Three M Paper Boards Limited IPO

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The company specializes in manufacturing recycled paper-based Duplex Board products, utilized in various packaging applications across multiple industries, including food and beverage, pharmaceuticals, cosmetics, and consumer goods. They supply high-quality duplex board paper products to both domestic and international markets. Their products are made entirely from recycled waste paper and are fully biodegradable, reflecting their commitment to sustainability.

Market Opportunities

Given the current per capita paper consumption in India, they see substantial opportunities ahead. The growth of e-commerce, rising literacy rates, and the expansion of the FMCG, packaged food, and stationery industries signal a promising future for the Indian paper industry. Despite increasing digitization, the industry is expected to achieve double-digit growth over the next five years. Additionally, changes in Chinese raw material import policies, which have restricted their production and imports of certain waste paper varieties, have positively impacted Indian waste paper-consuming mills.

Strategic Focus

Their company’s performance is driven by a strategic focus on being a low-cost paper manufacturer, integrating new technologies and processes systematically. They have decided to accelerate this transition by setting up a new 400 tons per day (TPD) Duplex Machine. This new plant aims to meet the increasing demand for duplex board products and leverage their expertise in this segment. The project, expected to cost INR 400 crore, will be funded through debt, internal accruals, and equity participation.

Future Prospects

With the planned expansion and their strategic initiatives, they are poised to capitalize on the growing demand for recycled paper-based packaging solutions. Their commitment to sustainability, coupled with their focus on innovation and cost-efficiency, positions them to achieve significant growth and solidify their market leadership in the coming years.

Objects of the Three M Paper Boards Limited IPO:

The Company proposes to utilise the Net Proceeds from the Issue towards the following objects: i. Capital expenditure for installation of new machinery, modernisation of certain processes under existing manufacturing facility and installation of plastic fired low pressure boiler; ii. Funding long-term working capital requirements of the Company; and iii. Prepayment or repayment of all or a portion of outstanding borrowing availed by the Company; iv. General corporate purposes.

Three M Paper Boards Limited IPO Details:

Open Date: Jul 12 2024
Close Date: Jul 16 2024
Total Shares: 5,772,000
Face Value: ₹ 10 Per Equity Share
Issue Size: 39.83 Cr.
Lot Size: 2000 Shares
Issue Price: ₹ 67 - 69 Per Equity Share
Listing At: BSE SME
Listing Date: Jul 19 2024

Promoters And Management:

Hitendra Dhanji Shah, appointed Chairman and Whole Time Director of the Company on January 11, 2024, holds a Bachelor's in Science from Mumbai University. With over 33 years of experience in the paper business, he has been instrumental since the Company's inception. As the founder, he transformed a distressed mill in 1989 and has been crucial in product development, marketing, finance, administration, strategic planning, and business development. Prafulla Hitendra Shah, is the Whole Time Director of the Company and was appointed on January 11, 2024. She holds a Bachelor’s degree in Arts from Smt. Maniben M. P. Shah Women’s College of Arts, Matunga Mumbai and has more than 20 years of experience in the field of Administration. Rushabh Hitendra Shah, appointed Managing Director on August 1, 2022, holds a mechanical engineering degree from Robert Gordon University, Scotland, and a diploma from the Maharashtra State Board of Technical Education. With over 15 years of experience in product and marketing, he has overseen the Company's production and marketing since 2007. His expertise in market research, target market identification, project management, and IT has significantly enhanced the Company's operations.

Financials of Three M Paper Boards Limited IPO:

Particulars ( In Lakhs )
2021
2022
2023
2024
Revenue from Operations 16,509 31,290 32,725 27,223
Other Income 43 310 250 378
Total Revenue 16,552 31,600 32,975 27,602
Cost of Material Consumed 7,704 17,476 18,274 14,576
Direct Expenses 1,321 1,874 2,269 2,219
Change in Inventories 29 -1,075 -608 -159
Employees Benefit Expenses 909 1,602 1,436 1,401
Other Expenses 5,133 9,968 9,437 6,859
EBITDA 1,455 1,755 2,166 2,707
OPM (%) 8.79% 5.55% 6.57% 9.81%
Depreciation & Amortisation 556 563 605 662
EBIT 899 1,192 1,562 2,045
Finance Cost 666 733 964 746
PBT 234 459 598 1299
Tax 61 132 -64 164
PAT 173 328 662 1135
NPM (%) 1.04% 1.04% 2.01% 4.11%
No.of Shares 192.37 192.37 192.37 192.37
EPS 0.89 1.70 3.43 5.89

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Three M Paper Boards Limited 272 11 5.89 11.7 69 133
N R Agarwal Industries Ltd 1,293 125 73.72 6.6 486 827
Kuantum Papers Ltd 1,211 184 21.07 8.2 172 1,504
Shree Ajit Pulp and Paper Ltd 295 8 9.27 14.8 228 122
* All the data is as per FY24.

Recommendation on Three M Paper Boards Limited IPO:

1. Three M Paper Boards Limited specializes in manufacturing recycled paper-based Duplex Board products used in various packaging applications across industries such as food and beverage, pharmaceuticals, cosmetics, and consumer goods. The company’s products are made from 100% recycled waste paper and are biodegradable, highlighting their commitment to sustainability. 2. Market Opportunities The company sees significant opportunities ahead due to the rising importance of e-commerce, increasing literacy rates, and the growth of the FMCG, packaged food, and stationery industries in India. The Indian paper industry is expected to outpace global growth despite increasing digitization. Changes in Chinese raw material import policies have also positively impacted Indian waste paper-consuming mills, adding to the bullish outlook for the Indian paper industry. 3. SWOT Analysis Strengths: i. In-house Core Competency                    ii. Low Power Costs                      iii. Waste Utilization iv. Stable Coal Supply                                 v. Established Network                 vi. Brand Recognition Weaknesses: i. High Initial Capital Investment                                       ii. Environmental Compliance Costs iii. Dependency on Imported Raw Materials                   iv. Lack of Own Collection Centers Opportunities: i. Plastic Ban                               ii. Regional Demand                          iii. Export Potential iv. FMCG Sector Growth           v. Cost-Effective Alternatives           vi. Environmental Awareness Threats: i. Environmental Regulations                          ii. Competition                         iii. Thin Margins iv. Foreign Exchange Fluctuations                 v. Supply Chain Disruptions 4. Competition The company faces competition from other players in the paper industry, such as N R Agarwal Industries Ltd., Kuantum Papers Ltd., Shree Ajit Pulp and Paper Ltd., and Astron Paper & Board Mill Limited. Competition is based on product range, production capacity, and quality. 5. The Revenue has Increased from Rs.165 Crores in FY21 to Rs.272 Crores in FY24. 6. The EBITDA has Increased from 14 Crores in FY21 to 27 Crores in FY24. 7. The PAT has Increased from 1.7 Crore in FY21 to 11 Crores in FY24. 8. As per FY24, CFO/EBITDA is 0.87, and EPS is 5.89, 9. Market Capitalization is 133 Crores and P/E is 11.7x based on FY24.

Lead Manager of Three M Paper Boards Limited IPO:

  1. Comfort Securities Pvt Ltd

Registrar of Three M Paper Boards Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Three M Paper Boards Limited A33 & 34, Floor -2, Royal Industrial Estate 5-B Naigaon Cross Road Wadala, Mumbai- 400031 Phone: +91 22 6812 5757 Email: compliance@threempaper.com Website: https://www.threempaper.com/

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