Shreenath Paper Products specializes in providing supply chain solutions for industries reliant on paper-based raw materials, including coating-based paper, food-grade paper, machine-glazed paper, and pressure-sensitive adhesive paper. The company has carved a niche by offering specialized services, from understanding client requirements and sourcing manufacturers to ensuring timely delivery of products.

The company’s Initial Public Offering (IPO) is set to launch in February 2025. The subscription period will run from February 25, 2025, to February 28, 2025, with the shares priced at ₹44 per equity share. This Fixed Price Issue consists entirely of a fresh issue of 53.10 lakh shares, and the market capitalization at the IPO price will be ₹86.48 Crores. The IPO's lot size is 3,000 shares, and retail investors need to invest a minimum of ₹1,32,000, while High-Net-Worth Individuals (HNIs) must invest in at least 2 lots (₹2,64,000). The BSE SME listing date is expected to be around March 5, 2025.

Subscription Process and Allotment
Shreenath Paper Products IPO will open for subscription on February 25, 2025, and will close on February 28, 2025. Investors will have the chance to participate in the IPO during this period. Once the subscription is closed, the company will conduct the allotment process. The allotment status can be checked online, and investors can view their status by entering details like the application number, PAN, or DP Client ID on the registrar's website. The allotment is expected to be finalized by March 3, 2025, with shares likely to be listed on the BSE SME on March 5, 2025.

IPO Proceeds Utilization
Shreenath Paper Products plans to utilize the net proceeds from the IPO for two main purposes. Firstly, ₹1,800.00 Lakhs will be used to meet the company’s incremental working capital requirements, which will help maintain smooth operations and supply chain efficiency. Secondly, ₹287.16 Lakhs will be allocated for general corporate purposes, which will likely cover operational costs and strategic initiatives.

Financial Overview
For the period ending December 31, 2024, Shreenath Paper Products reported revenues of ₹7,861.95 Lakhs. The company has demonstrated a solid revenue history, with revenues in 2023 and 2022 at ₹18,966.98 Lakhs and ₹20,669.91 Lakhs, respectively. The company has faced fluctuations in its EBITDA, which stood at ₹434.34 Lakhs for FY 2024 compared to ₹577.36 Lakhs in FY 2023. Despite the drop in EBITDA, the company’s profit after tax (PAT) for FY 2024 amounted to ₹240.51 Lakhs, reflecting a growth from previous years.

The company’s key performance indicators show a pre-issue EPS of ₹3.07 and a post-issue EPS of ₹2.23 for FY 2024. The pre-issue P/E ratio stands at 14.33x, while the post-issue P/E ratio is 19.70x. These ratios indicate that the IPO is priced with a moderate level of valuation. Return on Capital Employed (ROCE) for FY 2024 was 19.32%, and the Return on Equity (ROE) was 23.19%, both solid financial indicators.

Grey Market Premium (GMP)
As of now, the Grey Market Premium (GMP) for the Shreenath Paper Products IPO is ₹0, indicating that there is no significant premium in the grey market for this offering. This suggests that the market is not expecting substantial listing gains upon the IPO's listing. However, it is essential to remember that the GMP is speculative and does not accurately reflect the future performance of the stock once it lists on the exchange.

IPO Valuation and Recommendation
Shreenath Paper Products presents an interesting case for investors, given its role in the supply chain solutions for paper-based raw materials. However, with a GMP of ₹0, and a P/E ratio suggesting that the IPO is priced at a relatively high valuation, it might not offer immediate gains for listing. Based on the company's financial performance and valuation metrics, we recommend that investors avoid the Shreenath Paper Products IPO for listing gains or long-term investment purposes. This IPO appears to be fully priced, and investors should be cautious in deciding whether to participate based on their investment goals.

The Upcoming IPOs in this week and coming weeks are Nukleus Office, Shreenath Paper.

The Current active IPO are Beezaasan Explotech, Swasth Foodtech, HP Telecom India.

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