Sanathan Textiles Limited – About the Company
Sanathan Textiles is a leading player in India's polyester, cotton, and technical textile sectors, with over 2,800 active yarn products and 30,000 stock keeping units as of December 31, 2023. The business is divided into three yarn verticals: polyester yarn products, cotton yarn products, and yarns for technical textiles and industrial uses. The company produces value-added products such as dope dyed, superfine/micro, functional, industrial, and technical yarn, cationic dyeable, and specialty yarn.
Sanathan Textiles manufactures its products at its Silvassa facility, with a total installed capacity of 223,750 MTPA across the three yarn verticals. The company seeks to capitalize on growth opportunities in the yarn industry, considering its current scale of operations, network of distributors, number of customers, and experienced management team. The company is in advanced talks to setup a manufacturing facility In Punjab..
Sanathan Textiles Limited IPO Objectives
The issue consists of both fresh issue and offer for sale by promoters.
- The prompter wishes to en-cash some money by selling shares up to 46, 72, 898 Equity Shares.
- The companies through this IPO want to raise money up to Rs. 400 crores by issuing up to 1,24,61,060 Equity Shares aggregating. The use of fresh issue has been mentioned in the table below.
Particulars Amount to be funded from the Net Proceeds Repayment of certain outstanding borrowings 1600 Investment in subsidiary viz. Sanathan Polycot Pvt Ltd for funding long-term working capital req. 1400 General corporate purposes XXXX
(in ₹ million)
Sanathan Textiles Limited IPO Details:
| IPO Open Date | December 19, 2024 |
| IPO Close Date | December 23, 2024 |
| Basis of Allotment | December 24, 2024 |
| Listing Date | December 27, 2024 |
| Face Value | ₹10 per share |
| Price | ₹305 to ₹321 per share |
| Lot Size | 46 Shares |
| 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) | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not less than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Sanathan Textiles Limited IPO Issue Price & Size
Total issue size of Sanathan Textiles has been declared for Rs. 550 crores. The company wish to bring offer for sale of Rs. 150 crores and fresh issue of Rs. 400 crores. Issue price of the Sanathan Textiles Limited has been set between ranges of Rs. 305 to Rs. 321. Investors who wish to bid for IPO can do so between these price ranges.
Sanathan Textiles Limited IPO Launch Date
The launch date of Sanathan Textiles IPO has been declared for December 19 to December 23, 2024.
Sanathan Textiles Limited Financial Statements:
| Particulars | For 9 Month ended
31 December 2023 |
FY23 | FY22 | FY21 |
| Revenue from operation | 22013.69 | 33292.13 | 31853.2 | 19183.55 |
| Other income | 127.99 | 158.06 | 161.4 | 146.15 |
| Cost of materials consumed | 16169.74 | 23349.1 | 20632.7 | 11012.69 |
| Purchases of stock-in-trade | 6.2 | 52.26 | 324.7 | 159.73 |
| Changes in inventories | -238.15 | 651.48 | -719.99 | 34.34 |
| Employee benefits expense | 672.77 | 885.36 | 947.4 | 867.41 |
| Finance costs | 178.69 | 224.18 | 324.6 | 500.86 |
| Depreciation and amortisation | 333.52 | 434.86 | 421.7 | 397.69 |
| Other expenses | 3928.32 | 5758.63 | 5292.27 | 3829.74 |
| Profit before tax | 1090.59 | 2094.32 | 4791.22 | 2527.04 |
| Profit for the period / year | 815.86 | 1527.41 | 3554.42 | 1856.31 |
| Basic earnings per share | 11.34 | 21.24 | 49.4 | 25.8 |
| Diluted earnings per share | 11.34 | 21.24 | 49.4 | 25.8 |
| Particulars | 9 months ended December 31, 2023 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 |
| Revenue from operations | 22013.69 | 33292.13 | 31853.2 | 19183.55 |
| EBITDA | 1474.81 | 2595.3 | 5376.12 | 3279.44 |
| EBITDA margin | 6.70% | 7.80% | 16.88% | 17.10% |
| Profit after tax | 815.86 | 1527.41 | 3554.42 | 1856.31 |
| Return on equity | 9.21% | 14.36% | 43.95% | 34.53% |
| Return on capital employed | 10.57% | 15.54% | 35.83% | 24.71% |
| Net debt | 2942.99% | 2719.82% | 3702.62% | 5146.32% |
| Net debt | 2942.99 | 2719.82 | 3702.62 | 5146.32 |
| Net debt / EBITDA | 1.5 | 1.05 | 0.69 | 1.57 |
| Fixed asset turnover ratio | 3.15 | 3.51 | 3.56 | 2.16 |
| Working capital cycle | 55 days | 44 daya | 65 daya | 53 days |
Sanathan Textiles Limited IPO Promoters & Shareholding of the Company
There are eight promoters of Sanathan Textiles Limited, in together they hold about 97% of paid up Equity Share Capital of the company.
| Name of the Promoter | No. of Equity Shares | % of pre-Offer issued, subscribed and
paid-up Equity Share Capital |
Designation |
| Nimbus Trust | 10475000 | 14.56 | - |
| D&G Family Trust | 10475000 | 14.56 | - |
| A&J Family Trust | 10475000 | 14.56 | - |
| P&B Family Trust | 10475000 | 14.56 | - |
| Paresh Vrajlal Dattani | 7012600 | 9.75 | Promoter, Chairman & MD |
| Ajay Vallabhdas Dattani | 7327650 | 10.19 | Promoter and Joint MD |
| Anilkumar Vrajdas Dattani | 6819700 | 9.48 | Promoter and Executive Director |
| Dinesh Vrajdas Dattani | 7112800 | 9.89 | Promoter |
| Total | 70172750 | 97.55 |
Why Invest in Sanathan Textiles Limited IPO?
While investing in an IPO-bounded company, one should check their fundamentals that help an investor to Visions Company’s financial performance and competitive strength which at last drives its business growth. Fundamental analysis apart from financial and competitive strength, also help you to know the risk factors that can affect the business operations and future prospects of the company. After evaluating the variables such strength weakness, financials, you may strike a balance and decide to invest or not invest in an IPO.
Strengths
Focus on the product development through process innovation
The company with its 5 member in-house Product Innovation and Development team located in Silvassa, is dedicated to creating unique products that cater to specific customer requirements. Some key value-added products include Cationic Dyeable, born dyed, functional, industrial, speciality, and superfine/micro yarns. The company has an in-house testing facility equipped with advanced equipment And constantly analyze, test, and improve their products, staying abreast of the latest market trends to develop innovative value-added yarns.
Strategic location of manufacturing plant
Location of the manufacturing facility at Silvassa in western Gujarat is strategically important because the unit is near supply chain for the polyester segment and the presence of raw material manufacturers like Reliance Industries. Also, the company’ has access to Gujarat and Maharashtra's textile markets.
Low customer concentration
The company has consistently had low customer concentration as it relies more on delivering quality, which in turn is reflected in long term relationship with customers. Over the years, the company with its 902 distributors across 7 countries, has catered to over 2500 customers and at same time has established long-standing relationships with leading consumer brands such as Welspun India Limited, Valson Industries Limited, G.M. Fabrics Private Limited, Premco Global Limited, etc.
Company’s revenue from operations from top 10 and 5 consumers is shown in below table.
| Particulars | 9 months ended
Dec 31, 2023 |
Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | ||||
| Revenue (₹ million) | % of revenue from operations | Revenue (₹ million) | % of revenue from operations | Revenue (₹ million) | % of revenue from operations | Revenue (₹ million) | % of revenue from operations | |
| Top 10 customers | 5000.7 | 22.72 | 7340.61 | 22.05 | 6530.84 | 20.5 | 4053.99 | 21.13 |
| Top 5 customers | 3162.92 | 14.37 | 4693.76 | 14.1 | 4088.03 | 12.83 | 2621.06 | 13.66 |
Expanding manufacturing capacity
Sanathan Textiles present installed facility at Silvassa is running near 100% capacity and to cater increasing demand, the company is in advanced talks to commission a greenfield facility in Punjab.
Punjab facility would be built in 2 phases:
- 1st phase is expected to be completed by FY25
- 2nd Phase is expected to be completed in Fiscal 2027.
Total installed capacity
| Products Name | December 31, 2023 (MTPA) | March 31, 2023 | March 31, 2022 | March 31, 2021 |
| Polyester | 200750 | 200750 | 200750 | 200750 |
| Cotton Yarn | 14000 | 14000 | 14000 | 14000 |
| Technical Textiles | 9000 | 9000 | 9000 | 5475 |
Actual production and Capacity utilisation
| Product | Actual production (in MTPA) | |||||||
| 9 months ended Dec 31, 2023 | Capacity utilization (%) | Fiscal 2023 | Capacity utilization (%) | Fiscal 2022 | Capacity utilization (%) | Fiscal 2021 | Capacity utilization (%) | |
| Polyester | 152183 | 101.08 | 211.611 | 105.41 | 208316 | 103.77 | 168.35 | 83.86 |
| Cotton Yarn | 11680 | 111.26 | 13959 | 99.71 | 14907 | 106.48 | 9533 | 68.09 |
| Technical Textiles | 6278 | 93 | 7866 | 87.4 | 7171 | 102.44 | 4661 | 85.15 |
Risks
Dependency on production facility
The company has only one manufacturing facility up and running at Silvassa, Gujrat. Any problem, whether operational, technical, or interference from government officials, could affect company's operations and profitability. However, seeing the capacity utilization and demand graph, they are in talks of commissioning a greenfield facility in Wazirabad, Punjab.
Delays on the part of clients
The company is vulnerable to payment delays and any defaults on the part of clients can impact its financial position and performance. Below mentioned is outstanding as at December 31, 2023:
| Particulars | Outstanding for following periods from due date of payment | |||||
| Less than 6 months | 6 months -1 year | 1-2 years | 2-3 years | More than 3 years | Total | |
| Undisputed trade receivables - considered good | 1265.01 | 86.09 | 108.59 | 1456.69 | ||
| Disputed trade Receivables - credit impaired | 5.36 | 5.36 | ||||
Numerous Tax Litigation
As per the DRHP, the company is facing numerous tax litigations amounting to roughly Rs. 178 crore. If the verdict of tax demand comes against the company, it could have a material impact on the profitability of the business.
Slowdown in economic momentum
Indian economy as per recent economic data is doing fine, but any slowdown or kind of disruption in global market can have implications for the domestic market. The aftereffects of COVID led to rising inflation, which forced central banks to increase interest rates and take other precautionary measures to control inflation. As of now the inflation is under control but if inflation starts to rise again due to geopolitical tension or commodity led boom, it could result in economic momentum to lose stream, which could have negative effect on economy and business sentiments.
| Particulars | 9 months ended Dec 31, 2023 | Fiscal 2023 | Fiscal 2022 | Fiscal 2021 | ||||
| Revenue (in million) | % of revenue from operations | Revenue (in million) | % of revenue from operations | Revenue (in million) | % of revenue from operations | Revenue (in million) | % of revenue from operations | |
| Exports | 967.73 | 4.4 | 3401.88 | 10.22 | 4155.8 | 13.05 | 2418.73 | 12.61 |
| Domestic | 21045.96 | 95.6 | 29890.25 | 89.78 | 27697.4 | 86.95 | 16764.82 | 87.39 |
| Total | 22013.69 | 100 | 33292.13 | 100 | 31853.2 | 100 | 19183.55 | 100 |
Sanathan Textiles Limited IPO Grey Market Premium
GMP is the premium price paid over the IPO issue price. This premium is seen from speculator or trader view, that they are ready to pay in the grey market. GMP is an unofficial ecosystem that is determined in the grey market and keeps fluctuating as per the demand and supply of the shares in the primary market. However, GMP only should be not considered as a reliable factor to determine the listing price of an IPO-bounded company, as there are various factors that affect the stock market and individual stocks.
Also Read: What are the Top Factors Affecting the Stock Market in India
The DRHP has only been filled with the SEBI and no further news on issue launch date is present in market. As and when the RHP is filed and date of IPO comes near, grey market premium price discovery will be made available through online sources.
Sanathan Textiles Limited IPO Review & Analysis
Since India is betting big on infrastructure, the government, through policies with the help of private employers, is focusing on shifting the population from agriculture to the private sector, bringing in more women to the labor force, increasing demand for apparel in the fashion industry, and growing e-commerce platforms. These are expected to grow steadily over the next few years. According to the research shared in the prospectus, the Indian textile and apparel industry is projected to grow at a CAGR of 6.0–7.0% until FY28, with exports growing at a CAGR of 4.5–5.5%.
The Silvassa manufacturing facility is already running near full capacity, and with the initiation of the new facility, the company seeks to capitalize on growth opportunities that will lead to improvements in their financial situation over time and also lower the risk of the geographical presence of the facility.
How to Apply for Sanathan Textiles Limited IPO?
If you choose the best discount brokers in India like Moneysukh, you can easily apply in the Sanathan Textiles Limited or invest in any listed companies in the secondary market. You just need to open a trading account and demat account to apply in the IPOs, or do trading and investing in the stock market through the best trading platform at Moneysukh.
Also Read: Trading or Investing Which is Better and More Profitable
Here you will enjoy all the facilities and advantages of the best online trading app through the most advanced trading software or algorithms like Trade Radar, TradeTron, Quantman, AlgoBulls, Keev and FoxTrader with the best charting system TradingView to trade or invest in equities, commodities and forex market. Right now to apply for the Mobikwik IPO you can follow the steps given below.
Also Read: Things to Know Before Starting Forex Trading & How to Start
Steps to Apply for Sanathan Textiles Limited:
Step 1: Wait for the date Sanathan Textiles Limited to open for online bidding.
Step 2: Now browse the trade.moneysukh.com and log in with your User ID & password.
Step 3: Here you need to find the IPO section and click on Sanathan Textiles Limited.
Step 4: Now just fill in the required details like price, quantity, and so on.
Note: While applying in any IPO, make sure to bid at the cutoff price before submitting your application.
Step 5: Finally make the payment and then submit your IPO application successfully.
How to Check Sanathan Textiles Limited Allotment Status?
Apart from Moneysukh, you can also use stock exchange websites like BSE or NSE to check the Sanathan Textiles Limited allotment status. Checking the allotment status is possible only after the closing of the bidding and the basis of the allotment date arrives. You can use your PAN card details and IPO application number to check the Mobikwik IPO allotment status.
Also Read: How to check IPO allotment status on NSE, BSE through Moneysukh
However, if the IPO is oversubscribed in all the categories including retail and HNI, then there is less chance of getting the allotment of shares. But if you follow the investing tips while applying for in IPO, you can improve your chances of allotment in the IPO.
Also Read: How to Increase the Chances of IPO Allotment
If you have not been allotted any share, your IPO application money will be refunded into your bank account or the fund will be unblocked if applied through ASBA. If you have allocated any share in the allotment, then it will be transferred into your demat account before the listing that you can sell to book profits or keep from the long-term investment viewpoint.
Also Read: What to Know Before Investing in Stocks: 10 Things to Consider
