Admin
9 October 2023

Kahan Packaging IPO: Weaving a Future in Packaging

Introduction:

Kahan Packaging Limited, established in 2016, specializes in providing bulk packaging solutions primarily to business-to-business (B2B) manufacturers in various industries such as agro-pesticides, cement, chemicals, fertilizers, and food products. The company manufactures a wide range of woven and flexible packaging products tailored to customer specifications. Kahan Packaging operates its manufacturing units in Asangaon, Maharashtra.

IPO Snapshot:

The Kahan Packaging IPO is valued at ₹5.76 crores, comprising an entirely fresh issue of 7.2 lakh shares. The IPO bidding period took place from September 6, 2023, to September 8, 2023. Allotment was finalized on September 13, 2023, with shares being listed on the BSE SME platform on September 15, 2023. The IPO was priced at ₹80 per share, with a minimum lot size of 1600 shares, requiring a minimum investment of ₹128,000 for retail investors. High Net Worth Individuals (HNI) had a minimum lot size of 2 lots (3,200 shares), amounting to ₹256,000.

Key Players:

Hem Securities Limited served as the book running lead manager of the Kahan Packaging IPO, while Purva Sharegistry India Pvt Ltd was the registrar for the issue. Hem Finlease was the market maker for the IPO.

Stock Performance:

As of September 28, 2023, Kahan Packaging Limited's stock (Arrow) was trading at ₹120.46, reflecting a 4.99% decrease. The stock opened at ₹120.46, reached a high of ₹131.50, touched a low of ₹120.46, and had a previous closing price of ₹126.79. The total traded value amounted to 84,800 shares. The 52-week high and low were ₹175.95 and ₹120.46, respectively

Ownership Structure:

Pre-issue shareholding stood at 99.95%, while post-issue, it was 73.49%.

Financial Performance:

Kahan Packaging has shown steady financial growth. As of March 31, 2023, the company's assets were valued at ₹1,449.34 lakhs, with revenue amounting to ₹1,755.93 lakhs. Profits after tax reached ₹103.38 lakhs, and the net worth of the company stood at ₹172.91 lakhs, with reserves and surplus of ₹72.91 lakhs. The total borrowing as of that date was ₹773.90 lakhs.

Performance Indicators:

Key performance indicators for the Kahan Packaging IPO included a P/E (Price-to-Earnings) ratio of 7.74 and a Market Capitalization of ₹21.76 crores.

Objectives of the Issue:

The net proceeds from the IPO were allocated for the following purposes:

1. Meeting working capital requirements.
2. General corporate purposes.

Expert Opinion:

Noted that Kahan Packaging Limited operates in a highly competitive and fragmented segment. While the company reported boosted net profit for FY23, he expressed concerns that this might be a window dressing to fetch a higher IPO price. Based on FY23 earnings, he opined that the issue appeared to be greedily priced and suggested considering other investment options.

Subscription Status:

The Kahan Packaging IPO garnered strong demand, with a subscription rate of 730.45 times as of September 8, 2023. Retail investors showed significant interest, with a subscription rate of 1,042.37 times. While the Qualified Institutional Buyers (QIB) category did not have any subscriptions, the Other category exhibited substantial demand with a subscription rate of 405.59 times.

Conclusion:

Kahan Packaging Limited operates in a competitive industry, and investors should carefully assess its long-term potential and business strategy before making an investment decision. As with any investment, due diligence is crucial to determine whether it aligns with one's investment objectives and risk tolerance.

Read More IPO related blogs - Jiwanram Sheoduttrai Industries IPO