Subam Papers Limited is a manufacturer of Kraft Paper and paper products. The company uses waste paper as a raw material. Subam Papers IPO is looking to raise Rs 93.70 crores. The issue is entirely a fresh issue of 61.65 lakh shares.

About Subam Papers Limited

• They are a company engaged in the manufacturing of Kraft Paper and Paper Products.
• They are a packaging solution providing company.
• Subam started its journey in the year 2004 with manufacturing of paper cones and later expanded the product base by adding Duplex board and Kraft paper in its portfolio.
• Company is not like the traditional paper manufactures, They do not manufacture products from wood pulp but instead use waste paper as raw material.
• The promoters of the Company are Mr. T Balakumar and Ms. Sudha Alagarsamy.

Financials: Subam Papers Limited

Subam Papers IPO: Anchors

Subam Papers IPO: Salient Points

• The paper and packaging sector in India is growing rapidly and has significant potential for future expansion. The industry was valued at $50.5 billion in 2019 and is anticipated to reach $204.81 billion by 2025, registering a CAGR of 26.7% from 2020 to 2025.
• The growth in the sector is being driven by a surge in e-commerce, food processing, pharmaceuticals, FMCG, manufacturing industry and healthcare sector. Additionally, numerous government initiatives including ‘Make in India’ had positive impact on the packaging industry. The paper and packaging industry is currently the fifth largest sector in the Indian economy and has the potential to achieve pricing levels that are about 40% cheaper compared to European regions.
• Net proceeds use :

• As per company, the said investment will increase profitability and provide benefit of lower taxation to the subsidiary.

• PE 2024: 10.6x.
• Peers:

• They own wind and solar power installations. Wind energy infrastructure includes two windmills: with a capacity of 850 KW each totalling approximately 1.7 MW. Additionally, operate a solar plant with a capacity of 14 MW. These renewable energy sources enable our manufacturing facilities to significantly reduce their carbon footprint, aligning with goal of sustainable and eco- friendly operations.
• Paper manufactures like Seshasayee Paper & Boards Ltd in the same state are quoting at a low PE of 9.5.
• I have a neutral view on Subam Papers IPO. Company has posted a big jump in profits last year whereas paper industry in general has seen lower profitability. In their favor they produce paper from waster paper. Possible escalation in Israel Iran conflict could dampen the markets.
• GMP on social media is around Rs. 60 but may not be for actual deals being done.
• Lead manager has an average to fair track record. .
• SME IPOs are quite volatile and new retail investors need to exercise considerable caution in my view.
• This post is exploratory and educational purposes only. Please do your own diligence before investing in SME IPOs like this.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.