Last Date for Sanstar IPO

Last Day to Bid for Sanstar IPO: Should You Subscribe? Check GMP, Review, and Key Details

Sanstar Ltd’s Initial Public Offering (IPO) has generated significant interest among investors, with high subscription rates and favorable reviews from analysts. As the final bidding day approaches, potential investors are evaluating the benefits of subscribing to this promising IPO. This article provides a comprehensive overview of Sanstar’s IPO details, subscription status, expert reviews, and the Grey Market Premium (GMP).

Sanstar IPO Overview

IPO Subscription Details

Sanstar’s IPO opened for subscription on Friday, July 19, and will close on Tuesday, July 23. The IPO aims to raise ₹510.15 crore through a combination of a fresh issue of shares and an offer-for-sale (OFS) by existing shareholders.

Company Background

Sanstar Ltd is a leading producer of plant-based specialized goods and novel ingredient solutions in India. The company ranks as the fifth-largest maker of maize-based specialized products, serving various sectors, including food, animal nutrition, and industrial applications.

Current Subscription Status

Day 1 and Day 2 Highlights

On the first day of bidding, the IPO was subscribed 4.16 times. By the second day, the overall subscription had surged to 13.48 times, indicating strong investor interest.

Breakdown of Subscriptions by Investor Type

• Non-Institutional Investors (NII): 32.85 times
• Retail Individual Investors (RII): 12.15 times
• Qualified Institutional Buyers (QIB): 1.29 times

Expert Reviews and Recommendations

Canara Bank Securities

Canara Bank Securities highlights Sanstar’s strong market position, growing global footprint, and high entry barriers as key factors driving its financial performance. They recommend subscribing to the IPO, citing the company’s reasonable valuation and attractive investment opportunity.

Nirmal Bang

Nirmal Bang’s analysis reveals Sanstar’s impressive revenue growth, with a 42% CAGR between FY20 and FY24. The brokerage also notes improved operating margins and superior return ratios compared to industry peers. Based on these factors, Nirmal Bang suggests subscribing to the IPO for long-term gains.

Financial Performance and Valuation

Revenue and Profitability

Sanstar’s revenue has grown significantly, with operating margins increasing from 7.1% in FY20 to 9.2% in FY24. The company’s return on equity (ROE) and return on capital employed (ROCE) are 30.2% and 29.5%, respectively, outperforming the industry average.

Comparison with Industry Peers

Sanstar’s valuation is priced at 26 times FY24 EPS, lower than the peer average of 34.7 times. However, excluding Gulshan Polyols, the peer average drops to 16.9 times, making Sanstar’s valuation relatively higher.

IPO Details and Objectives

Fundraising Goals

Sanstar aims to raise ₹510.15 crore through its IPO. The funds will be used for expanding the Dhule Facility, repaying or prepaying borrowed funds, and general corporate purposes.

Utilization of Proceeds

The proceeds from the fresh issue will finance capital expenditure for facility expansion, repay debts, and support other corporate needs.

Grey Market Premium (GMP)

Current GMP Trends

Sanstar’s IPO has a grey market premium (GMP) of +30, indicating a strong demand. The estimated listing price is ₹125 per share, 31.58% higher than the IPO price of ₹95.

Estimated Listing Price

Based on current GMP activity, the estimated listing price suggests a positive debut, reflecting investor confidence in Sanstar’s growth prospects.

Positives:

1. Industry Potential: Sanstar operates in a high-growth industry, which may provide significant opportunities for expansion and profitability in the future. Investors may be attracted to the company’s potential to capitalize on industry trends.
2. Company Growth: Sanstar has shown consistent growth in revenue and profitability over the past few years. This track record can instill confidence in investors regarding the company’s ability to generate returns.
3. Strong Management Team: The company’s leadership team has a proven track record of successfully navigating the industry. Their experience and strategic vision can drive Sanstar’s future growth.
4. Innovative Products/Services: Sanstar’s commitment to innovation and development of new products or services can be a major selling point. This can position the company as a leader in its market and attract a loyal customer base.
5. Grey Market Premium (GMP): A positive GMP indicates strong investor interest and a potential for listing gains. High demand in the grey market can be a good sign for the IPO’s performance on the stock exchange.

Negatives:

1. Market Volatility: The stock market is subject to volatility, which can affect the performance of newly listed shares. Market conditions can change rapidly, impacting the IPO’s success and the company’s stock price.
2. Competitive Landscape: Sanstar operates in a highly competitive market. Intense competition can affect market share, pricing power, and profitability. Investors need to consider how well Sanstar can compete against established players.
3. Operational Risks: Like any business, Sanstar faces operational risks, including supply chain disruptions, production issues, and changes in consumer preferences. These risks can impact the company’s financial performance.
4. Economic Factors: Macroeconomic factors, such as changes in interest rates, inflation, and economic downturns, can affect Sanstar’s business. Investors should consider the broader economic environment when evaluating the IPO.
5. Regulatory Risks: Sanstar is subject to industry regulations that can change over time. New regulations or changes in existing ones can increase compliance costs and impact profitability.
6. Valuation Concerns: The IPO’s pricing needs to be carefully evaluated. If the valuation is too high, it may limit the potential for future gains and make the investment less attractive.
7. Short-Term Performance: While the long-term prospects may be positive, the short-term performance of the IPO can be unpredictable. Investors looking for quick gains should consider the potential for initial price fluctuations.

By weighing these positives and negatives, investors can make an informed decision about subscribing to the Sanstar IPO.

Conclusion

Sanstar’s IPO has garnered significant interest from various investor segments, with high subscription rates and positive reviews from financial analysts. The company’s strong financial performance, industry leadership, and strategic growth plans make it an attractive investment opportunity. Potential investors should consider subscribing to the IPO, given the favorable Grey Market Premium and expert recommendations.

FAQs

1. What is the subscription status of Sanstar’s IPO? The IPO was subscribed 13.48 times by the second day, with high interest from non-institutional and retail investors.
2. What are the key financial highlights of Sanstar Ltd? Sanstar’s revenue grew at a 42% CAGR from FY20 to FY24, with operating margins increasing to 9.2% and strong return ratios.
3. What do experts say about subscribing to the Sanstar IPO? Analysts from Canara Bank Securities and Nirmal Bang recommend subscribing to the IPO, citing strong financial performance and reasonable valuation.
4. What is the Grey Market Premium (GMP) for Sanstar’s IPO? The GMP is +30, indicating an estimated listing price of ₹125 per share, 31.58% higher than the IPO price.
5. How will Sanstar use the funds raised from the IPO? The funds will be used for expanding the Dhule Facility, repaying borrowed funds, and general corporate purposes.

Last Date for Sanstar IPO

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