⚡ At a Glance
Aten Papers, born in 2019, is a Gujarat-based middleman that flips waste paper and Kraft rolls to packaging clients and mills. With 99% revenue from just one state, wafer-thin cash flows, and a modest ₹98.9 Cr market cap, this IPO smells less like pulp and more like pure speculation.
1. 🧻 What Does Aten Papers & Foam Actually Do?
No, they don’t make notebooks. Or foam mattresses. The “Foam” is just there for vibes.
What Aten does is play middleman for the paper packaging value chain — buying from one guy, selling to another, and pocketing the spread.
🧩 Business Model:
- Raw Material Supplier: Buys waste paper, sells it to paper mills
- Distributor: Buys Kraft paper & duplex board from mills, sells to packaging industry clients
In essence, they’re the “Scrap Dealer + Flipkart” of industrial paper.
2. 📦 Product Portfolio – The Krafty Breakdown
The company deals primarily in recycled paper products, mostly used in packaging, grocery bags, and decorative laminates.
📜 Key Products:
| Product | Application |
|---|---|
| Kraft Paper (12–40 BF) | Corrugated boxes, envelopes, grocery bags |
| Absorbent Kraft Paper | Laminates, interior decor, furniture |
| Tube Kraft Paper | Cylindrical tubes, industrial rolls |
| Paper Bag Kraft Paper | Biodegradable bags for grocery and pharma usage |
They’re also eyeing waste paper processing, planning ₹4.25 Cr investment into processing machinery. The goal? Better sourcing control, maybe better margins. Or at least better press releases.
3. 📍 Where’s the Business Coming From?
Short answer? Gujarat. Long answer? Still Gujarat.
📌 State-Wise Revenue (FY24):
- Gujarat – 99%
- Others (MP, Maharashtra, Rajasthan) – 1%
So if Ahmedabad floods or one truck union strikes, Aten is basically pani-pani.
💰 Product-Wise Revenue:
| Segment | FY24 Revenue Share |
|---|---|
| Kraft Paper | 76% |
| Waste Paper | 14% |
| Duplex Board | 9% |
| Other Papers | 1% |
It’s clear — Kraft is king, and Aten is riding it like the last camel in a desert economy.
4. 📊 Financials – Growth Paper or Tissue Thin?
Let’s rip open the balance sheet:
🧾 FY24 Performance:
| Metric | Value (₹ Cr) |
|---|---|
| Sales | 96.8 |
| Operating Profit | 5.15 |
| OPM | 5.32% |
| Net Profit | 2.78 |
| Net Margin | ~2.87% |
| ROE | 49.3% |
| ROCE | 23.2% |
| P/E Ratio | 35.6x |
| Market Cap (IPO) | ₹98.9 Cr |
⚠️ Yes, margins improved in FY24, but…
- Debtor days = 118 days
- Working capital days = 81
- Cash flow from ops in FY24 = ₹1.89 Cr
💬 That’s not a cash machine — that’s a UPI delay on steroids.
5. 🛠 Supply Chain Structure & Risky Linkages
🧿 Client & Supplier Concentration:
| Category | FY24 Share (Top 10) |
|---|---|
| Customers | 34.5% |
| Suppliers | 84.5% |
🤯 Almost all raw material supply comes from just 10 vendors — not ideal when you’re middleman-dependent.
Think of it this way: if one supplier hiccups, Aten sneezes… and the margins catch pneumonia.
6. 💸 IPO Structure – Small Raise, Big Leap?
📌 IPO Details:
- IPO Size: ₹31.7 Cr
- Listing Date: June 2025
- Utilization:
- ₹4.25 Cr for waste paper processing plant machinery
- Working capital & corporate purposes
No fancy acquisition. No big infra capex. Just better control of their existing trade — good… but safe.
🤏 At ₹98.9 Cr mcap and 35.6x P/E, the listing isn’t cheap. It’s more “growth priced in” than “value find.”
7. 🔍 What’s Working for Them?
✅ Improving Margins: OPM grew from 2% (FY22) to 5.3% (FY24)
✅ Debt reduced from ₹15.6 Cr to ₹11 Cr
✅ ROE is a juicy 49.3% (thanks to leverage + low base)
✅ Diversifying via in-house waste paper processing
✅ Decent revenue growth (CAGR ~4% over 3 years)
8. 🧠 What Should Make You Nervous?
❌ 99% revenue from Gujarat — zero geographic hedge
❌ Supplier concentration = 84% from just 10 names
❌ Cash conversion issues — 118 debtor days
❌ Low scalability — being a middleman has limited value-add
❌ P/E of 35.6 is unjustified for a B2B paper reseller with no IP, no brand moat, and minimal tech
TL;DR for the Lazy Investor:
- 📦 Aten is a paper-flipping B2B trader with some growth ambition
- 💰 Recent margin improvement looks nice, but it’s coming from a low base
- 📉 Customer base + state dependency is high-risk
- ⚠️ IPO valuation is not cheap at all — feels like a growth fantasy baked into a thin profit layer
Final EduVerdict: Krafty Business, But Not a Compelling Package
Aten is a classic SME IPO: niche, mid-margin, growing but nowhere close to dominating anything.
If you believe they’ll expand across India, bring in large clients, and make a margin leap with waste paper processing — it’s worth a watch.
Otherwise, you’re buying a paper distributor… at 35x earnings… during a packaging slowdown.
✍️ Written by Prashant | 📅 June 15, 2025
Tags: Aten Papers IPO, SME Listings 2025, Kraft Paper Stocks, Packaging Industry India, Waste Paper Processing IPO, EduInvesting SME
