Sanstar IPO opens today; check price band, GMP, should you subscribe?

Sanstar IPO: Sanstar Limited IPO will launch its initial public offering (IPO) today, July 19, 2024, aiming to raise Rs 510.15 crores through a book built issue. 

The IPO comprises a fresh issue of 41.8 million shares valued at Rs 397.1 crore and an offer for sale (OFS) of 11.9 million shares worth Rs 113.05 crore. 

The IPO is priced in a range of Rs 90 to Rs 95 per share, and prior to the public offering, the company secured Rs 153.05 crore from anchor investors.

Established in 1982, Sanstar Limited specialises in manufacturing specialty plant-based products and ingredient solutions for various applications including food, pet food, and industrial sectors across India. 

The company’s product line includes liquid glucose, dried glucose solids, maltodextrin powder, dextrose monohydrate, native and modified maize starches, as well as by-products like germ, gluten, fibre, and fortified proteins.

Sanstar operates two manufacturing facilities spread over 10.68 million square feet in Dhule, Maharashtra, and Kutch, Gujarat, with a combined annual production capacity of 3,63,000 tons (1,100 tons per day). Sanstar is positioned as the fifth largest producer of corn-based specialty products in India.

The company's global footprint extends to 49 countries across Asia, Africa, the Middle East, America, Europe, and Oceania, exporting their products widely. In India, they distribute their products in 22 states. As of March 31, 2024, Sanstar Limited employs a workforce of 271 individuals, including 60 permanent employees across its manufacturing facilities and headquarters.

Here is all you need to know about the Sanstar IPO:

Sanstar IPO Lot size

For retail investors, the minimum lot size required for an application is 150 shares, translating to a minimum investment of Rs 14,250 based on the IPO price range of Rs 90 to Rs 95 per share. For eligible Non-Institutional Investors (sNII), the minimum investment is set at 15 lots, equivalent to 2,250 shares, totaling Rs 213,750 based on the IPO price range. For eligible Big Non-Institutional Investors (bNII), the minimum investment requirement is 71 lots, totaling 10,650 shares, amounting to Rs 1,011,750 based on the IPO price range.

Sanstar IPO funds usage

The proceeds from the issue will be allocated towards funding the capital expenditure required for expanding the Dhule Facility. Additionally, they will be used for the partial or full repayment of specific borrowings availed by the company. The remaining funds will be utilised for general corporate purposes.

Sanstar IPO allotment, listing details

The allotment for the Sanstar IPO is scheduled to be finalised on Wednesday, July 24, 2024. The IPO is expected to list on both BSE and NSE, with the tentative listing date set for Friday, July 26, 2024.

Sanstar IPO GMP

The Grey Market Premium (GMP) of the company is Rs 37, indicating a listing gain of about 39 per cent.

Sanstar IPO Lead managers

Pantomath Capital Advisors Pvt Ltd is serving as the book running lead manager for the Sanstar IPO, with Link Intime India Private Ltd appointed as the registrar for the issue.

Sanstar IPO Financials

Sanstar Limited's revenue dropped 10.6 per cent to Rs 1,081.7 crore and profit after tax (PAT) rose 59.7 per cent to Rs 66.8 crore between the financial year ending with March 31, 2024 and March 31, 2023.

Should you subscribe?

According to Master Capital Service, 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 brokerage said, the capacity will almost double from current levels creating a huge headroom for growth. The current capacity is already 90 per cent 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,” said Master Capital Service.