Sanathan Textiles launches Rs 550 crore IPO, eyes growth amid expansion plans

Mumbai-based Sanathan Textiles, a leading manufacturer of polyester, cotton, and technical yarns, is launching its Rs 550 crore initial public offering (IPO). The offering includes a fresh issue of Rs 400 crore and an offer for sale of Rs 150 crore, reducing promoter shareholding from 100 per cent to 79.7 per cent. The company plans to allocate Rs 300 crore from the proceeds to repay borrowings.

Sanathan Textiles derives 77 per cent of its revenue from polyester yarn, 18 per cent from cotton yarn, and 5 per cent from technical textiles. It has a manufacturing facility in Silvassa with an annual capacity of 2.23 lakh tonnes, the company has 5 per cent share of India’s polyester yarn market. It offers over 3,200 yarn varieties across 45,000 SKUs, with over half of its revenue from value-added products like dope-dyed and technical yarns.

The company’s FY24 performance was impacted by falling yarn prices, with revenue dropping 11 per cent and net profit 12 per cent. EBITDA margins fell to 7.6 per cent from the historical 10 per cent. However, expansion projects in Punjab and Silvassa aim to double capacity by FY26 to meet rising demand.

With valuations at 0.86x annualized revenue and 13.5x FY25 earnings, the IPO appeals to long-term investors seeking exposure to an integrated textile business despite risks like price volatility and competition.