Nikita Papers listed on NSE SME at ₹90 price at 13.46% discount to issue price

resr 5paisa Capital Ltd

Last Updated: 3rd June 2025 - 12:50 pm

4 min read

The paper and packaging solutions manufacturer, Nikita Papers Limited, has made a weak debut on the NSE SME platform. After closing its IPO bidding between May 27-29, 2025, the company made its stock market debut on June 3, 2025, at a 13.46% discount to the issue price. This book-building IPO raised ₹67.54 crore, marking an important step for India's paper manufacturing sector as the company aims to strengthen its production capacity, fund power plant setup, and meet working capital requirements for business expansion.

Nikita Papers IPO Listing Details

Nikita Papers Limited launched its IPO through book-building process in the price band of ₹95-104 per share with final issue price of ₹104. The minimum investment required was 1,200 shares costing ₹1,24,800. The IPO received a lukewarm response with an overall subscription of 1.43 times - retail segment at 1.84 times, NII at 2.11 times, and QIB at 0.74 times by the final day of bidding.

Listing Price:  The Nikita Papers IPO share price opened at ₹90 on NSE SME on June 3, 2025, marking a discount of 13.46% to the issue price of ₹104, reflecting investor caution about the company's near-term prospects.

Investor Sentiment: Nikita Papers holds a niche position in kraft and packaging papers manufacturing with focus on environmentally sustainable production processes using recycled materials.

First-Day Trading Performance Outlook

Nikita Papers commenced trading on NSE SME on June 3, 2025, witnessing a weak stock market debut. The Nikita Papers Share Price opened at ₹90, representing a 13.46% discount to its IPO price of ₹104. The company entered the market specialising in kraft paper production ranging from 70-200 GSM, serving industrial, commercial, and printing applications. During the market debut, investors and analysts closely monitored the stock's performance considering the paper industry's cyclical nature and the company's expansion plans.

Market Sentiment and Analysis

Nikita Papers Limited, incorporated in 1989, operates as a manufacturer of paper and paper products with specialization in kraft paper production. The company focuses on environmentally sustainable production processes, incorporating recycled materials in manufacturing and serves both domestic and international markets. The company offers durable and breathable packaging solutions ideal for wrapping, bags, cushioning, and various eco-friendly applications across multiple industry verticals.

Market Sentiment: Investors actively evaluate the company's niche positioning in kraft paper segment, capacity expansion plans, and prospects in India's packaging industry amid growing environmental consciousness.

Performance Indicators: Nikita Papers demonstrated mixed financial performance with revenue volatility but maintained profitability with ROE of 21.45% and ROCE of 28.71% in FY2024.

Listing Outlook: The weak listing with 13.46% discount reflects investor concerns about market conditions and company's near-term performance, despite its established position in the kraft paper segment.

Growth Drivers and Challenges

Nikita Papers presents growth potential with its niche positioning in kraft paper manufacturing, focus on sustainable production, and capacity expansion plans. The rising demand for eco-friendly packaging solutions and growing e-commerce sector support its business prospects. However, the company faces challenges including cyclical industry nature, raw material price volatility, intense competition, and the need for continuous capital investment in technology and capacity enhancement.

Growth Drivers:

  • Niche Market Position: Specialised focus on kraft paper manufacturing with established reputation as preferred supplier of brown packaging papers
  • Sustainable Production: Environmentally conscious manufacturing processes using recycled materials aligned with market trends
  • Capacity Expansion: Recent capacity expansion initiatives expected to contribute to revenue and profitability growth
  • Experienced Management: Long-standing operations since 1989 with experienced promoters and strategic market positioning
  • Diverse Applications: Products serve multiple end-use industries including packaging, industrial, and commercial applications
     

Challenges:

  • Industry Cyclicality: Paper industry subject to economic cycles and demand fluctuations affecting revenue predictability
  • Raw Material Volatility: Dependence on recycled materials and other inputs subject to price fluctuations
  • Weak Market Response: Low IPO subscription indicating investor caution about company's growth prospects
  • High Debt Levels: Significant borrowings requiring careful debt management and cash flow monitoring

Utilisation of IPO Proceeds

Nikita Papers plans to utilise the ₹67.54 crore raised from the fresh issue to strengthen its production infrastructure and support strategic business growth.

  • Power Plant Setup: ₹50 crore allocated for capital expenditure towards setting up power plant to enhance operational efficiency and reduce dependency on external power sources.
  • Working Capital: ₹5 crore earmarked for funding working capital requirements to support day-to-day operations and business growth.
  • General Corporate Purposes: Remaining funds allocated for general business needs including issue expenses and corporate initiatives.
     

Financial Performance of Nikita Papers

Nikita Papers has shown mixed financial performance with revenue volatility but maintained consistent profitability:

  • Revenue: ₹272.38 crore for December 2024, showing decline from ₹346.78 crore in FY2024, reflecting market challenges and industry cyclicality.
  • Net Profit: ₹15.68 crore in December 2024, compared to ₹16.60 crore in FY2024, demonstrating resilient profitability despite revenue pressures.
  • Net Worth: ₹93.05 crore as of December 2024, showing steady growth from ₹77.37 crore in FY2024, reflecting financial stability and reinvestment in business.
     

Nikita Papers offers a specialised investment opportunity in the kraft paper manufacturing segment with its focus on sustainable production and established market presence. While it faces challenges like industry cyclicality and market volatility, its niche positioning and capacity expansion plans provide long-term growth potential.

The IPO presents an opportunity for informed investors to participate in a company with strong fundamentals in India's evolving packaging industry, despite the weak listing performance reflecting current market sentiment and investor caution about near-term prospects.
 

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