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The initial public offering (IPO) of Sanstar Limited opened on July 19, 2024, and will remain open until July 23, 2024. With a price band set at ₹90 to ₹95 per equity share, the IPO aims to raise ₹510.15 crore. Sanstar Limited plans to list on the BSE and NSE, with ₹397.10 crore being raised through fresh shares and ₹113.05 crore via the Offer for Sale (OFS) route.
The IPO has received an overwhelmingly positive response from investors. On the first day of bidding, the public issue was subscribed 4.16 times. The retail portion was booked 4.07 times, the Non-Institutional Investors (NII) segment saw 9.85 times subscription, while the Qualified Institutional Buyers (QIB) portion was subscribed 0.05 times.
Shares of Sanstar Limited have shown a strong performance in the grey market. As of today, the grey market premium (GMP) for Sanstar Limited is ₹46, an increase from ₹42 on Friday. This rise in GMP, despite weak sentiments on Dalal Street, highlights the robust subscription status and investor confidence.
Sanstar Limited is a leading manufacturer of plant-based specialty goods and ingredient solutions in India. The company produces ingredients, thickening agents, stabilizers, and sweeteners that enhance the flavor, texture, nutrition, and usefulness of meals. With an installed capacity of 1,100 tons per day from its two manufacturing plants in Dhule, Maharashtra, and Kutch, Gujarat, Sanstar exports its products to 49 countries and has a significant domestic presence.
Sanstar’s operating revenue has grown at a CAGR of 45.46% to ₹1,067.27 crore in FY24 from ₹504.40 crore in FY22. Profit after tax has increased to ₹66.77 crore in FY24 from ₹15.92 crore in FY22.
The proceeds from the IPO will be used for:
- Capital expenditure: ₹181.55 crore will be allocated for the development of the company’s Dhule facility.
- Debt repayment: ₹100 crore will be used to repay existing debt.
- General corporate purposes: The remaining funds will be used for various corporate needs.
Sanstar’s Red-Herring Prospectus (RHP) lists several risks:
- Raw material costs: Volatility in raw material costs could affect product pricing and financial performance.
- Supplier contracts: The lack of long-term contracts with suppliers may impact operations and costs.
- Working capital: High working capital requirements during peak maize harvesting season.
- Legal issues: Pending lawsuits could affect operational outcomes.
- Expansion delays: Delays in approvals and construction for the Dhule facility expansion could impact business.
- Export risks: Import tariffs, foreign currency fluctuations, and compliance issues could affect international operations.
- Growth management: Failure to manage growth initiatives could impact future financial performance.
- Financing restrictions: Compliance with financial covenants is crucial for operational flexibility.
IPO key dates
Bidding Period: July 19, 2024, to July 23, 2024
Allotment Date: Likely on July 24, 2024
Listing Date: Expected on July 26, 2024