Sanstar IPO: From products to financials, here are 10 key things to know from RHP

Sanstar IPO opened for subscription on Friday, July 19. The price band for the Sanstar IPO has been set at ₹90 to ₹95 for each equity share with a face value of ₹2. The ₹510-crore issue will end on Tuesday, July 23. Investors may place bids in multiples of 150 equity shares following the minimum of 150 equity shares. Sanstar Ltd, a plant-based specialised goods firm, announced on Thursday that it has raised ₹153 crore from anchor investors, a day before its initial public offering.

A new issue of 4.18 crore shares and an offer for sale (OFS) of 1.19 crore shares by selling shareholders make up the IPO. The estimated IPO size at the top end of the pricing range is ₹510.15 crore.

₹100 crore will be used to pay off debt, ₹181.55 crore of the fresh issue's proceeds will go toward funding the capital investment needed to expand the company's Dhule plant, and a part would go toward general corporate objectives.

For the IPO, Pantomath Capital Advisors is the only book-running lead manager.

Here are 10 key things from the Red Herring Prospectus (RHP) that investors might want to know before subscribing to the issue.

Sanstar IPO Promoters

Gouthamchand Sohanlal Chowdhary, Sambhav Gautam Chowdhary, and Shreyans Gautam Chowdhary are the company's promoters. Together, the promoters own 80,366,100 equity shares in their company, or 57.22% of the equity share capital that has been issued, subscribed for, and paid up.

Sanstar IPO peers

Gujarat Ambuja Exports Ltd (P/E of 18.65), Gulshan Polyols Ltd (P/E of 73.31), and Sukhjit Starch and Chemicals Ltd (P/E of 15.01) are the company's listed peers.

Sanstar Business details

The firm is one of the leading producers of plant-based specialty goods and ingredient solutions in India for use in industrial, animal nutrition, and food applications. According to Frost & Sullivan, the firm is the fifthlargest producer of specialty goods and ingredient solutions based on maize in India, with an installed capacity of 3,63,000 tons annually (1,100 tons per day).

Sanstar Manufacturing Facilities

The firm has two manufacturing facilities: one in Dhule, Maharashtra, and the other in Kutch, Gujarat. Together, the facilities cover an area of 10.68 million square feet, or around 245 acres. Their Dhule Facility was created by our in-house team of 24 engineers and is the newest, most advanced, automated facility with an emphasis on sustainability. Their production plants are positioned to take use of both the seaports at Mundra, Kandla, Hazira, and Nhava Sheva, which are important for exporting their final goods, and the areas where their raw materials are harvested, such as maize belts.

Sanstar Group Companies

Sanstar Gems & Jewels Private Ltd and Sambhav Starch Products Private Ltd are the group companies of the firm.

Sanstar Industry

Due to higher output from South America, India's share of the world's maize production increased somewhat from 2.6% in FY2020 to 3.3% in FY2023. It is anticipated to slightly fall to 2.9% in FY2024. By increasing yield to 5 tons/ha over the next five years, India may boost its maize production from the present levels of around 37.5 million tons to 50 million tons.

Overall productivity and farmer income will increase with the implementation of appropriate governmental measures and actions to fortify post-harvest infrastructure, enhance storage facilities, put price stabilisation mechanisms in place, and build an integrated value chain strategy.

Sanstar Products

Among the goods produced by the firm are liquid glucose, dried glucose solids, dextrose monohydrate, maltodextrin powder, native and modified maize starches, and co-products such enhanced protein, fiber, gluten, and germs.

Their specialty goods and ingredient solutions enhance the flavor, texture, nutritional value, and overall usefulness of (i) foods as ingredients, thickeners, stabilisers, sweeteners, emulsifiers, and additives (in bakery goods, confections, pastas, soups, ketchups, sauces, creams, desserts, and so on); (ii) animal nutrition products as nutritional ingredients; and (iii) other industrial products as disintegrants, excipients, supplements, coating agents, binders, smoothing & flattering agents, and finishing agents, among other things.

Sanstar Financials

Sanstar's revenue from operations increased from ₹504.40 crore in fiscal 2022 to ₹1,067.27 crore in fiscal 2024 at a compound annual growth rate (CAGR) of 45.46%, according to its restated consolidated financial statements. Between fiscal years 2022 and 2024, their profit after tax climbed at a compound annual growth rate (CAGR) of 104.79%, from ₹15.92 crore to ₹66.77 crore.

Sanstar IPO - key risks

Some of the key risks are as follows;

• The company hasn't signed any long-term contracts with suppliers for its raw materials, so any increase in the price or decrease in the availability of these materials, or their incapacity to take advantage of new or existing relationships with their suppliers, could negatively impact their operations and business.
• The company offers its products to particular industries for particular purposes. Any decrease in the need for or demand for their products in these sectors might lead to a loss of business and have an impact on their overall financial health and performance.

Lock-in of equity shares allotted to anchor investors

Allotted equity shares to anchor investors in the anchor investor portion will be locked in the following way: 50% of the equity shares will be locked in for 90 days from the date of allotment to each anchor investor, and the remaining 50% will be locked in for 30 days from the date of allotment to each anchor investor.

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