Sanstar Limited IPO: Subscription To Open On July 19; GMP Surges 50% In 1 Day; Check Key Dates

Sanstar Ltd, a player in the plant-based specialty products sector, is all set to launch its Initial Public Offering (IPO) on Friday, July 19, 2024. This IPO, which has already created a buzz in the market, will remain open for public subscription until July 23, with the anchor book opening a day earlier on July 18.

The Ahmedabad-based company has set a fixed price band for its shares, ranging from Rs 90 to Rs 95 per share. Investors looking to participate in this IPO can bid for a minimum of 150 equity shares in one lot and in multiples thereof. At the upper end of the price band, Sanstar aims to raise Rs 510.15 crore through this offering.

Currently, Sanstar's shares are commanding a premium of Rs 44 in the grey market, reflecting strong investor interest and positive market sentiment. However, it's important to note that grey market premiums are speculative and can fluctuate significantly.

The IPO consists of both a fresh issue and an offer for sale (OFS). The fresh issue comprises 4.18 crore shares, while the OFS involves 1.19 crore shares being sold by existing shareholders. Key shareholders participating in the OFS include Rani Gouthamchand Chowdhary, who will offload 38 lakh equity shares, and Richa Sambhav Chowdhary and Samiksha Shreyans Chowdhary, each selling 33 lakh shares. Additionally, Gouthamchand Sohanlal Chowdhary, Sambhav Gautam Chowdhary, and Shreyans Gautam Chowdhary will each offload 5 lakh shares.

The allocation of shares from this IPO has been strategically planned. About 50% of the total IPO size is reserved for qualified institutional buyers (QIB), 35% for retail investors, and the remaining 15% for non-institutional investors. This structured allocation ensures a balanced participation from diverse investor categories.

The proceeds from the fresh issue, amounting to Rs 181.55 crore, are earmarked for several purposes: a significant portion will fund the capital expenditure required to expand the company's Dhule manufacturing facility; approximately Rs 100 crore will be utilized to repay existing debt, thereby strengthening the company's balance sheet; and the remaining funds will be used for various corporate needs.

Sanstar is renowned for its range of plant-based specialty products and ingredient solutions, which enhance the taste, texture, and nutritional value of various food items. These products serve multiple functions as ingredients, thickening agents, stabilizers, and sweeteners.

The company operates two manufacturing facilities located in Dhule, Maharashtra, and Kutch, Gujarat, with a combined installed capacity of 1,100 tonnes per day. Sanstar's products are exported to 49 countries across Asia, Africa, the Middle East, the Americas, Europe, and Oceania. Domestically, the company has a strong presence, distributing its products across 22 Indian states.

Sanstar has demonstrated strong financial performance in the fiscal year ending March 2024. Despite a decrease in revenue from operations, which stood at Rs 1,067.3 crore (down 11.4% from the previous year's Rs 1,205 crore), the company reported a 60% growth in net profit, reaching Rs 66.8 crore compared to Rs 41.8 crore in the previous year.

This growth in net profit is attributed to a healthy operating margin, achieved through lower input costs. The company's EBITDA (earnings before interest, tax, depreciation, and amortization) also saw an increase of 35.5% year-on-year, reaching Rs 98.1 crore, with the margin expanding by 319 basis points to 9.2% for FY24.

Pantomath Capital Advisors will act as the sole book-running lead manager for the IPO, while Link Intime India has been appointed as the registrar. The equity shares of Sanstar are proposed to be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on July 26, 2024.