Sanstar IPO subscription status: The second bidding day of Sanstar Ltd's initial public offering followed a similar pattern to the first, with non-institutional investors (NII) leading the way with huge subscription numbers, followed by retail investors who showed great interest in the issue. On the second day, qualified institutional buyers (QIBs) also began to participate. According to BSE data, the subscription status for Sanstar IPO was 13.48 times.
Non-institutional investors obtained 32.85 times as many subscriptions as Retail Individual Investors (RIIs), who received 12.15 times. The section reserved for Qualified Institutional Buyers (QIBs) received 1.29 times subscription.
On the first day of bidding, Friday, July 19, the issue was booked 4.16 times. The business has allocated 15% of its shares for NIIs, 50% for QIBs, and 35% for retail investors. Sanstar garneredRs 153 crore from anchor investors.
Sanstar Ltd focuses on plant-based specialised goods and novel ingredient solutions. They are India's fifth-largest maker of maize-based specialised goods and ingredient solutions. Their comprehensive range serves the food sector, animal nutrition, and a variety of industrial uses, with an installed capacity of 3,63,000 tonnes per year.
According to the brokerage, Sanstar's financial performance is fueled by its established market position in the industry, growing global footprint, high entry barriers, expanded manufacturing capacities to capture additional market share, and long-term customer relationships, which allow it to capitalize on significant opportunities in existing and new products.
It is an attractive investment opportunity because of its industry leadership, wide product portfolio, and strong global presence. The issue is priced at 20.0x on the top price range based on FY24 profits, which looks reasonable. As a result, we suggest a SUBSCRIBE rating for this issue.
According to the brokerage's analysis, Sanstar's revenue grew at a 42% CAGR between FY20 and FY24. In terms of profitability, operating margins increased from 7.1% in FY20 to 9.2% in FY24. When compared to peers, the firm has done better in terms of sales growth and profitability. Thus, the company's FY24 return ratios outperformed the industry average, with ROE and ROCE standing at 30.2% and 29.5%, respectively (peer average: 8.9% and 11.1%).
The issue is priced at 26 times FY24 EPS, which is less than the peer average of 34.7x. However, excluding the Gulshan polyols, the peer average PE valuation drops to 16.9x, which is significantly lower than Sanstar's valuation. Given the stock's strong growth and profitability parameters, we suggest SUBSCRIBE as a long-term investment.
Through its IPO, the company aims to raise ₹510.15 crore. The IPO consists of an offer-for-sale (OFS) of 1.19 crore shares valued at ₹113.05 crore by the promoters and a fresh issue of 4.18 crore equity shares valued at ₹397.1 crore by the firm.
Richa Sambhav and Samiksha Shreyans Chowdhary will each be selling 33 lakh shares via OFS, while Rani Gouthamchand Chowdhary will be selling 38 lakh equity shares through the OFS. The other selling shareholders among the promoters are Gouthamchand Sohanlal Chowdhary, Sambhav Gautam Chowdhary, and Shreyans Gautam Chowdhary, who are each offloading 5 lakh shares.
The proposed uses of the net proceeds of the new issue include financing the capital expenditure needed to expand the Dhule Facility, repaying and/or prepaying, in full or in part, some of the company's borrowed funds, and general corporate purposes.
The sole book running lead manager is Pantomath Capital Advisors Private Ltd, and the offer's registraris Link Intime India Private Ltd.
Sanstar IPO grey marker premium is +30. This indicates Sanstar share price were trading at a premium of ₹30 in the grey market, according to investorgain.com.
Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Sanstar share price was indicated at ₹125 apiece, which is 31.58% higher than the IPO price of ₹95.
Based on grey market activity over the previous 11 sessions, today's IPO GMP is heading upward and anticipates a solid listing. According to investorgain.com analysis, the lowest GMP is ₹0, and the maximum is ₹44.
'Grey market premium' indicates investors' readiness to pay more than the issue price.'
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
