Shreenath Paper Products shares hit 5% lower circuit after listing at 20% discount on BSE SME

Shreenath Paper Products shares were listed at a 20% discount on the BSE SME platform on Wednesday, marking a weak debut on the stock exchange.

Shreenath Paper Products shares opened for trading at ₹35.2 per piece, down by 20% over the issue price of ₹44 apiece. Soon after listing, the stock further declined up to 5% to hit the lower circuit limit at ₹33.44 per share due to selling by investors.

According to BSE data, within minutes of listing, more than 93,000 equity shares changed hands on the BSE SME platform. The total turnover stood at ₹32.11 lakh, and the company's market valuation stood at ₹65.72 crore.

At the listing price of ₹35.2 per share, the value of a single lot of equity shares bagged by IPO investors stood at ₹1,05,600 (₹35.2 x 3,000). Shreenath Paper Products IPO investors would have faced a loss of ₹26,400 per lot as the minimum investment in a single lot was ₹1,32,000 (₹44 x 3,000).

Paper products supplier Shreenath Paper Products Ltd launched its initial public offering on the BSE SME platform on February 25 to mobilise ₹23.36 crore from investors. The fixed price issue comprised only a fresh issue of 53.1 lakh shares.

The IPO received strong demand from retail investors. The public offer closed for bidding on February 28 with an overall subscription of nearly 2 times. The BSE SME issue received applications for more than 96 lakh equity shares against 50.28 lakh shares on offer.

The retail portion of the IPO was booked more than 3 times as applications for 80 lakh shares were received against 25.14 lakh shares set aside for retail investors.

The non-retail portion received poor demand from non-institutional investors (NIIs). The non-retail portion was booked around 63% as applications for 16 lakh shares were received against 25.14 lakh shares on offer.

Founded in 2011, Shreenath Paper Products is engaged in the supply of various paper products that are used in various industries such as pharmaceuticals, FMCG, food and beverages, textiles and e-commerce.

The company sources paper products from manufacturers and supplies to end users. Its product portfolio includes high-strength paper, straw paper, sublimation base paper, thermal base paper, cup stock paper, security PSA sheets and other products.

The company supplies products mainly in Gujarat, Maharashtra and Madhya Pradesh.

According to the Shreenath Paper Products RHP, the company will use ₹18 crore of IPO proceeds to finance working capital needs and ₹2.87 crore for general corporate purposes.

The company reported a net profit of ₹2.41 crore for the April-September period of FY 2024-25. Its revenue stood at ₹78.62 crore in the first six months of FY 2024-25.

Shreenath Paper Products reported a net profit of ₹4.39 crore in FY 2023-24 against that of ₹4.38 crore in the preceding financial year.

Its revenue declined to ₹185.84 crore in FY 2023-24 from ₹204.43 crore in the previous fiscal.