Strong Listing: Sanathan Textiles Makes A Healthy Debut On NSE, Lists At 32% Premium From IPO Price

Sanathan Textiles, a player in the yarn manufacturing sector, made a healthy stock market debut on December 27, with its shares listing at a premium of around 32% on the National Stock Exchange (NSE). The company's stock opened at Rs 422.30 per share, higher than its IPO price of Rs 321, giving it a market valuation of Rs 3,373.63 crore.

On the Bombay Stock Exchange (BSE), the shares were listed at Rs 419.10 per share, marking a 30.56% premium over the issue price. The stock later rose to Rs 422.65, reflecting a 31.66% gain on the first day of trading.

Subscription Details

Sanathan Textiles' initial public offering (IPO), which ran from December 19 to December 23, garnered investor interest, achieving an overall subscription rate of 35.12 times. Qualified Institutional Buyers (QIBs) subscribed 75.62 times, Non-Institutional Investors (NIIs) subscribed 42.21 times, and retail investors subscribed 8.93 times.

The IPO, priced in the range of Rs 305 to Rs 321 per share, aimed to raise Rs 550 crore. This consisted of a fresh issue of Rs 400 crore and an Offer-for-Sale (OFS) worth Rs 150 crore by the promoters and promoter group entities.

IPO Proceeds

Sanathan Textiles plans to use the proceeds from the fresh issue to strengthen its financial position and support its growth initiatives. Rs 160 crore will be used for debt repayment, Rs 140 crore will be invested in its subsidiary, Sanathan Polycot Pvt Ltd, for loan repayment, and the remaining funds are earmarked for general corporate purposes.

Grey Market Premium (GMP)

The grey market premium (GMP) for Sanathan Textiles shares provided an early indicator of its strong listing. Ahead of the IPO allotment, the GMP stood at Rs 90 per share, suggesting a potential listing price of Rs 411, approximately 28.04% higher than the upper end of the IPO price band.

Business Overview

Sanathan Textiles operates three distinct yarn business divisions:
Polyester Yarns: A rapidly growing segment driven by demand for durable, sustainable materials.
Cotton Yarns: Serving traditional and contemporary textile needs.
Yarns for Technical Textiles and Industrial Applications: Catering to specialized industrial demands.
These divisions are integrated under a single corporate structure, enabling efficient operations and streamlined management.

The company's focus on innovation and sustainability positions it well to benefit from increasing demand in the textile sector. With the IPO proceeds, Sanathan Textiles aims to expand its production capacity, improve operational efficiency, and meet the growing demand for its products.

Growth Potential

Sanathan Textiles operates in a dynamic industry experiencing rising demand for polyester and technical textiles, fueled by the shift towards more durable and environmentally friendly materials. The company's ability to cater to diverse market segments ensures resilience and adaptability to market changes.

Post-listing, Sanathan Textiles achieved a market valuation of Rs 3,373.63 crore. Analysts highlight the company's healthy financials, diversified product portfolio, and strategic use of IPO proceeds as key factors that could drive long-term value for shareholders.