Sanstar’s Initial Public Offering (IPO) has taken the market by storm since its launch on July 19, 2024. Sanstar IPO With strong interest from Non-Institutional Investors (NII) and retail investors, the IPO has garnered full subscriptions within hours. Let’s delve into the specifics of the Sanstar IPO, including its subscription status, Grey Market Premium (GMP), key dates, and whether it’s a worthy investment.
Subscription Status
The Sanstar IPO opened for subscription on Friday, July 19, and will close on Tuesday, July 23. According to data from the Bombay Stock Exchange (BSE), the IPO subscription status is impressive, with an overall subscription of 4.16 times. Breaking this down further:
| Category | Subscription Status |
|---|---|
| Non-Institutional Investors (NII) | 9.85 times |
| Retail Investors | 4.07 times |
| Qualified Institutional Buyers (QIB) | 5% |
| Total Subscription | 4.16 times |
| GMP (Grey Market Premium) | Status |
|---|---|
| Sanstar IPO GMP | Positive Jump |
- The NII quota is oversubscribed by 9.85 times.
- The retail portion is oversubscribed by 4.07 times.
- Qualified Institutional Buyers (QIBs) have subscribed at a rate of 5%.
The firm has allocated 15% of its shares to NII, 50% to QIB, and 35% to retail investors. This diverse allocation ensures a broad spectrum of investor participation, enhancing the IPO’s stability and appeal.
Price Band and Lot Size
The Sanstar IPO price band is set between ₹90 and ₹95 per equity share, with a face value of ₹2 per share. The minimum lot size for investment is 150 equity shares, and investors can apply in multiples of this lot size.
Key Dates to Remember
- Issue Closing Date: Tuesday, July 23, 2024.
- Basis of Allotment Finalization: Wednesday, July 24, 2024.
- Initiation of Refunds: Thursday, July 25, 2024.
- Credit of Shares to Demat Accounts: Thursday, July 25, 2024.
- IPO Listing Date: Friday, July 26, 2024, on BSE and NSE.
Grey Market Premium (GMP)
The Grey Market Premium (GMP) is a crucial indicator of the market sentiment towards an IPO. As of the latest update, the Sanstar IPO GMP has seen a significant jump following the strong subscription status, reflecting positive investor sentiment and high demand for the shares in the grey market.
Company Overview
Sanstar Ltd, headquartered in Ahmedabad, is a prominent manufacturer of specialty plant-based products. The company specializes in ingredient solutions derived from Indian plants, which enhance the flavor, texture, nutritional content, and usability of food items. Their products serve various functions, including as thickeners, stabilizers, and sweeteners.
Financial Performance and Growth Prospects
Sanstar has demonstrated consistent growth over the past three fiscal years across several financial metrics such as sales, profitability, cash flows, and returns. The company’s robust balance sheet and strategic expansion initiatives bolster its financial health and future growth potential.
Sanstar is positioned as the fifth-largest player in the Indian maize-based specialty goods and ingredient solutions sector. The company’s Dhule plant is set to increase its capacity by 1,000 tons per day, further boosting production capabilities.
Expert Opinions
BP Equities Pvt Ltd: The brokerage highlights Sanstar’s strong market position, expanding global footprint, high entry barriers, and long-term customer relationships as key drivers of its financial performance. With an issue price at 20.0x on the upper price range based on FY24 profits, BP Equities recommends a SUBSCRIBE rating for the IPO.
Arihant Capital Markets Ltd: This brokerage firm emphasizes Sanstar’s potential for robust growth, driven by increased global demand for plant-based products and strategic capacity expansion. The firm values the IPO at 25.9x P/E based on FY24 EPS of ₹3.66 (post issue) and advises investors to “subscribe for the long term.”
Use of IPO Proceeds
Sanstar aims to raise ₹510.15 crore through this IPO. The proceeds will be utilized for:
- Financing capital expenditure to expand the Dhule Facility.
- Repaying or prepaying certain borrowed funds.
- General corporate purposes.
Promoter’s Offer for Sale (OFS)
The IPO includes an Offer for Sale (OFS) of 1.19 crore shares, valued at ₹113.05 crore, by the promoters. Key stakeholders, including Richa Sambhav, Samiksha Shreyans Chowdhary, Rani Gouthamchand Chowdhary, Gouthamchand Sohanlal Chowdhary, Sambhav Gautam Chowdhary, and Shreyans Gautam Chowdhary, are offloading a portion of their holdings.
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Conclusion: Should You Apply?
Given the strong subscription numbers, favorable GMP, and expert endorsements, the Sanstar IPO appears to be a promising investment. The company’s solid financial track record, strategic growth initiatives, and expanding market presence underscore its potential for long-term value creation. However, as with any investment, potential investors should consider their risk tolerance and investment horizon before making a decision.
Sanstar’s IPO represents a compelling opportunity to invest in a growing company with a significant market position and strong future prospects. If you are seeking a potentially rewarding addition to your portfolio, the Sanstar IPO might just be the right choice.