Details Board: Earnings Per Share (EPS) INR 3.06



Details of the


Astron Paper and Board Mill IPO details

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Subscription Dates

15 – 20 December

Finalization of
Basis of Allotment


Initiation of


Transfer of shares
to demat accounts


Listing Date


Price Band

INR 45 – 50 per

Fresh issue

(INR 63 – 70 crore)

Offer For Sale


Total IPO size

shares (INR 63 – 70 crore)

Minimum bid (lot


Face Value 

INR10 per share

Retail Allocation


Listing On


Listing Price on NSE

INR115 per share (up
130% from IPO price)

Closing Price on NSE

INR120.75 per share
(up 141.5% from IPO price)


Book running lead manager:   Pantomath
Capital Advisors Private Limited

Promoters of Astron Paper and
Board Mill:

·       Mr.Kirit G Patel

·       Mr. Ramakant Patel

·       Mr. Karshanbhai Patel

·       Asian Granito India Limited



Valuation of Astron Paper and Board:

Earnings Per Share

INR 3.06

Price/Earnings (P/E)

14.70 – 16.33

Return on Net Worth


Net Asset Value

INR 13.94/share






Astron paper was incorporated in 2010 engaged in manufacturing
of kraft paper. Within a short span of time, the Company has developed a name
for itself in kraft paper industry. They mainly cater to packaging industry and
have been able to develop a loyal clientele network consisting of various
packaging companies and MNCs Currently they are operating in domestic markets
with the products being supplied on PAN India basis. They are also in the
process of exploring export markets. They believe that they are one of the
major kraft paper manufacturers in Gujarat with the manufacturing facility
having an installed capacity of 96,000 mt p.a. as on the date of this RHP. The
manufacturing facility is situated at Halvad, Gujarat and is well equipped with
requisite plant and machineries and other facilities. They also have in house
testing laboratory for quality control checks and testing of the products. They
endeavour  to maintain safety in the
premises by adhering to key safety norms. With increasing environmental
awareness, the Company has since its inception adopted the use of waste paper
as raw material instead of traditional usage of wood. The process of
manufacturing Kraft paper involves recycling of waste paper and with many organizations,
now supporting the Go Green Campaign, it increases the demand of FSC certified
Kraft paper as the same is eco-friendly. They have been environmentally
conscious and the products have been certified as meeting relevant FSC
Standards since 2014 by SGS South Africa (Pty) Ltd. The product Kraft paper is
used by packaging industry for manufacturing corrugated boxes and liners,
corrugated sacks and composite containers. They offer varied products like High
RCT, Kraft Liner, and Liner to Corrugated Medium Paper, ranging mainly from 140
GSM to 350 GSM and 22-35 BF. They endeavor to serve the customers, each having
different requirements of Ring Crust test (RCT), Gram square meter (GSM) and weight
pressure. The Company mainly imports raw material for ensuring better quality
of output. They have also been accredited with Authorized Economic Operator- T1
Certificate (Importer and Exporter

The Individual Promoters manage and control the major affairs
of the business operations. With their dedication and commitment, the Company
has shown an increasing trend in the business operations which is evidenced by
the growth in the total income from Rs. 267.27 million in FY 2012-13 to Rs.
1,845.89 million in FY 2016-17. They believe that the market position has been
achieved by adherence to the vision of the Promoters and senior management and
their experience. Geographical Customer Presence for FY 2016-17.The registered
office is situated at Ahmedabad. They have a dedicated marketing team who
continuously interacts with customers to understand their requirements and
analyse the market dynamics. They have also been actively participating and
associated with the Federation of Corrugated Box Manufacturers of India and
Indian Corrugated Case Manufacturers Association. They aim to establish the
brand as a distinguished name in industry. From FY 2013-14 to FY 2016-17, as
per the Restated Financial Statements, i) the total revenue has shown growth
from Rs. 1,061.98 million to Rs. 1,845.89 million, representing a CAGR of
14.82% ii) the EBITDA has shown growth from Rs. 113.32 million to Rs. 230.06
million, representing a CAGR of 17.95% iii) the profit after tax has shown
growth from Rs. a loss of Rs. (30.21) million to a profit of Rs. 99.59 million
and iv) the Return on net worth has shown a growth from (12.78)% to 21.98%. The
restated total revenue, EBITDA and profit after tax for the six months ended
September 2017 was ` 1,109.61 million, 146.20 million and ` 94.55 million
respectively, with an EBITDA margin of 13.18% and PAT margin of 8.52%




They intend to utilize the Net Proceeds towards the following

1.     For
setting an additional facility of Kraft Paper with low GSM range and low B.F ranging
from 80 to 180 GSM and ranging from 12 B.F to 20 B.F respectively

2.     Repayment
of unsecured loan taken by company.

3.     To
meet the working capital requirement of the company

4.     For
general purpose related to corporate

5.     Believe
the listing will help the company to enhance its corporate image, brand name
and create public market.

The following figures show a brief
overview of utilization of funds.




Market Trend in favour of IPOs

·       The risk appetite has
increased and the year 2016-2017 is term the year of IPO

·       IPOS have risen from IPOs,
which were only 15.8% to 46.9% share (2016-17) of all equity issues in 2013-14.
In terms of net worth, the size of the IPO market has expanded (96%) to Rs
21,904 crore.

·       The companies coming out with
IPOs where from diverse and unconventional section unlike in olden times where conventional
sectors were dominant like l banking, finance and IT in the IPO market since
2000.This clearly indicates the gradual rise of capital market as a mode of
finance among large and small corporate,

·       Three fold growths in Mutual
Funds is another reason for upsurge.

·       Thereby the Mid-cap and
small-cap companies are seeing better opportunities for a good valuation, given
current market conditions.
Market is flooded IPOs and the market is totally
ready to pay a premium.
Rise of SIPs is also pumping to Rs 5,000 crore
month-on-month into the MF market The rise of systematic investment plans
(SIPs) prove an indirect incentive for companies looking to go public

Growing Indian Economy

India is the fastest growing economy in the world as Real GDP
growth of the Indian economy is expected to be in range of 6.75% to 7.5% for FY
2017-18. Even under this forecast, India would remain the fastest growing major
economy in the world.

Growing Demand Paper

The paper industry in India accounts for about 3% of the
world’s paper production.

 The estimated turnover
of the industry is INR 50,000 crore (USD 8 billion) approximately and its
contribution to the exchequer is around INR 4,500 crore.

 The industry provides
employment to more than 0.5 million people directly and 1.5 million people

 Most of the paper mills
are in existence for a long time and hence present technologies fall in a wide
spectrum ranging from oldest to the most modern. The mills use a variety of raw
material viz. wood, bamboo, recycled fibre, bagasse, wheat straw, rice husk,

 In terms of share in
total production, approximately 24% are based on wood, 65% on recycled fibre
and 11% on agro-residues.

The per capita paper consumption in India at a little over 13
kg, is way behind the global average of 57 kg.

 India is the fastest
growing market for paper globally and it presents an exciting scenario; paper
consumption is poised for a big leap forward in sync with the economic growth.

The futuristic view is that growth in paper consumption would
be in multiples of GDP and hence an increase in consumption by one kg per
capita would lead to an increase in demand of 1 million tonnes.






Operating profit margin improving for paper players from H2
FY16. The major cost heads for paper industry players are raw material
(constituting ~50% of net sales) and power and fuel cost (constituting ~ 16% of
net sales). The operating margins of the paper companies were in the range of
14 % during FY09 to FY11 due to lower costs and better price realizations
backed by good demand growth. However, during FY12 to FY14, the operating
margin trend showed a declining trend with increase in raw material prices and
power and fuel cost largely during FY13. Also, with capacity expansion during
FY09 to FY11, players could not increase the prices and faced import threat.
Due to this the operating margin declined to ~11% during FY12 to FY14. The fall
in margin was arrested in FY15 and H2FY16 witnessed improvement in margins due
to declining RM costs and power & fuel cost. Consumption & Production:
Indian Paper Industry in 2015 – 16: Though digitization has taken the Indian
Paper industry for a ride, India’s demand for paper is expected to rise 53 per
cent as the educational demand for paper is constantly on the rise. Although
India’s per capita consumption of paper is quite low compared to global
countries, the demand is set to rise from the current 13 million tonne (MT) to
an estimated 20 MT by 2020. As per industry scene, India’s per capita paper
consumption at nine kg, against 22 kg in Indonesia, 25 kg in Malaysia and 42 kg
in China. The global average stands at 58 kg. India’s paper demand is set to
rise 53% by 2020.

During 2011-15, consumption grew by 6.3%, higher than the
global average. The index of industrial production (IIP) recorded a decline of
0.1% in FY14. Paper and paper products industry saw growth of only 0.1% y/y. However,
the industry saw a revival in FY15 with a growth of 3% y/y. In 8MFY16, it
recorded a growth of 3.2% y/y. In the last five years, the Indian paper sector
has invested about Rs.20,000 crore on capacity enhancement, technology upgrade
and acquisitions. The raw material prices for the paper industry soared in
FY15-16. This together with slug of cheap imports from China and other
Southeast Asian nations negatively impacted the profit margins of most paper
producers. In 2015, global wood pulp prices have risen beyond the previous peak
since 2011, which was the highest point in more than 30 years. Unfortunately
for manufacturers who rely on the material as input, especially paper packaging
manufacturers, higher prices for wood pulp have increased their production
costs. According to IBIS World, the price of wood pulp is forecast to increase
further at an annualized rate of 5.1% in the three years to 2019. The increase
in the price of wood pulp will also be reflected in the domestic price of
paper, will grow at an annualized rate of 3.2% over the next three years.


The raw material consumption pattern has drastically changed
in the recent years with the pulp & paper industry witnessing a rise in the
use of waste paper. This shift has been mainly brought about for purpose of
environmental compliance. Presently, the consumption of wood, agro and waste
paper is 20 %, 10% and 70 % respectively. Till about a few years ago, the
consumption of wood, agro and waste paper was 31%, 22% and 47% respectively.
Figure below illustrates the changing raw material consumption pattern of the
Indian Paper Industry














Shares of Astron Paper and Board Mills saw a
bumper listing on Friday as the stock debut with a premium of 141 percent.

The stock traded at a high point of Rs 120.75 on the NSE.

The initial public offer (IPO) was oversubscribed 243.20
times so far on the last day of bidding.

The IPO to raise Rs 70 crore received bids for
3,40,48,47,040 shares against the total issue size of 1,40,00,000 shares (data
available with the NSE showed).

Qualified institutional buyers (QIBs) – oversubscribed
103.36 times

Non institutional investors- 396.99 times

Retail investors- 76.26 times








As they can see through the working capital requirement the
company needed 239 million rupees for the fiscal year 2018 which is to be
utilized for funding the working capital.

The financials of the
company which is the income statement of the company clearly shows the increase
in profits of the company . Company enjoys strong Financial
performance and stable cash flows






Relative Valuation





The P/E ratio of the listed amount was in comparison with the
industry peers but the return on net worth is the highest, hence it is a well
placed company in terms of relative valuation.






If we take the upper
price band (Rs 50), and the EPS of 2.9 in FY17, we see that P/E ratio comes out
to be ~17 times. And if we take EPS of last 3 years (2.3), the P/E ratio comes
out to be ~21 times.

Thus we can say that the
stock was undervalued, thus the investors could see future gains, and thus the
IPO got oversubscribed.

The industry average P/E is
equal to 22.8 times, and if we compare it with its competitors, South India
Paper (P/E 15 times), Genius Paper (P/E 36 times), we can say it was decently

Further looking at the
company’s financials, in the last 5 years it’s revenues multiplied 7 times, and
the profits look good in the future as well, at least in the short term.

However, on a conservative
outlook, we see that the company’s profits have been dependant on a few
customers, the loss of one or more could impact profits, in turn affecting
revenues, future cashflows and operations.

Also, it is import
dependant for its raw material. Thus, any global impact could impact the
company as well.

All past cashflows were
negative, be it operating, financing or investing activities. If this trend
continues, it could be problematic for the company, impacting growth.  

On the positive outlook,
the company is expanding facility to increase its product range. It is also
planning to explore export markets, as well as increasing domestic reach with
more marketing strategies. On an operational level, it wants to increase efficiency,
using advanced technology.


Overall, the IPO was
rightfully oversubscribed as there was a positive outlook towards its future growth