Sanathan Textiles Ltd IPO

Last Updated on October 17, 2023 by BFSLTeam BFSLTeam

Sanathan Textiles Ltd filed its DRHP with the market regulator SEBI in January 2022. Sanathan Textiles Ltd IPO will include both fresh issues worth Rs. 500 crore and OFS of up to 11,400,000 shares by its promoters and existing shareholders. The company might also consider a pre-placement of up to Rs. 100 crore. 

Sanathan Textiles Ltd is a Mumbai-based yarn producer and one of the few Indian firms with a presence across various sectors such as textile, polyester, and cotton. It has its manufacturing facility at Silvassa with the capacity of producing over 12,900 yarn products. 

About the Sanathan Textiles Ltd

Sanathan Textiles Ltd stands out in India for its presence in the polyester, cotton and technical textile sectors, all under one corporate entity. This integration has enabled diversification into new segments that serve a broad customer base. 

As of September 30, 2021, the company boasted a diverse product portfolio with more than 12,900 yarn types and 100,000 SKUs. Production is divided into three verticals – polyester, cotton and technical textiles – at the Silvassa plant. The company’s total production capacity in all of these verticals reached 2,21,050 MTPA on September 30, 2021.

To manufacture polyester yarns, Sanathan Textiles uses chips made from eco-friendly PTA and MEG, emphasising environmental responsibility. The company has embraced renewable energy as seen in its 2.3MW rooftop solar projects in Silvassa, contributing to 5% of energy consumption in FY2021.

In addition, its facility incorporates a “zero liquid discharge solution” that ensures minimal environmental impact by eliminating the discharge of industrial wastewater. The company prioritises sustainability by making products from recycled materials.

Company Financial 

The following table lays down crucial financial details of Sanathan Textiles. Potential investors might find these helpful: 

Parameters as Per the Year Ending On	March 31 2021	March 31 2020	March 31 2019
Total Assets	16,419.86	14,521.08	13,445.82
Total Liabilities	10,110.75	10,077.38	9,450.76
Total Expenses	16,802.66	20,494.10	22,629.49
Total Revenue	19,329.70	21,234.99	23,465.26
Profit After Tax	1,856.31	460.16	552.26
EBITDA	3,279.44	2,126.55	2,346.71
Earnings Per Share (EPS) (Basic & Diluted) *	25.80	6.40	7.68

*All values are in Rs. millions except EPS 

Also Read: How Can You Analyse An IPO?

Strengths of Sanathan Textiles Ltd

Here are some of the crucial and unique driving factors behind the company’s growth and success: 

• Its key strength lies in a diverse assortment and a significant share of value-added items. As of September 30, 2021, it manufactures more than 100,000 SKUs for various end-users, including apparel, suitcases, luggage, parachutes and medical items.
• During the six-month period ending on September 30, 2021, as well as for fiscal years 2021, 2020 and 2019, the share of revenue from value-added products represented 52.16%, 51.31%, 41.97% and 39.37% of total revenue, respectively.
• Its products are manufactured at the Silvassa plant in West Gujarat, a major centre for polyester yarn manufacturers in India. The strategic importance of this area is attributed to the large number of production facilities involved in the supply chain of polyester textiles. 
• The presence of key raw material suppliers such as Reliance Industries Limited, specifically for MEG and PTA, offers a logistical advantage to manufacturers in the region.
• From March 31, 2019, to September 30, 2021, its capacities increased from 212,425 MTPA to 221,050 MTPA. 
• The facility holds ISO 9001:2015, ISO 14001 and ISO 45001 certifications along with Standard 100 certification from OEKO-TEX. 

Risks Involved 

Along with the strengths, there are also some underlying risks of the company that you should know about as an investor. Here are a few of them: 

• Certain legal proceedings involving the company, its founders, subsidiaries, directors and group companies could adversely affect the cash flows, business, and operations. 
• The company relies heavily on technology. Failures in IT systems can hinder competitiveness, leading to reduced revenues and increased costs. 
• The company’s trademarks, including Sanathan and BornDyed, are not registered, which poses a risk to intellectual property protection and could potentially harm the business.

Also Read: IPO investment strategy

Summary 

Sanathan Textiles Ltd’s IPO issue size is supposed to be somewhere between Rs. 1,200 and Rs. 1,300 crore. The company aims to utilise proceeds worth Rs. 325 crore to repay its borrowings, Rs. 65 crore for general corporate purposes and financing working capital. 

Sanathan Textiles Ltd IPO price, date, lot size and other details are yet to be announced. Keep checking here for the latest details.

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