Nikita Papers Limited is one of the leading manufacturers of recycled kraft paper in India, committed to sustainability and environmental preservation. The company produces kraft paper using 100 percent recycled waste paper and integrates cutting-edge technology to deliver superior quality products to both local and international markets. Their vision focuses on reducing environmental impact while driving innovation at every stage of production.

The company is launching an Initial Public Offering (IPO) via a book-built issue of fresh equity shares totaling ₹6753 crores consisting of 64.94 lakh shares. The subscription period will open on May 27 2025 and close on May 29 2025. The allotment is expected by May 30 2025, and the shares will be listed on the NSE SME platform tentatively on June 3 2025.

The price band is set between ₹95 and ₹104 per equity share. At the upper price, the company’s market capitalization will stand at ₹25654 crores. The lot size is 1200 shares, requiring a minimum retail investment of ₹124800. High-Net-Worth Individuals (HNIs) must subscribe for a minimum of 2 lots or 2400 shares, which translates to ₹249600.

The Book Running Lead Manager is FAST TRACK FINSEC PRIVATE LIMITED while the registrar is SKYLINE FINANCIAL SERVICES PRIVATE LIMITED. Rikhav Securities Limited is the market maker for the IPO.

Financial Performance

Nikita Papers has demonstrated consistent financial performance over recent years as reflected in the following figures (in lakh):

• Revenue from operations:

  • FY2022: 3584857

  • FY2023: 4013091

  • FY2024: 3467828

  • 9M FY2024 (ended Dec 31): 2723828

• EBITDA:

  • FY2022: 296220

  • FY2023: 305580

  • FY2024: 484004

  • 9M FY2024: 438046

• Profit After Tax (PAT):

  • FY2022: 69521

  • FY2023: 86452

  • FY2024: 165953

  • 9M FY2024: 156811

The company’s pre-issue EPS for FY24 is ₹981 and post-issue EPS is ₹673. The pre-issue Price to Earnings (P/E) ratio is 10.60x while the post-issue P/E ratio is 15.46x, which compares favorably against the industry average P/E of 22x, indicating the IPO is fairly priced.

Additional metrics include a Return on Capital Employed (ROCE) of 2871 percent, Return on Equity (ROE) of 2145 percent, and Return on Net Worth (RoNW) of 2145 percent for FY24. The annualized EPS based on the latest data is ₹1150, resulting in a P/E ratio of 9.03x, further confirming reasonable valuation.

Grey Market Premium (GMP) and Market Sentiment

The Grey Market Premium for Nikita Papers IPO is zero, indicating no expected gains on listing day. As GMP is an unofficial measure based on unorganized market demand and supply, it should not be solely relied upon for investment decisions.

Management and Industry Outlook

The company is led by Mr Ashok Kumar Bansal, the Chairman with over 35 years of experience and more than 25 years in the paper industry. The management team’s deep expertise and focus on innovation support the company’s sustainable growth trajectory.

Given the increasing emphasis on environmentally friendly products and sustainable packaging, Nikita Papers is well-positioned to benefit from rising demand for recycled paper products in India and abroad.

Risks and Considerations

• The IPO is fairly priced with limited scope for listing day gains

• Zero GMP indicates low speculative interest in the grey market

• Competitive paper industry with pressure on margins

• Listing on NSE SME platform may limit liquidity

Conclusion

The Nikita Papers IPO offers exposure to a sustainable recycled paper business with steady financials and experienced management. However, given the fair valuation and zero GMP, the IPO does not offer attractive listing gains for short-term investors.

Final Recommendation

Investors looking for quick listing gains should avoid Nikita Papers IPO while long-term investors focusing on sustainability and paper sector growth may consider selective participation after assessing risk tolerance

The Upcoming IPOs in this week and coming weeks are Neptune Petrochemicals, Aegis Vopak Terminals, Schloss Bangalore, Astonea Labs, Nikita Papers, Prostarm Info Systems, Victory Electric Vehicles International, Blue Water Logistics, Wagons Learning.

The Current active IPO are Unified Data - Tech Solutions, Dar Credit and Capital, Belrise Industries.

The Closed IPOs are Borana Weaves.