Sanathan Textiles has filed drafting documents with the SEBI for an IPO of Rs 1300 crore

5 August 2022
4 mins read
Sanathan Textiles has filed drafting documents with the SEBI for an IPO of Rs 1300 crore

Sanathan Textiles has filed a DRHP through capital markets regulator SEBI in order to raise money via an IPO. The IPO consists of a new offering of Rs 500 crore by the firm and a promoters’ offer to sell 1.14 crore equity shares. It is entirely owned by the promoters.

Ajaykumar Dattani owns 26,59,500 equity shares, Pareshkumar Dattani owns 23,51,100 equity shares, Anilkumar Dattani owns 25,57,500 equity shares, and Dineshkumar Dattani owns 28,27,500 equity shares.

Shareholders in the promoter group will also sell their equity shares via an OFS, with Vallabhdas Dattani HUF, Vajubhai Investments and Dineshkumar Dattani HUF each selling 18,000 shares. Beena Dattani, Sonali Dattani, Anilkumar Dattani HUF, Mikesh Dattani and Pareshkumar V Dattani HUF are among the other promoters who would sell 9.5 lakh shares via the OFS.

Before filing a red herring prospectus with the IPO registrar, Sanathan Textiles may explore a pre-IPO placement of around Rs 100 crore. If the pre-IPO placement is completed, the IPO’s fresh issue amount will be lowered correspondingly.

According to market reports, the company’s IPO is projected to garner Rs 1,200-1,300 crore

The proceeds from the new issuance will be used to settle debts and meet working capital needs, as well as for general corporate reasons.

Sanathan Textiles works in the polyester, cotton, and technical textile industries. As of September 30, 2021, the firm claims to have a wide product portfolio with the potential to create over 12,900 variations of yarn products with over 1,00,000 SKUs (stock-keeping units) utilized in different forms and for various end purposes.

Polyester yarn goods, cotton yarn products, and yarns for technical textiles and industrial purposes make up the company’s three yarn business verticals. Sanathan Textiles has a manufacturing site in Silvassa, where it claims to have increased output to 2,21,050 MTPA across all three yarn verticals by September 30, 2021.

The firm made a profit of Rs 185.63 crore in FY21, up from Rs 46.01 crore the previous year, although income from operations declined to Rs 1,918.35 crore from Rs 2,116.6 crore over the same time period.

The profit for the six months ending September 30, 2021 was Rs 170.77 crore on sales of Rs 1,430.94 crore, with exports accounting for 12.36% of revenue. The book running lead managers for the issue are JM Financial and Edelweiss Financial Services.

Why are textile stocks on the rise?

Textile company stocks have risen 130-270 percent in the past year. This rapid increase is claimed to be the consequence of a mix of favorable global and company-specific circumstances.

Increased government involvement is thought to be one of the positive elements fueling this sector’s confidence. “Several incentives for the Man-Made Fiber category, such as MITRA, RoSCTL and PLI, have been introduced in the last 12 months,” analysts noted.

The Indian government has been reluctant to negotiate any new major free trade agreements (FTAs) since 2014, resulting in a loss of market share for Indian textiles and apparel to Bangladesh and Vietnam. “However, we see the government becoming more receptive to FTAs, with the Government of India’s Textile Minister saying that many of them may be inked in FY22,” the analysts noted.

The China + 1 theme is another reason that is helping Indian textile firms export. According to experts, the textile industry has experienced considerable consumer interest in recent quarters as a result of several big global retailers diversifying their sourcing and decreasing their reliance on China. According to research released on December 28, overall order booking from India has surged fast as a result of global retailers’ China+1 strategy. It also stated that owing to balance sheet deleveraging, several readymade garment exporter equities have witnessed a major re-rating.

While textile stocks continue to attract investors’ interest, experts warn that a rebound of pandemic cases in developed countries, particularly in major markets such as the United States and Europe, might undermine the recovery in exports.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.

Source: MoneyControl

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.