Sanathan Textiles IPO day 3: GMP, subscription status, review. Should you apply?

Sanathan Textiles IPO day 3: The initial public offering (IPO) of Sanathan Textiles, which opened for subscription on Thursday, December 19, and concludes today, i.e., Monday, December 23, has seen a solid response from investors. The issue has been fully subscribed, and the grey market trends indicate investors expect the stock to list at a premium.

Sanathan Textiles IPO's price band is at ₹305 to ₹321 per equity share. The company aims to raise ₹550 crore, of which ₹400 crore will be raised through fresh shares. The remaining ₹150 crore is reserved for the OFS route. The stock will be listed on the BSE and the NSE on December 27.

Sanathan Textiles IPO GMP today

According to stock market observers, the grey market premium (GMP) of Sanathan Textiles shares is ₹41. Considering the issue's upper price band at ₹321, the estimated listing price of the stock is ₹362. This indicates a premium of nearly 13 per cent with respect to the issue price.

Sanathan Textiles IPO subscription status

According to BSE data, at 7 PM on Monday, December 23, the third and final day of subscription, the Sanathan Textiles IPO had seen an overall subscription of 35.12 times, with bids received for 44,32,74,538 shares against 1,26,22,950 offered. The segment reserved for retail investors was booked 8.93 times, the non-institutional investors' (NIIs) segment was subscribed 42.21 times and the qualified institutional buyers (QIBs) segment was booked 75.62 times.

Sanathan Textiles IPO review: Should you buy?

DRChoksey FinServ Private Limited, a SEBI-registered research entity, has a "neutral" view on Sanathan Textiles IPO, considering the company's growth prospects, strategic capacity expansion, and an on-par valuation.

According to DRChoksey, Sanathan Textiles is positioned for substantial growth in the coming years.

"With its existing capacity being fully utilised, the company is set to more than double its production capacity by FY25 with the addition of a new facility in Punjab dedicated to polyester yarn. Looking ahead, the product mix shifts towards value-added products and growing international sales are likely to boost profitability and strengthen the overall financial performance," said DRChoksey.

"Sanathan’s valuation appears fair, with a P/E ratio of 20 times and an EV/EBITDA of 13 times compared to its peers in the industry. The company enjoys a diverse client base, reflecting its strong market reach. It demonstrates robust operational efficiency with a fixed asset turnover ratio of 3.2 times and a short working capital cycle of 54 days for FY24, better than many of its competitors," said the financial firm.

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