🟢 At a Glance
Nikita Papers, a 35-year-old Kraft paper veteran, just listed on NSE SME at ₹99. With 90% plant utilization, 219% PAT growth, and big CAPEX moves (hello solar power!), this might just be the most profitable recycling story since Kabadiwala 2.0.
🧻 About the Company
Founded in 1989 — yes, back when Doordarshan still ruled — Nikita Papers Ltd manufactures Kraft Paper, the kind that powers:
- 📦 Corrugated Boxes
- 🛍️ Carry Bags
- 🧃 Food & Pharma Packaging
🎯 Product Portfolio:
- Corrugation Paper: 120–200 GSM, 18–32 BF
- Fluting Paper: 100 GSM, 18–22 BF
- Carry Bag Paper: 80–120 GSM, 22–30 BF
📍 Use Case: Think Amazon parcels, biryani boxes, and your next Swiggy delivery’s paper bag.
🏭 Manufacturing & Capacity
| Plant | Year | Capacity (TPD) | Utilization |
|---|---|---|---|
| PM-1 | 1992 | 150 TPD | 86% |
| PM-2 | 2021 | 250 TPD | 90% |
| Total | – | 99,750 MTPA | 90% (FY24) |
🚨 9MFY25 Utilization: Just 62%
(Possibly seasonal slowdown or maintenance shutdown)
🪴 Upcoming CAPEX:
- 1 MW Solar Plant (Opex model)
- Generates ~4,000 units/day, lowering power costs
📦 Revenue Bifurcation (9MFY25)
| Source | % of Revenue |
|---|---|
| Kraft Paper | 95.40% |
| Waste Paper & Others | 2.72% |
| EPR Credits (Recycling Tokens) | 1.88% |
📦 Translation: It’s a pure-play paper business — no unrelated side hustles (yet).
🌍 Geography & Sourcing
- Revenue Origin:
- 93% from Uttar Pradesh
- Rest: Delhi, Haryana, Punjab
- Raw Material:
- Sourced from India, USA, and Canada
- Major suppliers: 13 domestic; Top 5 = 69% of raw spend
♻️ Fun fact: They use waste paper as their main input, literally turning trash into cash.
📊 Financials Snapshot
| Metric | FY22 | FY23 | FY24 |
|---|---|---|---|
| Revenue (₹ Cr) | 355 | 398 | 338 |
| Net Profit (₹ Cr) | 5 | 5 | 21 |
| EBITDA % | 8% | 7% | 12% |
| ROCE % | 9% | 9% | 16% |
| ROE % | – | – | 26% |
| Cash from Ops | ₹9 Cr | ₹10 Cr | -₹12 Cr |
| Borrowings | ₹144 Cr | ₹163 Cr | ₹189 Cr |
📉 TTM Sales Decline: -15%
📈 TTM PAT Growth: +219%
🛠️ IPO Details
📅 Listed: June 3, 2025
💰 Raised: ₹67.5 Cr
💸 Utilization:
- Capex (Solar plant)
- Working Capital
- General Corporate
- Issue expenses
👥 Employees: 208 (Dec 2024)
👀 Revenue Concentration Risks
| 🔍 Insight | Value |
|---|---|
| Top 10 customers | 84% of revenue |
| Total dealers | 13 |
| Geography skew | 93% from UP |
🚩 Interpretation: One state, few clients = concentration risk
⚖️ Fair Value Estimate 🔍
Assume FY25 PAT = ₹25 Cr
Apply SME Paper Sector PE = 13x–16x
🎯 Market Cap FV Range = ₹325 Cr – ₹400 Cr
Outstanding Shares ≈ 2.47 Cr
🧮 Fair Value Range = ₹131 – ₹162
📉 CMP = ₹99
🎯 Upside: ~32% – 63%
📌 EduInvesting Take
Nikita Papers is an old-school, low-noise business that’s gone public like it’s a young D2C tech startup. Except — it sells kraft paper, not cosmetics.
✅ 219% PAT growth
✅ 16% ROCE
✅ Near-max utilization
✅ Green energy CAPEX
But…
❌ Cash from Ops is negative
❌ Working capital days up to 172
❌ Promoter holding dipped by 12.8%
❌ Debtors stretch from 103 → 134 days
It’s like a well-run paper mill that’s slightly out of breath from chasing too much growth too fast.
🚩 Risks & Red Flags
📉 Negative CFO in FY24: Not ideal for a manufacturing firm
📈 Inventory + Debtor Days Rising: Locking up capital
🛑 Customer + Regional Concentration: Too UP-centric
👀 Other Income = ₹12.7 Cr in FY24: Needs scrutiny
🧠 Final Word
Nikita Papers is one of those “stealth” SME stories — 35 years of low drama, now chasing solar energy and public markets. The fundamentals are clean, capacity is sweating, and margins are rising.
But tight working capital and promoter sell-down make us pause.
If FY25 delivers ₹25 Cr PAT with stable utilization and debtor control, the ₹99 stock could pulp its way to ₹160.
📦 Is it paper? Or is it packaging for your next 60% return?
✍️ Written by Prashant | 📅 June 16, 2025
Tags: nikita papers, kraft paper ipo, sme stock analysis, paper manufacturing, solar capex, sme multibaggers
