Gujarat based Kraft paper manufacturer, Astron Paper and Board Mill Ltd saw a blockbuster listing this morning, as the shares listed on BSE at Rs 119.7, as against issue price of Rs 50, implying listing gains of more than 140%. The pre open rate was Rs 114, up by more than 128% since issue price. 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.
Last week, the Astron Paper and Board Mill Ltd’s IPO to raise up to Rs 70 crore, got subscribed by more than 243 times as at the end of last day of bidding, backed by strong demand across categories. The issue received bids amounting to 340.6 crore shares as against the size of 1.4 crore shares implying subscription of 243.29 times. Notably, the retail investors bid for a total of 36.27 crore shares as against 46.5 lakh shares reserved for them implying demand of more than 77 times. While this may seem staggering, Non Institutional category saw the highest demand, as investors bid for a total of 290.3 crore shares as against 73.15 lakh shares reserved for them implying a subscription of nearly 400 times.
QIB category too registered a heavy demand as investors bid for a total of 13.7 crore shares implying a subscription of more than 103 times. Comparatively, the employee portion posted the least demand as investors from the category bid for a total of 2.7 times the total shares reserved for them. Most notably, the bulk of the bidding happened on the last day. ie 20th December, and the issue was subscribed just over 12 times at the end of third-day of bidding on 19th December.
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.