| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 305 to ₹ 321 | 46 | 19th Dec, 2024 – 23rd Dec, 2024 | ₹ 550.00 Cr |
About Sanathan Textiles Ltd IPO
Sanathan Textiles Limited, founded in 2005, is a prominent player in the Indian textile industry, holding a market share of 1.7% in the Indian textile yarn sector. The company operates across three key yarn verticals: polyester yarn, cotton yarn, and technical textiles, with the latter catering to diverse industries such as automotive, healthcare, construction, sports, outdoor activities, and protective clothing. As of September 30, 2024, Sanathan Textiles manufactures over 3,200 active yarn varieties and 45,000 SKUs, with the capability to produce more than 14,000 yarn varieties and 190,000 SKUs for various end uses. The company also specializes in high-value, tailor-made products, including dope dyed, superfine/micro, functional, industrial, technical yarns, cationic dyeable and specialty yarns, developed through extensive in-house research. These value-added products are customized to meet specific customer requirements and feature distinctive properties. Sanathan Textiles’ manufacturing facility in Silvassa, with an installed capacity of 223,750 MTPA, serves as a key production hub, especially for polyester yarn. The company manufactures polyester chips using purified terephthalic acid (PTA) and mono ethylene glycol (MEG), converting them into polyester yarn through various processing stages to impart specific properties. The company exports to 14 countries and has over 925 distributors worldwide, including India, Argentina, Singapore, Germany, and Israel. It has built long-term relationships with leading brands such as Welspun India, Page Industries, and Ganesha Ecosphere. Additionally, the company is committed to sustainability, incorporating renewable energy solutions through rooftop solar projects at its facility.
Objective of the Sanathan Textiles Ltd IPO
The company proposes to utilise the net proceeds towards the following objects:
- 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 its subsidiary viz. Sanathan Polycot Private Limited; and
- General corporate purposes.
Rationale To Sanathan Textiles Ltd IPO
Diversified product portfolio strengthens market presence
The company operates across three key yarn verticals – Polyester, Cotton, and Yarns for technical textiles – offering over 14,000 varieties and 190,000 SKUs. A notable strength lies in its high share of value-added products, such as dope dyed, superfine, functional, industrial, and specialty yarns, which represent more than 50% of total sales. With consistently high capacity utilization, the company demonstrates efficient manufacturing processes, driven by strong demand across various industries like apparel, home textiles, medical, and automotive. Its in-house Product Innovation and Development team focuses on customization and process innovation, further enhancing its competitive edge. The team’s efforts are backed by advanced testing facilities, ensuring products meet international standards. The ability to cater to diverse markets and product requirements positions the company well for sustained growth. With a robust product portfolio, a proven track record of high-margin value-added products, and strong market positioning, the company offers a compelling investment proposition with consistent revenue generation and scalability.
Long-standing association with leading consumer brands and low customer concentration ensures sustainable growth
The company has built strong, long-term relationships with leading consumer brands across various sectors, including Welspun India, Page Industries, and Siyaram Silk Mills. Developed over decades, these associations reflect the company’s commitment to quality and customer satisfaction. Notably, the company maintains low customer concentration, with the top 10 customers contributing 24.8% of revenue as of June 30, 2024, demonstrating a diversified customer base. The long-standing nature of these relationships provide revenue visibility and industry goodwill, offering a competitive edge in upselling and cross-selling diverse products. Furthermore, the company has been consistently expanding its global presence, with customers across 14 countries in Q1FY24 and a well-established network of 925 distributors in 7 countries, including India. This extensive distributor network, built over 10 years, has significantly enhanced supply chain efficiency and market reach, contributing to steady revenue growth. The combination of solid customer retention, a diverse product offering, and a broad geographical footprint mitigates customer and geographical concentration risks. As a result, the company is well-positioned for sustained growth, making it an attractive investment opportunity.
Valuation of Sanathan Textiles Ltd IPO
Sanathan Textiles Ltd., a key player in the Indian textile industry, is poised to benefit from the sector’s growth, driven by rising domestic demand, increased discretionary income, and government initiatives such as the PLI scheme. The company’s diversified product portfolio across polyester, cotton, and technical textiles, along with over 50% of its sales coming from high-value, value-added products, gives it a competitive edge. It also benefits from strong manufacturing capabilities, an expansive export network across 14 countries, and long-term relationships with major brands like Welspun India and Page Industries. However, despite these strengths, Sanathan Textiles faces significant challenges. Operating in a highly competitive market, the company holds a modest market share of just 1.7%. The company has also experienced declining revenues and profits, with profit declining from Rs. 3,554 million in FY22 to Rs. 1,338 million in FY24. The company’s reliance on imported raw materials, foreign exchange fluctuations, and high working capital requirements add to the risks. Despite its growth strategy, which includes expanding production capacity and enhancing its recycled yarn business, the financial and operational concerns make it a risky investment at this time. Therefore, we recommend an “AVOID” rating for the issue. We will reassess our recommendation if there is a sustained improvement in financial metrics in the future.
What is the Sanathan Textiles Ltd IPO?
Sanathan Textiles IPO is a book built issue of Rs 550.00 crores. The issue is a combination of fresh issue of 1.25 crore shares aggregating to Rs 400.00 crores and offer for sale of 0.47 crore shares aggregating to Rs 150.00 crores. Login to your account now.
How to apply for the Sanathan Textiles Ltd IPO through StoxBox?
To apply for the Sanathan Textiles Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Sanathan Textiles Ltd IPO open?
Sanathan Textiles Ltd IPO is opening on 19th December 2024. Apply Now
What is the lot size of the Sanathan Textiles Ltd IPO?
The Lot Size of Sanathan Textiles Ltd IPO is 46 equity shares. . Login to your account now
When is the Sanathan Textiles Ltd IPO allotment date?
he allotment Date for Sanathan Textiles Ltd IPO is 24th December 2024. Login to your account now.
When is the Sanathan Textiles Ltd IPO listing date?
The listing Date for Sanathan Textiles Ltd IPO is 27th December 2024. Login to your account now
What is the minimum investment required for the Sanathan Textiles Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,766. Login to your account now
What is the maximum investment allowed for the Sanathan Textiles Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 191,958. Login to your account now
What are the risks associated with investing in the Sanathan Textiles Ltd IPO?
- The company does not have long-term agreements for the supply of raw materials, which makes it vulnerable to fluctuations in quality, quantity, and pricing. As most raw materials are sourced from a few key suppliers, any disruption or discontinuation of their operations could significantly impact the company’s ability to procure materials at competitive prices, negatively affecting its business, operations, and financial condition.
- The company’s reliance on imported raw materials exposes it to the risks of foreign exchange fluctuations and potential supply chain disruptions due to restrictions or embargoes, which could increase costs and negatively impact profitability.
- The company’s high working capital requirements, coupled with potential delays or defaults in customer payments and the need for additional funding for its new manufacturing facility, could negatively impact its operations, profitability, and financial condition.
When will the Sanathan Textiles Ltd IPO shares be credited to my Demat account?
The Sanathan Textiles Ltd IPO be credited to the account on allotment date which is 26th December 2024. Login to your account now
Where can I find the Sanathan Textiles Ltd IPO prospectus?
The prospectus of Sanathan Textiles Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to Sanathan Textiles Ltd IPO?
| IPO Open Date | Thursday, December 19, 2024 |
| IPO Close Date | Monday, December 23, 2024 |
| Basis of Allotment | Tuesday, December 24, 2024 |
| Initiation of Refunds | Thursday, December 26, 2024 |
| Credit of Shares to Demat | Thursday, December 26, 2024 |
| Listing Date | Friday, December 27, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on December 23, 2024 |
