Udaan files for IPO to fund expansion

Udaan Paper Industries, which specialises in manufacturing corrugated boxes for secondary and tertiary packaging, is proceeding with its initial public offering (IPO) plans for listing on the Bombay Stock Exchange Small and Medium Enterprises (BSE SME) platform. The planned public issue consists entirely of a fresh issue of up to 30,72,000 equity shares of face value INR 10 each, with no offer for sale component. The entire fundraising initiative is dedicated to fuelling a significant expansion and strengthening the company's working capital base, setting a strategic goal to capitalise on India’s accelerating paper packaging market, which is projected to grow from INR 492-billion in FY2025 to INR 868-billion by FY2030.

The company intends to allocate a total of INR 894.62-lakh from the net proceeds toward capital expenditure for expanding its existing Pithampur manufacturing facility. This includes the construction of an additional shed and the installation of a new 5-ply corrugation machine. This expansion is expected to nearly triple the installed capacity of the Pithampur unit (Unit I) from approximately 22,500-tonnes per annum (TPA) to 52,500 TPA, which will effectively double the company's total aggregate installed capacity across its two units from 30,000 TPA to approximately 60,000-tpa. Commercial operations from the expanded facility are estimated to commence by August 2026. An additional INR 850-lakh of the net proceeds has been earmarked for meeting the company's working capital requirements.

Udaan Paper Industries has demonstrated significant financial improvement in recent years. The company reversed a prior loss of (INR 95.62-lakh) in fiscal year 2023 to achieve a profit after tax (PAT) of INR 233.91-lakh in FY 2024, further improving to INR 351.26-lakh in FY 2025. Revenue from operations followed a similar upward trend, growing from INR 4,412.64-lakh in FY 2023 to INR 6,456.60-lakh in FY 2025. In the most recent reported period, the three months ended 30 June  2025, the company maintained profitability with a PAT of INR 136-lakh on a revenue of INR 2,011.26-lakh. This performance resulted in an earnings per share (EPS) of INR 4.88 and a strong return on net worth (RoNW) of 47.39% for FY 2025.

Despite strong growth, the company operates in a sector marked by inherent risks. The primary concern is customer concentration, with the top 10 customers accounting for 90.96% of revenue during the three months ended 30 June 2025. Additionally, the principal raw material, kraft paper, is sourced under short-term arrangements, leaving the company exposed to risks of supply shortages and price volatility. The company also noted past delays in complying with various statutory dues, such as GST and EPF, and is still in the process of obtaining final approvals for its planned Pithampur expansion, including the Fire No Objection Certificate. The total outstanding indebtedness as of 30 June 2025, stood at INR 2,614.43-lakh.