Sanathan Textiles IPO: Public Issue Subscribed 7x On Final Day, QIBs Raise Bids; Check Latest GMP Here

The initial public offering (IPO) of Sanathan Textiles, which opened on December 19 and concludes today, December 23, has garnered moderate interest across investor categories. The IPO aims to raise Rs 550 crore through a combination of fresh equity issuance and an offer-for-sale (OFS) by promoter entities. While subscription levels reflect a steady uptake, grey market trends hint at a potential mild premium on the listing.

IPO Overview & Key Details

Sanathan Textiles has set the price band for its IPO at Rs 305 to Rs 321 per share, targeting to raise Rs 550 crore. Of this, Rs 400 crore will be raised through the issuance of 1.25 crore fresh equity shares, while Rs 150 crore is allocated for the OFS route, involving 47 lakh shares.

The stock is scheduled to be listed on the BSE and NSE on December 27, and allotment finalization is expected by December 24. Refunds for unsuccessful bids and crediting of shares to successful bidders' demat accounts are slated for December 26.

Subscription Status

As of 1:50 on December 23, the IPO had been subscribed 6.33 times overall, receiving bids for 7,98,44,546 shares against the 1,26,22,950 shares on offer. Retail Investors subscribed 4.96 times, Non-Institutional Investors (NIIs) subscribed 9.47 times, and Qualified Institutional Buyers (QIBs) subscribed 6.36 times.

Grey Market Trends

According to market observers, the grey market premium (GMP) for Sanathan Textiles stands at Rs 41 as of Monday. Based on the upper end of the price band at Rs 321, the anticipated listing price is approximately Rs 362 per share, indicating a 13% premium.

Company Profile

Sanathan Textiles is a player in India's textile yarn industry, offering a diverse portfolio of polyester, cotton, and technical textile yarns. The company operates a state-of-the-art manufacturing facility in Silvassa, with an installed capacity of 223,750 metric tonnes per annum (MTPA).

As of September 30, 2024, Sanathan Textiles boasts over 3,200 active yarn varieties and manages 45,000 stock-keeping units (SKUs). It also has the capacity to manufacture 14,000+ yarn varieties and 190,000+ SKUs for varied applications, from apparel to industrial uses.

According to a CRISIL report, the company commands a 1.7% market share in the Indian textile yarn industry by operating income.

The Indian textile and apparel industry is projected to grow at a CAGR of 6-7% between fiscal 2024 and fiscal 2028. Domestic demand is expected to expand at a CAGR of 7-8%, while export growth is anticipated at 4.5-5.5%.

Sanathan Textiles is well-positioned to capitalize on these opportunities, given its product offerings across polyester, cotton, and technical textiles. Additionally, the company's presence in international markets provides avenues for steady revenue growth.

Utilization of Proceeds

The proceeds from the fresh issue will primarily be used to: repay or prepay certain borrowings, invest in its subsidiary, Sanathan Polycot Pvt Ltd, and for general corporate purposes.

Promoter Participation

The OFS component involves shares being offloaded by key stakeholders, including Paresh Dattani and Vajubhai Investments Pvt Ltd, allowing them to partially monetize their holdings while maintaining significant interest in the business.

IPO Management

The IPO is being managed by DAM Capital Advisors and ICICI Securities as book-running lead managers, with KFin Technologies acting as the registrar.