Aten Papers & Foam is listed on BSE SME at ₹90 price with a 6.25% discount from the issue price

The paper and paper products intermediary, Aten Papers & Foam Limited, made a tepid debut on the BSE SME platform. After closing its IPO bidding between June 13 - June 17, 2025, the company made its stock market debut on June 20, 2025, at a 6.25% discount to the issue price, delivering negative returns to investors. This book-building IPO raised ₹31.68 crore with a modest subscription of 1.49 times, reflecting muted investor sentiment for the paper products sector as the company aims to expand working capital requirements and strengthen capital expenditure.

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Aten Papers & Foam IPO Listing Details

Aten Papers & Foam Limited launched its IPO through the book-building process, and the Aten Papers & Foam stock price was set at ₹96 per share. The minimum investment required was 1,200 shares costing ₹1,15,200. The IPO received a modest response with an overall subscription of 1.49 times, retail segment at 2.17 times, QIB at 2.91 times, and NII at 0.66 times by the final day of bidding, indicating lukewarm investor interest across categories. Aten Papers & Foam's share price is listed at ₹90 on BSE SME, offering a 6.25% discount from the issue price. Aten Papers & Foam's stock price debut reflects weak market sentiment and a cautious investor approach towards the company.

Listing Price: The Aten Papers & Foam share price opened at ₹90 on BSE SME on June 20, 2025, representing a discount of 6.25% from the issue price of ₹96, resulting in immediate losses for investors at listing.

First-Day Trading Performance Outlook

Aten Papers & Foam IPO commenced trading on the BSE SME on June 20, 2025, witnessing a weak stock market debut. The Aten Papers & Foam share price opened at ₹90, marking a 6.25% discount from its IPO price of ₹96, delivering negative returns to investors at listing. The listing performance went contrary to grey market expectations, reflecting cautious investor sentiment. The company entered the market with established operations as a key intermediary in the paper product supply chain, sourcing paper from various mills and supplying it to clients in the packaging industry.

Growth Drivers and Challenges

Aten Papers & Foam presents growth potential with its established position as an intermediary in the paper product supply chain, diverse product portfolio including Kraft paper and duplex boards, and strong relationships with paper mills and packaging industry clients. The growing packaging industry and e-commerce demand support the need for paper products. However, the company faces challenges, including intense competition in the paper trading business, concerns about aggressive valuation noted by analysts, and dependency on paper mill pricing and availability affecting margins.

Growth Drivers:

• Supply Chain Position: Key intermediary role in paper product supply chain, sourcing from various mills and supplying to packaging industry clients with established relationships
• Diverse Product Portfolio: Comprehensive range including Kraft paper, duplex boards, absorbent Kraft paper, paper bag Kraft paper, and tube Kraft paper in various grades and thicknesses
• Wastepaper Trading: An Additional revenue stream through purchasing and selling wastepaper to paper mills as a crucial raw material, creating a circular business model
• In-house Logistics: Operational advantage with in-house logistics capabilities and ready stock availability, ensuring efficient customer service
• Financial Performance: Strong revenue growth of 43% and exceptional PAT surge of 152% in FY25, demonstrating improved operational efficiency

Challenges:

• Aggressive Valuation Concerns: Analysts are noting aggressive pricing of the issue based on financial performance, suggesting potential overvaluation risks and sustainability concerns
• Sudden Profit Surge: Concerns about the sustainability of the boost in bottom lines from FY24 onwards, raising questions about long-term profitability trends
• Trading Business Risks: Operating as an intermediary with dependency on paper mill pricing, availability, and packaging industry demand affecting profit margins
• Limited Scale: Small-scale operations with 14 employees as of November 2024, limiting operational capacity and market expansion capabilities

Utilisation of IPO Proceeds

Aten Papers & Foam plans to utilise the ₹31.68 crore raised from the fresh issue to strengthen its operational capabilities and support business expansion.

• Working Capital Requirements: ₹15.50 crore allocated for meeting working capital requirements to support business operations and inventory management for paper trading activities.
• Capital Expenditure: ₹4.27 crore designated for capital expenditure to enhance operational infrastructure and capabilities in the paper products business.
• General Corporate Purposes: Remaining funds allocated for general business needs and corporate initiatives to support strategic growth plans and operational requirements.

Financial Performance of Aten Papers & Foam IPO

Aten Papers & Foam has shown strong financial performance with notable profitability improvement:

• Revenue: ₹138.70 crore for FY25, demonstrating solid business momentum with 43% growth from ₹96.80 crore in FY24, reflecting strong demand for paper products in the packaging industry.
• Net Profit: ₹7.01 crore in FY25, showing an exceptional growth trajectory with a 152% surge from ₹2.78 crore in FY24, showcasing improved operational efficiency and margin expansion.
• Financial Metrics: The company shows a high ROE of 66.53% and solid ROCE of 43.84%, though with an elevated debt-to-equity ratio of 0.79, indicating a leveraged capital structure and financial risk.
   

Aten Papers & Foam offers a mixed investment opportunity in the paper products trading sector with its established intermediary position, diverse product portfolio, and strong financial performance improvement. While it faces challenges like aggressive valuation concerns, sustainability questions about profit surge, and weak listing performance, its supply chain position and expansion plans provide potential for capitalising on India's growing demand for paper products, driven by the packaging industry growth and e-commerce expansion. The weak listing performance with a 6.25% discount reflects cautious investor sentiment towards the company's business model and growth prospects in the competitive paper trading market.