43% Surge Possible? This Eco-Friendly Paper IPO Could EXPLODE!

CONTENTS: 43% Surge Possible? This Eco-Friendly Paper IPO Could EXPLODE!

The initial public offering (IPO) for Three M Paper Boards is set to open for subscriptions on Friday, July 12, and will close on Tuesday, July 16. The IPO is priced between ₹67 and ₹69 per share, with each share having a face value of ₹10. Investors can bid for a minimum of 2,000 shares, with additional bids in multiples of 2,000 shares. The floor price is set at 6.7 times the face value, while the cap price is 6.9 times the face value.

In this offering, 35% is allocated to retail investors, 50% to qualified institutional buyers (QIBs), and 15% to non-institutional investors (NIIs or high-net-worth individuals). Additionally, 5% of the issue is reserved for the market maker portion.

 

The company manufactures premium duplex board paper products for both domestic and international markets. Their recycled paper-based duplex boards are utilized in various packaging applications across industries such as food and beverage, pharmaceuticals, cosmetics, and consumer goods. The firm exclusively uses 100% recycled waste paper to produce its goods, ensuring they are fully biodegradable. The organization is dedicated to achieving continuous advancements in product development and production techniques.

 

The company’s production facility is located in Chiplun, District Ratnagiri, Maharashtra, and its headquarters are based in Mumbai. As of the end of FY 2023–2024, the facility, equipped with state-of-the-art machinery and advanced technology, has the capacity to produce up to 72,000 TPA of paper.

According to the RHP, the company’s listed competitors include N R Agarwal Industries Ltd with a P/E ratio of 6.84, Kuantum Papers Ltd with a P/E ratio of 7.64, and Shree Ajit Pulp and Paper Ltd with a P/E ratio of 15.86. Between March 31, 2023, and March 31, 2024, Three M Paper Boards Limited saw its profit after tax (PAT) rise by 71.53%, despite a revenue decline of 16.3%.

 

The Three M Paper Boards IPO, valued at ₹39.83 crore, is an entirely offer-for-sale, comprising up to 5,772,000 equity shares.

The company intends to utilize the net proceeds from the IPO for several purposes: financing its long-term working capital requirements, installing new machinery, modernizing certain processes within its existing manufacturing facility, and installing a plastic-fired low-pressure boiler. Additionally, the funds will be used to repay all or part of its outstanding debt and for general corporate purposes.

Bigshare Services Pvt Ltd is the registrar for the IPO, while Comfort Securities Limited is the book-running lead manager and the market maker for the offering.

 

The Three M Paper Boards IPO has a grey market premium (GMP) of ₹30, indicating that its shares were trading at a ₹30 premium in the grey market, as reported by investorgain.com.

Given the upper end of the IPO price band and the current grey market premium, the estimated listing price of Three M Paper Boards shares is ₹99 per share, which represents a 43.48% increase over the IPO price of ₹69.

The term ‘grey market premium’ reflects investors’ willingness to pay more than the issue price.