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Sanathan Textiles Limited is a polyester yarn manufacturer and a global supplier of Cotton Yarn. Sanathan Textiles IPO is set to raise Rs 550 crores. The issue is a combination of fresh issue aggregating to Rs 400 crores and offer for sale aggregating to Rs 150 crores

About Sanathan Textiles

• Sanathan Textiles was originally incorporated on 10th October, 2005.
• Company is engaged in the business of manufacturing textile yarn, which is divided into three separate business verticals, consisting of
  • (a) Polyester yarn products;
  • (b) Cotton yarn products; and
  • (c) Yarns for technical textiles and industrial uses.
• The products are manufactured at their facility at Silvassa.
• As on June 30, 2024, their facility at Silvassa had a total installed capacity of 223,750 MTPA across the 3 yarn verticals. Their facility is designed with ‘Zero Liquid Discharge Solution’,
• They also manufacture products from recycled materials which are sold under the brand ‘Sanathan Reviro’.
• From April 1, 2021, to June 30, 2024, they catered to 20,066 customers out of which 983 customers were new customers.

Financials : Sanathan Textiles IPO

Anchors: Sanathan Textiles IPO

Company has raised ₹165 crore from anchor investors. Marquee investors took part in the anchor investment including Pinebridge Global Funds, SBI General Insurance, Societe Generale, Edelweiss Trusteeship, Whiteoak Capital, and Ashoka India Equity Investment Trust. Other investors included SBI Magnum Children’s Benefit Fund, Nippon India SmallCap Fund, HDFC Manufacturing Fund and Kotak Manufacture India Fund.

Salient Points: Sanathan Textiles IPO

• Projected growth of the Indian textiles and apparel industry, and the exports and domestic sales in the textiles and apparel industry from Fiscal 2024 till Fiscal 2028:

• Man-made textiles had the second largest market share between CY2018-CY2023(E) and is expected to remain in similar range in CY2027. Set out below are the growth details of global sales by raw material (value) of the man-made textile industry and cotton industry during the period mentioned below

• Out of the net proceeds from the issue, Rs 160crore will be used for repayment or prepayment of certain borrowings, Rs 140 crore towards investment in subsidiary Sanathan Polycot Private Limited for repayment or prepayment of certain borrowings and the balance towards general corporate purposes.
• Sanathan is one of the few companies in India with presence across the polyester, cotton and technical textile . Technical textiles’ find application in multiple end-use segments including automotive, healthcare, construction, sports and outdoor, and protective clothing.
• They had a market share of 1.7% in the overall Indian textile yarn industry as of FY2024.
• As on September 30, 2024, STL had more than 3,200 active varieties of yarn products and more than 45,000 stock keeping units (SKUs), and capability to manufacture a diversified product portfolio of more than 14,000 varieties of yarn products and more than 190,000 SKUs that are used in various forms and for varied end uses
• During June 30, 2024, Fiscal 2024, and Fiscal 2023, the company exported its products to 14, 27 and 29 countries, respectively. As on June 30, 2024, they had more than 925 distributors in 7 countries comprising India, Argentina, Singapore, Germany, Greece, Canada and Israel.
• On January 2, 2024, they were accorded the status of a ‘Three Star Export House’.
• Peers

• PE (FY25 annualized) – 13.6x ; PE FY24 20.2x.
• The company has a high- share of value-added products in its product mix. It manufactures high value products such as dope dyed, superfine/micro, functional, industrial and technical yarn, cationic dyeable and specialty yarn. As of FY24, the share of value-added products in the company’s sales mix stood at ~52%.
• They have established long standing relations with brands like Welspun India, Banswara Syntex, Ganesha Ecosphere, Page Industries, Siyaram Silk Mills, etc.
• Indian textile industry seems to be benefitting from the political and economic crisis in Bangladesh. There is also increased alternate sourcing by global brands.
• Expanding manufacturing capacity both in cotton yarn at Silvassa and is setting up new facility solely for manufacturing polyester yarn products in Punjab and will increase the company’s polyester yarn manufacturing capacity from 550 tonne per day to 1,500 tonne per day once fully operational.
• I intend to apply in Sanathan Textiles IPO. Given the segment one should have muted expectations of listed gains. significant Capacity addition debt repayment should drive its earnings growth going forward.
• This post is exploratory and educational purposes only.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.