By Sanstar Ltd is set to launch its highly anticipated IPO on Friday, July 19. With the price band set between ₹90 to ₹95 per equity share, the IPO aims to raise ₹510 crore. Investors have until Tuesday, July 23, to subscribe, and bids must be placed in multiples of 150 equity shares, starting with a minimum of 150 shares. Anchor investors are scheduled to receive their allocation on Thursday, July 18.
The IPO includes a fresh issue of 4.18 crore shares and an offer for sale (OFS) of 1.19 crore shares by existing shareholders. If priced at the upper end of the range, the total IPO size is estimated at ₹510.15 crore. The funds raised will be strategically allocated: ₹100 crore will go towards debt repayment, ₹181.55 crore will fund the capital investment needed to expand the company’s Dhule plant, and the remainder will be used for general corporate purposes.
Pantomath Capital Advisors is the sole book-running lead manager for this IPO, guiding Sanstar through the intricate process.
Sanstar Ltd’s promoters—Gouthamchand Sohanlal Chowdhary, Sambhav Gautam Chowdhary, and Shreyans Gautam Chowdhary—collectively own 57.22% of the company’s equity shares, totaling 80,366,100 shares. This substantial ownership underscores their vested interest in the company’s success.
Sanstar operates in the specialty goods and ingredient solutions sector, producing plant-based products for various applications, including industrial, animal nutrition, and food. According to Frost & Sullivan, the company ranks as the fifth-largest producer of maize-based specialty goods in India, with an installed capacity of 3,63,000 tons annually.
The company’s manufacturing footprint includes two state-of-the-art facilities: one in Dhule, Maharashtra, and another in Kutch, Gujarat, covering a combined area of 10.68 million square feet, or about 245 acres. The Dhule facility, developed by an in-house team of 24 engineers, is Sanstar’s most advanced and automated plant, emphasizing sustainability. These strategic locations allow efficient access to major seaports, facilitating the export of their products.
Sanstar’s product portfolio includes liquid glucose, dried glucose solids, dextrose monohydrate, maltodextrin powder, and native and modified maize starches, along with enhanced protein, fiber, gluten, and germs. These products serve as essential ingredients in food, nutritional supplements for animal feed, and various industrial applications.
Financially, Sanstar has demonstrated impressive growth. According to its restated consolidated financial statements, the company’s revenue from operations surged from ₹504.40 crore in fiscal 2022 to ₹1,067.27 crore in fiscal 2024, reflecting a compound annual growth rate (CAGR) of 45.46%. During the same period, profit after tax increased from ₹15.92 crore to ₹66.77 crore, representing a CAGR of 104.79%. These robust financials are likely to attract significant investor interest.
However, potential investors should be aware of certain risks. Sanstar does not have long-term contracts with its raw material suppliers, which could lead to volatility in prices and availability. Additionally, a decrease in demand from the specific industries that utilize Sanstar’s products could adversely impact the company’s financial performance. These factors could pose challenges, despite the company’s strong historical growth.
The company’s peers include Gujarat Ambuja Exports Ltd, Gulshan Polyols Ltd, and Sukhjit Starch and Chemicals Ltd, with respective P/E ratios of 18.65, 73.31, and 15.01. This comparison provides a benchmark for evaluating Sanstar’s valuation and market positioning.
For anchor investors, the equity shares allotted will be locked in following a specific schedule: 50% of the shares will be locked in for 90 days from the date of allotment, while the remaining 50% will be locked in for 30 days. This lock-in period is standard practice to ensure stability post-IPO.
As Sanstar Ltd prepares for its IPO, investors are keenly evaluating the company’s financial health, growth prospects, and broader market conditions. With a solid track record of revenue and profit growth, coupled with strategic investments in expansion and sustainability, Sanstar presents a compelling opportunity for potential investors. The success of the IPO will hinge on how well the company can navigate its risks and capitalize on its strengths in a competitive market.
