Sanathan Textiles, a prominent player in the textile industry is preparing to launch its Initial Public Offering (IPO), marking a significant milestone in the company’s journey. The IPO is poised to attract significant attention from both institutional and retail investors as it represents an opportunity to invest in a well-established firm with a rich history and a strong presence in the textile sector. Sanathan Textiles is known for its high-quality fabric production, catering to a diverse range of clients from domestic to international markets.
In this article, we will explore the key details of the Sanathan Textiles IPO like its business model, financial performance, growth prospects and what investors can expect from this exciting opportunity.
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Sanathan Textiles IPO Details
Sanathan Textiles is launching ₹550 crore book-built issue which includes two components: a fresh issue of 1.25 crore new shares worth ₹400 crore and an Offer for Sale (OFS) of 0.47 crore existing shares valued at ₹150 crore. This dual approach allows the company to raise new capital by issuing fresh equity, while also giving existing shareholders the chance to sell their shares and realize returns on their investments.
Sanathan Textiles’ ₹550 crore IPO opens for subscription on Thursday, December 19, 2024 and will close on Monday, December 23, 2024. The allotment for Sanathan Textiles IPO is expected to be finalized on Tuesday, December 24, 2024 with a tentative listing date on the stock exchanges set for Friday, December 27, 2024. The price band for Sanathan Textiles shares has been fixed at ₹305 to ₹321 per share.
| IPO Name | Sanathan Textiles Limited |
| IPO Open Date | 19 December 2024 |
| IPO Close Date | 23 December 2024 |
| Price Band | ₹305 to ₹321 per share |
| Lot Size | 46 shares |
| Face Value | ₹10 per share |
| Total-Issue Size | 1,71,33,958 shares (aggregating up to ₹550.00 Cr) |
| Fresh Issue | 1,24,61,060 shares (aggregating up to ₹ 400.00 Cr) |
| Offer for Sale | 46,72,898 shares of ₹10 (aggregating up to ₹150.00 Cr) |
| Share Holding Pre Issue | 7,19,43,000 shares |
| Share Holding Post Issue | 8,44,04,060 shares |
| Share Allotment Date | 24 December 2024 |
| Initiation of Refund | 26 December 2024 |
| Credit of Shares to Demat | 26 December 2024 |
| Listing Date | 27 December 2024 |
| UPI Cut Off Time | 23 December 2024 – 5 P.M. |
| Listing Exchange Name | BSE, NSE |
| Lead Manager(s) of Issue | Dam Capital Advisors Limited (Formerly IDFC Securities Limited), ICICI Securities Limited |
| Registrar of Issue | Kfin Technologies Limited |
For detailed information, you can refer to Sanathan Textiles IPO RHP.
Sanathan Textiles IPO GMP
Ahead of the opening, the IPO has been getting a good response in the unlisted market where the issue is currently commanding a premium of about 9% in the grey market, with the latest GMP standing at ₹30, indicating an estimated listing price of ₹351.
Check IPO Live GMP: View now for Real-Time Updates
Sanathan Textiles IPO Lot Size
Sanathan Textiles Limited company has issued 1,71,33,958 shares worth ₹550 Cr for both fresh and offer for sale issues. The minimum lot size for an application is 1 lot (46 shares) and the minimum amount of investment required by retail investors is ₹14,766.
The minimum lot size investment for s-HNI (Small High Net Worth Individual) is 14 lots (644 shares), amounting to ₹2,06,724, while the maximum is 67 lots (3,082 shares), amounting to ₹9,89,322.
For b-HNI (Big High Net Worth Individual), the minimum lot size is 68 lots (3,128 shares) amounting to ₹10,04,088.
| Category | Lots | Shares | Amount |
|---|---|---|---|
| Retail(Min) | 1 | 46 | ₹14,766 |
| Retail(Max) | 13 | 598 | ₹1,91,958 |
| s-HNI(Min) | 14 | 644 | ₹2,06,724 |
| s-HNI(Max) | 67 | 3,082 | ₹9,89,322 |
| b-HNI(Min) | 68 | 3,128 | ₹10,04,088 |
Sanathan Textiles IPO Reservation Details
Below are the limits for the shares offered in the different investor categories for this IPO:
| Investor Category | Shares Offered |
| QIB Shares Offered | Not more than 50.00% of the Net Issue |
| Retail Shares Offered | Not less than 35.00% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15.00% of the Net Issue |
Sanathan Textiles IPO Anchor Investors Details
Sanathan Textiles raised ₹165 crore from anchor investors. The bid date for Anchor investors in the Sanathan Textiles IPO was December 18, 2024.
| Bid Date | December 18, 2024 |
| Shares Offered | 51,40,186 |
| Anchor Portion Size (In Cr.) | 165 |
| Anchor lock-in period end date for 50% shares (30 Days) | January 23, 2025 |
| Anchor lock-in period end date for remaining shares (90 Days) | March 24, 2025 |
About the Company
That concludes the details of this IPO. Now, let’s shift our focus to explore more about the company’s background, operations, strengths and risks, financial statements and key highlights.
Incorporated in 2005, Sanathan Textiles Limited is a polyester yarn manufacturer and a global supplier of cotton yarn. Sanathan is a prominent player in India’s textile industry. It manufactures a wide array of yarn products, including dope-dyed, industrial and specialty yarns tailored through extensive in-house research to meet diverse customer needs.
The company’s business is divided into three separate yarn business verticals, consisting of:
- Polyester yarn products
- Cotton yarn products
- Yarns for technical textiles and industrial uses. These technical textiles are used in various sectors such as automotive, healthcare, construction, sports, outdoor activities and protective clothing.
As of September 30, 2024, the company boasts over 3,200 active varieties of yarn products and more than 45,000 stock-keeping units (SKUs). Its diverse portfolio includes over 14,000 yarn varieties and more than 190,000 SKUs for various applications.
The company has installed rooftop solar projects with a capacity of 2.35 MW at its Silvassa facility, contributing to its goal of increasing the share of renewable energy in its consumption. The firm’s strategic focus on expanding its product offerings and leveraging growth in the textile industry positions it well to capitalize on emerging market opportunities.
The company’s clients comprise several multinational, regional and local companies such as Welspun India Limited, Page Industries Limited, Valson Industries Limited, G.M. Fabrics Private Limited, Premco Global Limited, Creative Garments Textile Mills Private Limited, Banswara Syntex Limited, AYM Syntex Limited, Techno Sportswear Private Limited, Haren Textiles Private Limited, Khosla Profil Private Limited, Tulip Elastics Private Limited and more.
As of June 30, 2024, Sanathan Textiles Limited exported its products to 14 countries, compared to 27 countries in fiscal 2024 and 29 countries in fiscal 2023. By June 30, 2024, the company had over 925 distributors across seven countries including India, Argentina, Singapore, Germany, Greece, Canada and Israel.
With the Indian textile and apparel industry projected to grow significantly, Sanathan Textiles is poised to capitalize on this trend, supported by its extensive network, diverse customer base and experienced management.
Competitive Strengths:
- The company is one of the few companies (amongst our peer group) in India with a presence across the polyester, cotton and technical textile sectors.
- Focus on the product development of new products through process innovation.
- Fully integrated yarn manufacturing plant set up at a strategic location with equipment supplied by domestic and globally renowned players.
- Long-standing association with leading consumer brands with a low customer concentration.
- Deep knowledge and understanding of optimal product assortment and strong supplier network enabling procurement at predictable and competitive pricing, leading to an overall efficient cycle.
Industry Outlook:
- India’s textile industry contributes 2.3% to GDP and 12% to exports, with cotton and jute production leading globally. Exports are projected to hit $65 billion by FY26.
- Employing 45 million directly and 100 million in related sectors, India ranks as the world’s second-largest PPE manufacturer with a market forecast of $92.5 billion by 2025.
Objectives of Sanathan Textiles IPO
The company proposes to utilize the net proceeds towards the following objects:
- General corporate purposes.
- Repayment and/ or pre-payment in full or part of certain borrowings availed by the company.
- Investment in the subsidiary viz. Sanathan Polycot Private Limited for repayment and/ or pre-payment in full or part of certain borrowings availed by the subsidiary viz. Sanathan Polycot Private Limited.
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Sanathan Textiles Limited Financial Information (Restated Consolidated)
In the fiscal year 2023-24 (from April 1, 2023, to March 31, 2024), Sanathan Textiles Limited saw an 11% decline in revenue and a 12% decrease in profit after tax (PAT).
| Period Ended | 31 Mar 2022 | 31 Mar 2023 | 31 Mar 2024 | 30 Jun 2024 |
| Assets | 1,796.47 | 1,906.67 | 2,203.68 | 2,529.53 |
| Revenue | 3,201.46 | 3,345.02 | 2,979.8 | 787.76 |
| Profit after Tax | 355.44 | 152.74 | 133.85 | 50.07 |
| Net Worth | 987.39 | 1,140.13 | 1,273.98 | 1,324.06 |
| Total Debt | 378.19 | 281 | 379.88 | 644.93 |
| Amt in ₹ Crore | ||||
Key Performance Indicators
Sanathan Textiles Limited has a current market capitalization of ₹2709.37 crore. As of March 31, 2024, the company’s key performance indicators (KPIs) include a Return on Capital Employed (ROCE) of 11.80% and a PAT Margin of 4.53%.
| Key Performance Indicators | Value |
|---|---|
| ROE | 11.09% |
| ROCE | 11.80% |
| Debt/Equity | 0.29 |
| RoNW | 10.42% |
| Price to Book Value | 1.81 |
| PAT Margin | 4.53% |
The EPS and PE ratios before and after the Sanathan Textiles IPO issue are detailed in the list below:
| Ratios | Pre IPO | Post IPO |
| EPS (Rs.) | 18.60 | 23.73 |
| P/E (x) | 17.25 | 13.53 |
- The Pre-IPO EPS is calculated based on the pre-issue shareholding as of the RHP date and the most recent FY earnings as of March 31, 2024, as disclosed in the RHP.
- The Post-IPO EPS is determined based on the post-issue shareholding and the annualized FY earnings as of June 30, 2024, as disclosed in the RHP.
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Sanathan Textiles IPO Review (Apply)
The review of the Sanathan Textiles IPO has been done based on the following points:
- Revenue Growth: Revenue declined from ₹3,201.46 crore in FY22 to ₹2,979.80 crore in FY24.
- Profit Growth: The profit after tax (PAT) has decreased significantly from ₹355.44 crore in FY22 to ₹133.85 crore in FY24. With a PAT margin of 4.49%, the company demonstrates relatively low profitability, which is below the industry average for the textile sector.
- Valuation Metrics: Pre-IPO P/E: 17.25 | Post-IPO P/E: 13.53
As per the RHP, the company has shown K.P.R. Mill Limited, Vardhman Textiles Limited and Indo Count Industries Limited as their listed peers. They are trading at the P/E of 45.4, 20.2 and 25.6 (as of December 17, 2024) respectively. However, they are not truly comparable on an apple-to-apple basis. The average P/E ratio for the textile sector is around 27x, so the company looks undervalued as of now.
- Return on Capital Employed (ROCE) and Return on Net Worth (RoNW):
ROCE: 11.80% reflects the company’s capital efficiency.
RoNW: 10.42% is extremely good for long-term investors.
- GMP and IPO Price Band: With a price band of ₹305 to ₹321 per share and a GMP of ₹30, the market shows little interest, suggesting a potential listing gain of only 9%.
Strengths
- Strategic Product Mix: Sanathan Textiles’ presence across three key yarn segments enables it to cater to diverse industries and reduce dependency on any single product line.
- Integrated Manufacturing Facility: The state-of-the-art manufacturing unit in Silvassa ensures cost efficiency, quality control and scalability to meet market demand.
- Long-Standing Customer Relationships: The company has established trust with leading consumer brands such as Welspun India Limited, Premco Global Limited, and Creative Garments Textile Mills Private Limited, ensuring consistent revenue streams.
- Focus on Innovation: With a commitment to product development and process innovation, Sanathan Textiles continuously expands its portfolio to meet evolving customer needs.
Risks
Here are some of the risk factors involved in the IPO that investors should know before subscribing to the issue. These risk factors have been highlighted by the company in its Red Herring Prospectus (RHP):
- High Revenue Dependence on a few Suppliers: Sanathan Textiles does not have long-term agreements for sourcing raw materials, and so it relies heavily on a few key suppliers. If the required quality and quantity of raw materials cannot be sourced at competitive prices or there is a delay in the procurement of materials, the company’s business, financial condition and operational results could be negatively impacted.
- Revenue Concentrated in a few States poses Geographic Risks: A large portion of the company’s revenue comes from customers in Gujarat, Maharashtra and Punjab. Gujarat, Maharashtra and Punjab contributed ₹529.74 crore, ₹1,024.70 crore and ₹295.39 crore in FY24 respectively.
- Equipment Maintenance and Obsolescence pose Operational Risks: The company’s operations are centered around its Silvassa facility. Any major disruption in the unit could adversely impact production and financial results.
- Dependence on few customers: The top 10 customers contributed ₹193.64 crore (24.79%) in the quarter ending June 30, 2024 and ₹653.08 crore (20.50%), ₹734.06 crore (22.05%) and ₹685.02 crore (23.16% to the revenue from operations in FY22, FY23 and FY24 respectively. Any loss of any of these customers or any cancellation or changes to customer orders could negatively impact business performance and financial stability.
All the above-mentioned risks should be considered by investors before deciding to invest in the IPO.
Opinion
Although the revenue, PAT and PAT margin have declined over the past three years, the current valuation of Sanathan Textiles still appears good. You can go through the points mentioned below and plan accordingly:
- For Long-Term Investors: Sanathan Textiles IPO appears attractive in valuation terms in comparison to its peers and therefore can be applied for investment. Investors might consider holding their investments for the medium to long term.
- For Short-Term Investors: The IPO seems average, with limited potential for short-term listing gains due to low investor interest, suggesting only small listing gains.
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Additional Details
Promoter Holding
Nimbus Trust, D&G Family Trust, A&J Family Trust, P&B Family Trust, Mr. Paresh Vrajlal Dattani, Mr. Ajay Vallabhdas Dattani, Mr. Anilkumar Vrajdas Dattani and Mr. Dinesh Vrajdas Dattani are the promoters of the company. Their shareholding before and after the issue is as follows:
| Pre Issue Shareholding | 100% |
| Post Issue Shareholding | 67.13% |
Sanathan Textiles IPO Allotment Status: Check Now
Sanathan Textiles Limited Contact Details
Address: SRV No. 187/4/1/2, Near Surangi Bridge, Surangi, Dadra & Nagar Haveli, Silvassa – 396230
Phone: +91-2266343312
Email: [email protected]
Website: https://www.sanathan.co/
Sanathan Textiles IPO Registrar Details
Registrar: Kfin Technologies Limited
Address: KFintech, Tower-B, Plot No 31 & 32, Financial District, Nanakramguda, Gachibowli, Hyderabad, Telangana – 500032
Phone: 04067162222, 04079611000
Website: https://kosmic.kfintech.com/ipostatus/
Disclaimer: This article is written solely for educational purposes and should not be interpreted as investment advice or recommendations. The stock market involves significant risks, so we encourage you to seek guidance from a financial advisor before making any investment decisions.
FAQs
Q1. What is Sanathan Textiles IPO?
Sanathan Textiles IPO is a book-built issue, which includes two components: a fresh issue of 1.25 crore new shares worth ₹400 crore and an offer for sale (OFS) of 0.47 crore existing shares valued at ₹150 crore.
Q2. What is the price band of Sanathan Textiles IPO?
The price band of this IPO has been fixed at ₹305 to ₹321 per share. This price range presents a good opportunity for investors.
Q3. What are the important dates for Sanathan Textiles IPO?
The IPO opens on 19 December 2024 and closes on 23 December 2024. The listing of shares will take place on 27 December 2024 on both the exchanges.
Q4. How many shares are being offered in the Sanathan Textiles IPO?
A total of 1,71,33,958 shares are being offered in the company’s IPO.
Q5. What is the lot size of Sanathan Textiles IPO?
The lot size of the Sanathan Textiles IPO is 46 shares.
Q6. How can I apply for Sanathan Textiles IPO?
You can apply for the Sanathan Textiles IPO online. The application can be made via UPI, and the deadline for submission is 23 December 2024.
Q7. What is the expected listing gain for Sanathan Textiles IPO?
The GMP of the Sanathan Textiles IPO has reached ₹30, indicating an expected listing gain of around 9%.
Q8. What is the business model of Sanathan Textiles?
Sanathan Textiles is a textile company engaged in the manufacturing of polyester yarn and cotton.
