Initial Public Offering (IPO) Review: Subam Papers
The IPO of Subam Papers, which commenced bidding on September 30, is witnessing a rather tepid reception among investors. By 4 p.m., the overall subscription rate was recorded at a mere 0.36 times. Specifically, the retail investor segment is subscribed at 0.57 times, while the portion allocated for non-institutional investors (NII) has only attracted bids for 0.36 times. Alarmingly, there have been no bids from Qualified Institutional Buyers (QIBs) as reported by the exchange data.
Financial Details of the IPO
Subam Papers aims to raise a total of ₹93.70 crore through this IPO, which consists entirely of a fresh issue of 61.65 lakh shares. The price range for the IPO is set between ₹144 and ₹152 per equity share, with each share having a face value of ₹10. The minimum investment required for retail investors is ₹1,21,600, based on a fixed lot size of 800 shares.
Key Dates and Process
Shares are expected to be listed on the BSE SME platform, with the allotment of the IPO anticipated to be finalized on Friday, October 4, 2024. Furthermore, the tentative listing date for these shares is scheduled for Tuesday, October 8, 2024.
Management and Operations
Gretex Corporate Services Limited is acting as the bookrunning lead manager for the Subam Papers IPO while Bigshare Services Pvt. Ltd. is designated as the registrar for the issue. The market-making services for the IPO are provided by Gretex Share Broking. This IPO is set to close on Thursday, October 3, 2024, which provides a limited window for interested investors.
Market Sentiment: Grey Market Premium
Currently, the grey market premium (GMP) for Subam Papers IPO is pegged at ₹35 per share. This implies that shares are anticipated to be listed at approximately ₹187, a notable 23% premium over the issue price of ₹152 per share. However, investors are urged to view GMP as merely a preliminary indicator rather than the singular basis for investment decisions.
Company Background: Subam Papers
Founded in 2004, Subam Papers has carved a niche in the manufacturing sector, specializing in Kraft paper and paper products. The company initially started by producing paper cones and has since broadened its product lineup to include Duplex board and Kraft paper. What sets Subam Papers apart is its commitment to sustainability; instead of relying solely on wood pulp, the company primarily utilizes waste paper for production, which is a core aspect of its operations.
Production Capacity and Utilization
| Product | Installed Capacity (MTPD) | Annual Capacity (Tons) | Utilization (FY24 Tons) | Utilization Previous Years (Tons) |
|---|---|---|---|---|
| Duplex Board | 140 | 47,200 | 43,963 | 30,393 (FY23), 3,336 (FY22) |
| Kraft Paper | 300 | 93,600 | 93,081 | 83,691 (FY23), 82,371 (FY22) |
Conclusion and Investor Advisory
The IPO landscape for Subam Papers exhibits mixed sentiments, showcasing both opportunities and challenges. While the grey market premium indicates positive expectations, the lukewarm subscription rates raise concerns about investor confidence. It is crucial for potential investors to conduct thorough research and seek advice from certified experts before making investment decisions. As with any investment, informed choices can significantly influence your financial outcomes.
Disclaimer: The views and recommendations provided in this article are those of individual analysts and do not represent the views of any publication. Always consult certified financial advisors before making investment choices.
