ASTRON PAPER & BOARD MILL IPO Price Band : ` 45 ` 50 our recommendation SuBScriBe
THE OFFER Issue Open : 15 Dec 2017 to 20 Dec 2017»» Issue Type: Book Built Issue IPO»» Issue Size: 14,000,000 Equity Shares of `10 aggregating up to ` 70.00 Cr»» Face Value: ` 10 Per Equity Share»» Issue Price: ` 45 - ` 50 Per Equity Share»» Market Lot: 280 Shares»» Minimum Order Quantity: 280 Shares»» Listing At: NSE, BSE
CAPITAL STRUCTURE The share capital of Company, is set forth below:- (Amount in ` except share data) Authorized Share Capital :- 5,00,00,000 Equity Shares @10 Aggregate value 50,00,00,000 Issued, subscribed and paid up capital before the Issue :- 3,25,00,000 Equity Shares @10 Aggregate value 32,50,00,000 Present Issue:- 14,000,000 Equity Shares of ` 10 aggregating up to ` 70Cr
OBJECT OF THE OFFER Astron Paper intends to utilize the net proceeds from this public issue towards the following objects: Setting up of additional facility for manufacturing of lower GSM and lower B.F Kraft Paper. ` 23cr Part repayment of unsecured loan. ` 8.1cr Funding the working capital requirements ` 23.9cr and General corporate purposes. ` 15cr Company Promoters: Company is promoted by Mr. Kirti G. Patel, Mr. Ramakant Patel and Mr. Karshanbhai Patel. Asian Granito India Ltd is the corporate promoter of the company. ( Equity shares of Asian Granito are listed at BSE and NSE)
COMPANY OVERVIEW Astron Paper and Board Mill Limited is engaged in the manufacture of Kraft paper. It mainly caters to packaging industry and has a clientele consisting of various packaging companies and MNCs. It is one of the major kraft paper manufacturers in Gujarat with manufacturing facility having an installed capacity of 96,000MTPA, which it intends to expand up to 1,29,000 MTPA in FY19. The company aims at capacity utilization of 83.7%, which will enable it to produce approximately 1,08,000MTPA of Kraft paper by FY20. The company sources 90% of its main raw material, i.e. waste paper, through imports from the US, UK and central Europe. Company Products : Company is mainly engaged in manufacturing of Kraft Papers. It offer wide range of products ranging from High RCT, Kraft Liner, Liner to Corrugated Medium Paper, ranging mainly from 140 GSM to 350 GSM and 22-35 BF. These products are used in corrugation industry for manufacturing various types of packaging boxes and packaging products.
ROAD MAP AHEAD Company objectives are to expand their market share and aim to accomplish this through the following strategies: Setting up of additional manufacturing facility which will increase product range. Expand domestic geographical reach through marketing network. Continue to improve operating efficiencies through technology enhancements. Forward integration
FINANCIAL PERFORMANCE From FY2013-14 to FY2016-17, as per Restated Financial Statements : Total revenue has shown growth from `1,06.19cr to Rs. 1,84.58cr, Representing a CAGR of 14.82%. EBITDA has shown growth from `11.33cr to `23cr. Representing a CAGR of 17.95%. PAT has shown growth from Rs. a loss of `(3.02)cr to a profit of `9.95cr Return on net worth has shown a growth from (12.78)% to 21.98%. Restated total Revenue, EBITDA and PAT for the six months ended September 2017 was ` 1,10.96cr, `14.62cr and `9.45cr respectively, with an EBITDA margin of 13.18% and PAT margin of 8.52%.
SNAPSHOT - CONSOLIDATED
INDUSTRY OVERVIEW The Indian paper industry accounts for about 3% of the worlds production of paper. The estimated turnover of the industry is `50,000cr (USD8 billion) approximately. In terms of share in total production, approx 24% are based on wood, 65% on recycled fibre and 11% on agro-residues. The paper industry in India could be classified into 3 categories According to the raw material consumed, Wood based, Waste paper Based & Agro based. India s demand for paper is expected to rise 53% as the educational demand for paper is constantly on the rise. As per industry source, India s per capita paper consumption at 9 kg, against 22 kg in Indonesia, 25 kg inmalaysia and 42 kg in China. The global average stands at 58 kg. India s paper demand is set to rise 53% by 2020.
Continue The increasing demand for packaging, changing lifestyle patterns in India, growth in population, growing awareness and need of education, sustainability and down gauging are some of the key demand drivers for the paper and paper products industry. The Kraft paper is easily distinguished from the writing, printing or newsprint paper by its brown colour. Kraft paper finds its application in numerous products and usages. It serves as the most suitable raw material for manufacturing corrugated boxes. TYPES OF KRAFT PAPER: Virgin Natural Kraft Paper Natural Recycled Kraft Paper Black Kraft Paper Colored Kraft Paper White or Bleached Kraft Paper Printed Kraft Paper
RISK FOR THE BUSINESS Company, its Group Companies and Promoters are parties to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on business. A portion of the proceeds of the Issue will be utilized for repayment / pre-payment of certain loans availed by Company from Group Company, Shreerangam Packaging Private Limited. The Company is yet to place orders for 21. 64% of its plant &machinery for proposed object, Any delay in placing orders, procurement of plant & machinery may affecting revenue and profitability.
Continue Any significant decline in the demand for products i.e. Kraft paper or introduction of alternative technology or consumer habits may adversely affect profitability and business prospects. Company mainly dependent on imports for supply of major raw material; i.e. waste paper. Company require certain approvals and licenses in the ordinary course of business, failure to obtain, retain and renew such approvals and licenses may adversely affect operations. Company is exposed to foreign currency exchange rate fluctuations, which may harm results of operations, impact cash flows and cause financial results to fluctuate.
VALUATION The increasing demand for packaging, changing lifestyle patterns in India, growth in population, growing awareness and need of education, sustainability and down gauging are some of the key demand drivers for the paper and paper products industry. It is one of the major kraft paper manufacturers in Gujarat with manufacturing Facility having an installed capacity of96,000 MTPA which it intends to expand up to 1,29,000 MTPA in FY19. The company is also planning to explore export markets and expand in the domestic markets. On the upper price band of `50 with EPS of `3 for FY17, P/E works out at 16.6x, Its seems FY17 is good for the company but if we compare it with estimated growth offy18, FY18 looks far better than FY17.Therefore we recommend to SUBSCRIBE the IPO on listing as well as for long-term.
DISCLAIMERS This Research Report (hereinafter called report) has been prepared and presented by RUDRA SHARES & STOCK BROKERS LIMITED, which does not constitute any offer or advice to sell or does solicitation to buy any securities. The information presented in this report, are for the intended recipients only. Further, the intended recipients are advised to exercise restraint in placing any dependence on this report, as the sender, Rudra Shares & Stock Brokers Limited, neither guarantees the accuracy of any information contained herein nor assumes any responsibility in relation to losses arising from the errors of fact, opinion or the dependence placed on the same. Despite the information in this document has been previewed on the basis of publicly available information, internal data, personal views of the research analyst(s)and other reliable sources, believed to be true, we do not represent it as accurate, complete or exhaustive. It should not be relied on as such, as this document is for general guidance only. Besides this, the research analyst(s) are bound by stringent internal regulations and legal and statutory requirements of the Securities and Exchange Board of India( SEBI) and the analysts' compensation was, is, or will be not directly or indirectly related with the other companies and/or entities of Rudra Shares & Stock Brokers Ltd and have no bearing whatsoever on any recommendation, that they have given in the research report
Rudra Shares & Stock Brokers Ltd or any of its affiliates/group companies shall not be in any way responsible for any such loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Rudra Shares & Stock Brokers Ltd has not independently verified all the information, which has been obtained by the company for analysis purpose, from publicly available media or other sources believed to be reliable. Accordingly, we neither testify nor make any representation or warranty, express or implied, of the accuracy, contents or data contained within this document. Rudra Share & Stock Brokers Ltd and its affiliates are engaged in investment advisory, stock broking, retail & HNI and other financial services. Details of affiliates are available on our website i.e. www.rudrashares.com. We hereby declare, that the information herein may change any time due to the volatile market conditions, therefore, it is advised to use own discretion and judgment while entering into any transactions, whatsoever. Individuals employed as research analyst by Rudra Shares & Stock Brokers Ltd or their associates are not allowed to deal or trade in securities, within thirty days before and five days after the publication of a research report as prescribed under SEBI Research Analyst Regulations.
Subject to the restrictions mentioned in above paragraph, we and our affiliates, officers, directors, employees and their relative may: (a) from time to time, have long or short positions acting as a principal in, and buy or sell the securities or derivatives thereof, of Company mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or profits.