Sanathan Textiles IPO

Sanathan Textiles IPO Details

Sanathan Textiles IPO Date

The Sanathan Textiles Limited IPO will open for subscription on December 19, 2024, and the closing date for the IPO is December 23, 2024, according to the offer document filed by the company with the SEBI. After this, investors are expected to be updated about the allotment status on Tuesday, December 24, 2024.

Investors who have been allotted shares can expect them to be credited to their demat account on December 26, 2024. The shares will be listed on the NSE and the BSE on Friday, December 27, 2024. 

Sanathan Textiles IPO Price Band

The IPO combines a fresh issue and an offer-for-sale (OFS) component. The IPO price band has been set between ₹305 to ₹321 per share. Interested investors can choose a price within this band to apply for the IPO.

The IPO is a book-building issue of ₹550.00 crore, with a fresh issue of 1,24,61,060 shares (amounting to ₹400 crore) and an offer for sale of 46,72,898 shares (totalling ₹550 crore).

The Sanathan Textiles Limited IPO listing price will be determined on December 27, 2024. The listing price is the price at which a company’s shares debut on the stock exchanges.

Sanathan Textiles IPO Lot Size

The Sanathan Textiles Limited IPO details have been declared. The minimum lot size for an application is 46 shares, and the investor would have to apply for a minimum of 1 lot. Meanwhile, the IPO issue size is approximately ₹550.00 crore.

Sanathan Textiles IPO Objective

Repayment of borrowings - The company will allocate ₹160 crores from the net IPO proceeds toward repaying a portion of its existing borrowings.

Investment in Subsidiary - The company has earmarked ₹140 crores to reduce a part of the borrowings availed of by its subsidiary, “Sanathan Polycot Private Limited.”

General corporate purpose - The company will reserve a part of the IPO proceeds for general corporate purposes.

About Sanathan Textiles

Incorporated in 2005, Sanathan Textiles is a yarn manufacturer in India with a presence across three verticals: polyester yarn products, cotton yarn products, and technical/industrial yarns. 

Based on operating income in FY24, the company had a market share of 1.7% in the Indian textile yarn industry. Its integrated operations, supported by a strong product portfolio, cater to various industries, including automotive, healthcare, construction, and apparel.

In FY24, the company catered to 1,571 clients through its diversified product portfolio of over 14,000 varieties of yarn products and more than 190,000 SKUs used in various forms and for varied end uses. The company also offers various value-added products such as dope dyed, superfine/micro, functional, industrial and technical yarn, and cationic dyeable based on client requirements. 

Polyester yarn products contributed 77.24% to the overall revenue in FY24, while the rest of the revenue came from Cotton yarn products and Industrial textiles. Meanwhile, a significant portion (95.61% of FY24 revenue) came from the domestic market, while the export business contributed 4.39%. 

The primary manufacturing facility of the company is located in Silvassa, and as of June 30, 2024, its installed capacity was 223,750 MTPA. The company is also expanding its capacity through a greenfield project in Wazirabad, Punjab. The Punjab manufacturing facility will be used solely to make polyester yarn products and will increase manufacturing capacity from 550 tonnes per day to 1,500 tonnes per day. 

The company's revenues have been volatile in recent years. It reported ₹3,185.32 crore in FY22, which declined to ₹2,957.50 crore in FY24 due to a reduction in selling price. Meanwhile, net profit also declined from ₹355.44 to ₹133.84 crore. 

The growing Indian textile and apparel industry could boost the company's business in the future. The industry is expected to grow at 6-7% CAGR until FY28, providing a strong domestic market. Additionally, the Punjab facility and additional units at Silvassa might boost production capacity, enabling the company to meet rising demand in domestic and international markets.

Now, Sanathan Textiles Limited is launching its initial public offer (IPO). The total IPO issue size is ₹550 crore, comprising a fresh issue and an offer for sale. Its shares will be listed on the NSE and BSE.

Company Name: Sanathan Textiles Limited

Company Established On: Oct 10, 2005

Company Type: Public Limited Company

Chairman and Managing Director:  Paresh Vrajlal Dattani

Financial snapshot

Sanathan Textiles IPO Analysis

Strengths and Opportunities

1. Diversified product portfolio with a strong focus on value-added products.
2. Long-standing relationships with prominent consumer brands like Welspun India, Siyaram Silk Mills, and Page Industries.
3. Presence in 27 countries with 925+ distributors, ensuring strong market penetration and efficient supply-chain management.
4. Facilities in Silvassa and the upcoming expansion in Punjab will provide logistical benefits and proximity to key raw material suppliers and markets.
5. A significant share of revenue from high-margin products such as dope-dyed, cationic dyeable, functional, and speciality yarns.
6. Value-added yarn products accounted for over 50% of total production in FY24, with higher margins and customised offerings for niche markets.
7. Fully integrated polyester manufacturing plant with advanced automation and digitisation, ensuring cost efficiency, quality control, and operational excellence.

Risks and Threats

1. The company relies heavily on key suppliers for critical raw materials like purified terephthalic acid (PTA) and mono ethylene glycol (MEG). The top 10 suppliers accounted for 62.25% of total purchases in Q1FY24.
2. 65.10% of revenue in FY24 was derived from customers in Gujarat, Maharashtra, and Punjab. This exposure to risks like natural disasters or political unrest in these regions exposes the company to risks.
3. Revenue from operations fell by 11.17% from ₹3,329.21 crores in FY2023 to ₹2,957.50 crores in FY2024 due to a reduction in selling prices of polyester and cotton yarn.
4. Dependence on markets like South Korea and the USA makes the company vulnerable to trade restrictions, tariffs, or loss of fiscal benefits like the MEIS scheme.
5. Export markets face increasing competition from Chinese manufacturers due to their larger production capacity and cost advantages.
6. The company operates in a highly regulated industry and must comply with environmental and labour laws. Non-compliance could lead to penalties or operational disruptions.
7. The Silvassa facility is critical to operations. Past disruptions due to COVID-19 and maintenance shutdowns highlight risks to production continuity.

How to apply for the Sanathan Textiles IPO?

If you are interested to invest in Sanathan Textiles IPO, following are the steps to apply:

1. Login to your Upstox account, using your six-digit PIN
2. After successfully logging in, click on ‘Discover’
3. On the Discover tab, you will find the ‘Invest in IPO’ section
4. Under the Invest in IPO section, look for the ‘Sanathan Textiles IPO’ tab and click on it
5. Now fill in all the required information, like ‘bid price’ and ‘lot size’
6. Confirm and click on ‘Apply’
7. Accept the mandate on your UPI app

You can also pre-apply for the Sanathan Textiles IPO on Upstox which usually begins a day before the IPO opens for subscription.