Sanathan Textiles Limited IPO: Key Highlights and Subscription Details
Sanathan Textiles Limited IPO- Overview
Sanathan Textiles Limited, a leading textile manufacturer, is launching its Initial Public Offering (IPO) with a total issue size of ₹550 crore. The offering includes a fresh issue of 1.25 crore shares worth ₹400 crore and an Offer for Sale (OFS) of 0.47 crore shares valued at ₹150 crore. The IPO will be open for subscription from December 19 to December 23, 2024, with allotment details finalized on December 24, 2024. Shares are set to list on BSE and NSE on December 27, 2024. The price band for the IPO is ₹305 to ₹321 per share. Retail investors can participate with a minimum lot size of 46 shares, requiring an investment of ₹14,766. Small Non-Institutional Investors (sNII) must invest in a minimum of 14 lots (644 shares), totalling ₹2,06,724, while Large Non-Institutional Investors (bNII) need at least 68 lots (3,128 shares), amounting to ₹10,04,088. Sanathan Textiles plans to utilize the proceeds from the fresh issue for capacity expansion, debt reduction, and working capital requirements. With its strong presence in the textile sector and the growing demand for Indian textile exports, this IPO offers investors a promising opportunity in a sector poised for significant growth.
IPO Subscription Period
The Sanathan Textiles Limited IPO is scheduled to open for subscription on December 19, 2024, and will close on December 23, 2024. The share allotment is expected to be finalized by December 24, 2024, with the tentative listing date set for December 27, 2024, on both the BSE and NSE.
Pricing and Lot Details
The Sanathan Textiles Limited IPO offers investors an opportunity to participate in the growth of a leading textile manufacturer. Below are the key details:
- Price Band: ₹305 to ₹321 per share. The lower limit is ₹305, while the upper cap is ₹321.
- Lot Size: A minimum investment requires 46 shares, amounting to approximately ₹14,766 at the upper price band.
- Issue Size: The IPO aims to raise a total of ₹550 crore, comprising a fresh issue of 1.25 crore equity shares worth ₹400 crore and an Offer for Sale (OFS) of 0.47 crore shares valued at ₹150 crore.
- Face Value: ₹2 per equity share, with the IPO price reflecting a premium based on the company’s valuation and market demand.
- The Sanathan Textiles IPO follows a structured bidding system that accommodates various investor categories, including Retail Investors, Small Non-Institutional Investors (sNIIs), and Large Non-Institutional Investors (bNIIs). Below is a breakdown of investment requirements:
| Category | Lots | Shares | Investment Amount (₹) |
| Retail Investors | Minimum: 1 | 46 | 14,766 |
| Retail (Max) | Maximum: 13 | 598 | 1,91,958 |
| Small HNIs (Min) | Minimum: 14 | 644 | 2,06,724 |
| Small HNIs (Max) | Maximum: 67 | 3,082 | 9,89,322 |
| Large HNIs (Min) | Minimum: 68 | 3,128 | 10,04,088 |
Reservation Structure
The Sanathan Textiles Limited IPO employs a structured reservation system to ensure participation from diverse investor categories:
- Qualified Institutional Buyers (QIBs): 50% of the total issue is reserved for QIBs, including mutual funds, foreign institutional investors, banks, and other large financial institutions.
- Non-Institutional Investors (NIIs): 15% of the issue is allocated to NIIs, including high-net-worth individuals (HNIs) who bid for larger lot sizes.
- Small HNIs (sNIIs): Minimum 14 lots (644 shares), amounting to ₹2,06,724 at the upper price band.
- Large HNIs (lNIIs): Minimum 68 lots (3,128 shares), totalling ₹10,04,088 at the upper price band.
- Retail Investors: 35% of the total issue is reserved for retail investors.
- Minimum lot size: 1 lot (46 shares) requiring an investment of ₹14,766 at the upper price band.
This reservation system ensures balanced participation across institutional and individual investors while catering to varying investment capacities.
Key Dates & Timelines Of Sanathan Textiles Limited IPO Timeline (December 2024)
- IPO Open Date: Thursday, December 19, 2024
- IPO Close Date: Monday, December 23, 2024
- Basis of Allotment: Monday, December 16, 2024
- Initiation of Refunds: Wednesday, December 25, 2024
- Credit of Shares to Demat Accounts: Thursday, December 26, 2024
- Listing Date on BSE and NSE: Friday, December 27, 2024
Book Running Lead Managers
The Sanathan Textiles Ltd IPO is being managed by the following Book Running Lead Managers (BRLMs):
- Dam Capital Advisors Ltd (formerly IDFC Securities Ltd)
- ICICI Securities Ltd
The registrar for the IPO is KFin Technologies Ltd, which is responsible for processing applications and managing the allotment process, and handling refund-related activities for the IPO.
Promoters Information
Sanathan Textiles is led by an experienced management team with deep roots in the textile industry.
- Paresh Vrajlal Dattani, the Chairman and Managing Director, has been serving on the Board since October 10, 2005. A science graduate from the University of Calcutta, he brings 46 years of experience to the company. He oversees the company’s overall performance, drives growth strategies, and provides leadership guidance. In addition, he has been a partner at Ramniklal Nandlal Bros since 1978.
- Ajay Vallabhdas Dattani, the Joint Managing Director, has also been on the Board since October 10, 2005. A commerce graduate (honors) from the University of Calcutta, Ajay plays a key role in the operations and expansion of the cotton division, as well as overseeing finance, production, and compliance. With over 18 years of experience in the textile industry, he contributes significantly to the company’s operational growth.
- Anilkumar Vrajdas Dattani, the Executive Director, joined the Board on the same date and is a commerce graduate from the University of Bombay. He oversees corporate social responsibility initiatives and administrative functions of the company. Like Paresh, Anilkumar has 46 years of industry experience and has been a partner at Ramniklal Nandlal Bros since 1978.
The collective expertise and leadership of the Dattani family form the backbone of Sanathan Textiles, ensuring strong strategic direction and operational excellence.
About Sanathan Textiles Ltd.
Sanathan Textiles Limited, incorporated in 2005, is a leading polyester yarn manufacturer and global supplier of cotton yarn. The company operates through three key business verticals: polyester yarn products, cotton yarn products, and yarns for technical textiles and industrial uses. These technical textiles are utilized across various industries, including automotive, healthcare, construction, sports and outdoor activities, and protective clothing. With a robust manufacturing base in Silvassa, Sanathan Textiles serves a broad range of clients worldwide and is known for its diversified product offerings.
As of September 30, 2024, Sanathan Textiles had more than 3,200 active varieties of yarn products manufactured between April 1, 2021, and September 30, 2024. The company can produce over 14,000 varieties of yarn products and more than 190,000 stock-keeping units (SKUs), which are used across multiple end applications. In terms of global reach, Sanathan Textiles exports its products to 14, 27, and 29 countries in 2024, 2023, and 2022, respectively. The company also has a strong distribution network, with over 925 distributors in seven countries, including India, Argentina, Singapore, Germany, Greece, Canada, and Israel.
Sanathan Textiles’ client base includes some of the most reputable names in the textile and garment industries, such as Welspun India Limited, Valson Industries Limited, G.M. Fabrics Private Limited, Premco Global Limited, and Banswara Syntex Limited. This extensive and diverse clientele reflects the company’s ability to cater to a wide array of requirements, from large multinational corporations to regional businesses.
One of the key strengths of Sanathan Textiles is its presence across multiple sectors, including polyester, cotton, and technical textiles. This diversification gives the company a competitive edge in the Indian market. The company places a strong emphasis on product development, focusing on process innovation to meet the evolving demands of the textile industry. Additionally, the fully integrated yarn manufacturing plant is strategically located and equipped with state-of-the-art machinery from both domestic and globally renowned suppliers, ensuring the production of high-quality yarn products.
Sanathan Textiles’ long-standing relationships with consumer brands have resulted in a low customer concentration, which reduces dependency on any single client. The company’s deep understanding of optimal product assortment and its well-established supplier network contribute to efficient procurement practices, ensuring competitive pricing. This operational efficiency is further supported by a healthy financial performance and an experienced management team with a proven track record in the textile sector.
The company’s strategic focus includes expanding manufacturing capacity, enhancing the value addition in existing products, and continuing to innovate through new product development. Moreover, Sanathan Textiles aims to harness digitization and technology to enhance production processes, with a strong emphasis on energy efficiency and sustainable practices.
Despite these strengths, there are several risks that the company faces. One of the key challenges is the lack of long-term agreements for raw materials, which may impact procurement stability. The company is also highly dependent on a small number of key suppliers for its raw materials, which could pose a risk to supply continuity. Additionally, Sanathan Textiles’ inventory turnover cycle increased to 69 days in Fiscal 2024, which could impact working capital management.
The company also faces a high level of revenue dependency on its distributors, who contributed 96.55% of the revenue in June 2024. This concentration poses a risk to the company’s revenue stream. Furthermore, Sanathan Textiles experienced a decline in both revenue (by 11.17%) and profit after tax (by 12.37%) in Fiscal 2024, which may indicate potential financial challenges. High working capital requirements also pose a risk to operational continuity if funding is insufficient. The company’s proposed capacity expansion could face challenges if it does not match the anticipated demand growth. Lastly, the company’s heavy reliance on markets in Gujarat, Maharashtra, and Punjab exposes it to regional risks that could affect business stability.
Financial Highlights
| Metric | 30-Jun-24 | 31-Mar-24 | 31-Mar-23 | 31-Mar-22 | Explanation |
| Assets (₹ Cr) | 2,529.53 | 2,203.68 | 1,906.67 | 1,796.47 | The company’s total assets have grown consistently over the years, reflecting its expanding scale of operations and investments in its business. |
| Revenue (₹ Cr) | 787.76 | 2,979.80 | 3,345.02 | 3,201.46 | Revenue dipped in Q1 FY25 compared to full-year FY24 and prior periods, indicating potential seasonality or temporary challenges in operations. |
| Profit After Tax (₹ Cr) | 50.07 | 133.85 | 152.74 | 355.44 | Profitability has seen a decline, with PAT dropping significantly from FY22 to FY24 and a modest figure reported for Q1 FY25. |
| Net Worth (₹ Cr) | 1,324.06 | 1,273.98 | 1,140.13 | 987.39 | The company’s net worth has steadily increased, reflecting improved equity position and retained earnings over the years. |
| Total Borrowing (₹ Cr) | 644.93 | 379.88 | 281 | 378.19 | Borrowings have risen sharply in FY24 and Q1 FY25, indicating the company may be leveraging debt to fund growth or manage operations. |
IPO Objectives
Sanathan Textiles Limited is conducting an initial public offering (IPO) to raise approximately ₹550 crore, comprising a fresh issue of ₹400 crore and an offer for sale of ₹150 crore.
The primary objectives for utilizing the proceeds from this IPO are:
- Repayment and Prepayment of Borrowings: The company plans to allocate ₹160 crore to reduce its outstanding debts, thereby strengthening its financial position.
- Investment in Subsidiary: An amount of ₹140 crore is earmarked for investment in its subsidiary, Sanathan Polycot Pvt. Ltd., to support its growth and operations.
- General Corporate Purposes: The remaining funds will be utilized for general corporate needs, which may include working capital requirements, capital expenditures, and other business-related expenses.
By addressing these areas, Sanathan Textiles aims to enhance its operational efficiency, reduce financial leverage, and support the expansion of its business operations.
Subscription Status as of December 20, 2024, 05:58 PM
| Category | Subscription Status | Explanation |
| Retail Individual Investor (RII) | 2.1517 times | The retail category was oversubscribed by 2.15 times, indicating strong interest from individual investors. |
| Non-Institutional Investor (NII) | 1.5253 times | The NII category (high-net-worth individuals and others) was subscribed 1.52 times, showing moderate demand from this segment. |
| Qualified Institutional Buyers (QIB) | 0.0935 times | QIBs subscribed to only 9.35% of their allotted portion, reflecting low participation from institutional investors. |
| Overall Subscription | 1.43 times | The IPO received an overall subscription of 1.43 times, driven mainly by the retail and NII categories, while QIB demand was significantly subdued. |
Recommendation:
- Long-Term Investors: Sanathan Textiles could be a viable option for investors looking for a stable, low-risk opportunity in the textile sector. Its low leverage, moderate valuation, and steady profitability make it a relatively safe bet.
- Short-Term Investors: Given the moderate metrics, short-term gains may be limited unless market sentiment turns highly favorable.
Action Plan:
Before investing, consider:
- The industry’s current and future outlook in light of global market trends.
- Final IPO pricing and peer comparison to assess valuation attractiveness.
- Your personal investment goals and risk tolerance.
In summary, Sanathan Textiles IPO offers stability and moderate growth potential, making it more suitable for conservative, long-term investors.
