SVPCL, a leading paper products manufacturer in South India, is open for subscription with a public issue of Rs 34.50 crore, till October 26, through a 100 per cent book-building process. The price band has been fixed at Rs 40-45 per equity share of Rs 10 each

The company is a paper product manufacturer with production facilities at Andhra Pradesh at Hyderabad, Vijayawada & Visakhapatnam Special Economic Zone.  Its manufacturing activities of paper products can be broadly categorized as Learning Aids, Business Stationery and Printing Services. Its products are selling under brand name "Classmate", "Lavanya" and "Deskmate".

Previous year, it registered CAGR of 70% in topline; 111% in EBITDA & 212% in bottomline.

The company had demonstrated strong strengths in Integrated content design & printing capabilities; printing services to overseas educational institutions, corporate, trading houses; and is one of the few large print houses in India in the organized sector catering to the educational & commercial sectors with decentralized bulk printing facilities.

The has a strong and competent Management team too.

One the weaknesses part, High cost of its borrowed funds; lack of requisite cost efficient infrastructure for manufacturing entire range of products; volatility in paper cost as it forms high percentage of raw material input cost; dependence on limited suppliers; no quality certification from ISO that would hamper it becoming an international brand.

Imports, especially from China pose a significant threat as those products are cheaper and better.

It is offering it’s shares at a price band of Rs.40 - Rs.45 at a P/E multiple of 13 & 15 respectively. The issue looks to be fully priced with not much room left for new investors. Last year, another company (from the same industry) i.e. Blue Bird India Limited, had come out with an issue of the same P/E as that of SL & is currently trading at a P/E of 7 with turnover being more than that of SL.

Considering these factors, and given the current political situation in the country that would definitely have impact on stock market, the issue may be ignored.