. The Non-Institutional investor category saw bids of 84.34 lakh, as against 73.15 lakh shares reserved for them, implying a subscription of 1.,14 times.
The public offer consisted 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 comprised of reservation of up to 7,00,000 equity shares for subscription by eligible employees. The company had fixed a price band of Rs 45-50 per equity share for the public offer. Post issue, the promoter share is seen reducing to 43.8%. The issue opened on Friday, and today was the last day of the offer. 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 had 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.