Astron Paper has opened today for subscription and the company, promoted by Asian Granito India among others, has garnered some favorable responses from analysts and brokerage houses. Priced in the range of INR45 – 50 per share, the IPO aims to raise as much as INR70 crore. Not many analyst reports are out so far on the IPO so please know that these are the views of a fraction of the market. Here is a snapshot of Astron Paper IPO recommendations:
Ventura Securities has put a Subscribe rating on the IPO and has cited experienced promoters, facility in well-developed industrial area, and availability of skilled and unskilled manpower at competitive costs as key reasons behind its positive view. “The company has achieved a capacity utilisation of 75% and continues to add capacity to serve its customers. The business model is order driven and with a growing e- commerce market and the stringent quality paper requirements set by the client companies, Astron will be expanding its capacity in the future. This new capacity will see the production of novel products like lower GSM and lower BF Kraft paper which are used in the inner layer of the corrugated boxes. Astron has previously doubled its capacity from 46,200 MTPA to 96,000 MTPA,” said the report.
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Sushil Finance is also among the brokerage houses with positive Astron Paper IPO recommendations. “Valuation wise, the issue is priced at 3.6 times the book value and the P/E Ratio comes to 16.3, which when compared to the industry average of 22.89 is well priced. The management of the company is a blend of experienced senior personnel and young officers, a combination which seems to be working well. The company is well positioned in the Kraft Paper industry and we believe the addition of the 2nd plant will help improve margins along with output and revenue, we recommend investors to subscribe to this issue and stay invested for the medium to long term,” noted analyst Krishna Rana in her note.
Choice Broking finds merit in the company’s scalable business model and noticed that its factory’s capacity utilization in FY15-17 was high at 80%. “Revenue grew by a CAGR of 62% to Rs1,832.7 mn 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 12.2(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,” the brokerage house said in its report.
SMC Global Securities noted that the company has location advantages and scalable business model but gave the IPO only one star on concerns of high revenue concentration with a few customers and in three states of Gujarat, Madhya Pradesh and Rajasthan. “The company has the existing manufacturing capacity of 96,000 tonnes per annum at its plant in Halvad. The expansion will increase the product basket for the company. With the new addition of additional range of products, the company will be able to provide a complete range of craft papers to its clients. Along term investor may opt the issue,” said its IPO note.
We will continue to add more brokerage views in Astron Paper IPO recommendations as they are made available. Meanwhile, feel free to visit the discussion page about Astron Paper IPO to participate in an engaging discussion.