Unlisted shares of Sanstar Ltd are trading Rs 30 higher in the grey market, signalling a 31.58 per cent listing gain from the public issue.
Sanstar IPO: The initial public offering (IPO) of plant-based speciality products company Sanstar Limited, which will be closed on today, Tuesday, has received a positive response from investors. Till 10:12 am on the final day of bidding on Tuesday, July 23, the 510.15-crore IPO received a 15.44 times subscription, garnering bids for 58,04,20,350 shares as against 3,75,90,000 shares on offer.
According to the latest data, the retail quota received a 13.24 times subscription, while the non-institutional investors category got a 39.45 times subscription. The qualified institutional buyers (QIB) category received a 1.29 per cent subscription.
Its retail and non-institutional investors’ quotas were fully subscribed within the first two hours of its bidding on Friday.
The issue was opened for public subscription on July 19. The price band of the IPO has been fixed at Rs 90-Rs 95 apiece.
The Sanstar IPO allotment will likely be finalised on July 24, Monday; while its listing will take place on both BSE and NSE on July 26.
Investors need to apply for a minimum of 150 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,250 [150 (lot size) x Rs 95 (upper price band)].
Sanstar IPO GMP Today
According to market observers, unlisted shares of Sanstar Ltd are trading Rs 30 higher in the grey market as compared with its issue price. The Rs 30 grey market premium or GMP means the grey market is expecting a 31.58 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Sanstar IPO: Analysts’ Recommendations
Most analysts have grant a ‘Subscribe’ rating to the Sanstar IPO, given its growth prospects.
In its IPO note, brokerage firm Master Capital said Sanstar is looking to payoff its debt and strengthen its balance and invest into building additional capacity to fuel their growth. Post the proposed expansion, the capacity will almost double from current levels creating a huge headroom for growth. The current capacity is already 90% filled and the capex for expansion has already started.
“The valuation of the IPO is at par with the listed peers, but given the growth prospects, we advise to Subscribe to the IPO keeping a long term view,” Master Capital said in the IPO note.
Another brokerage Swastika in its IPO note said, “Sanstar’s financial performance presents a mixed picture, with recent declines in revenue but growth in profitability. However, some key risks require careful consideration. Fluctuations in raw material prices, exposure to global market volatility, intense competition, and a lack of diversification beyond maize-based products pose challenges for future growth.”
The IPO valuation of 20x P/E appears fully priced. While we acknowledge the potential for listing gains, a cautious approach is warranted due to the aforementioned risks. “Thus, we recommend a subscribe rating for this IPO for listing gain,” Swastika added in its note.
Sanstar Limited, a leading Indian manufacturer of maize-based specialty products and ingredient solutions, caters to a diverse range of industries in both domestic and global markets. The company boasts strategically located, state-of-the-art manufacturing facilities with a focus on sustainability, and has established a large and diversified customer base.
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Sanstar IPO: More Details
The Ahmedabad-based company’s proposed initial public offering (IPO) is a combination of fresh issue of 4.18 crore shares and an offer for sale (OFS) of 1.19 crore shares. At the upper end of the price band, the IPO size is pegged at Rs 510.15 crore.
A day before the IPO, on July 18, Sanstar Ltd collected Rs 153 crore from anchor investors. According to a circular uploaded on the BSE website, the company has allocated 1.61 crore equity shares to 13 funds at Rs 95 apiece, aggregating the transaction size to Rs 153 crore.
Proceeds from the fresh issue to the tune of Rs 181.55 crore will be utilised to fund the capital expenditure requirement for the expansion of the company’s Dhule facility, Rs 100 crore for debt payment and a portion will also be used for general corporate purposes.
Sanstar is one of the major manufacturers of plant-based speciality products and ingredient solutions in India.
The company’s specialty products and ingredients add taste, texture, nutrients and increased functionality to foods as ingredients, thickening agents, stabilisers, and sweeteners, among others.
It has an installed capacity of 1,100 tonnes per day through its two manufacturing facilities at Dhule in Maharashtra and Kutch in Gujarat.
The company exports its products to 49 countries across Asia, Africa, the Middle East, the Americas, Europe, and Oceania and has established its presence across India, distributing its products to 22 states.
Sanstar’s revenue from operations has increased at a CAGR of 45.46 per cent to Rs 1,067.27 crore in FY24 from Rs 504.40 crore in FY22, and its profit after tax has grown to Rs 66.77 crore in FY24 from Rs 15.92 crore in FY22.
Investors can bid for a minimum of 150 equity shares and in multiples of 150 equity shares thereafter.
Pantomath Capital Advisors is the sole book-running lead manager for the IPO. The equity shares of the company are proposed to be listed on the BSE and the NSE.
