Sanstar Aims for Growth: Files IPO Papers with SEBI to Raise Rs 400-500 Crore

8 Jan 2024 , 09:34 AM

Ahmedabad-based Sanstar, specializing in plant-based products, has submitted initial documents to the Securities and Exchange Board of India (SEBI) to initiate an initial public offering (IPO), with sources suggesting a fundraising target within the range of Rs 400-500 crore.

The proposed IPO comprises a combination of a fresh issue of four crore shares and an offer-for-sale (OFS) of 80 lakh shares by the Chowdhary family, the company’s founders. Sanstar is also exploring funding avenues through private placement, rights issue, or preferential issue of up to 40 lakh equity shares before finalizing the red herring prospectus. In the event of successful pre-IPO placement, the size of the fresh issue will be adjusted accordingly.

Specializing in the production of plant-based specialty products and ingredient solutions for applications in food, animal nutrition, and industrial sectors, Sanstar plans to allocate Rs 181.55 crore towards expanding its Dhule facility and repaying debts amounting to Rs 100 crore. As of December 15, the company’s outstanding borrowings stood at Rs 120.52 crore. The remainder of the fresh issue proceeds will be earmarked for general corporate purposes.

Sanstar, recognized as the third-largest manufacturer of maize-based specialty products and ingredient solutions in India, boasts an installed capacity of 3.63 lakh tonnes per annum. The company operates manufacturing facilities in Dhule, Maharashtra, and Kutch, Gujarat.

In terms of financial performance, Sanstar reported a net profit of Rs 40.74 crore for the fiscal year ending March FY23, a significant increase from Rs 15.92 crore in the previous year. Revenue also experienced growth, reaching Rs 759.7 crore compared to Rs 504.4 crore. In the six-month period ending September FY24, the company achieved a net profit of Rs 21.82 crore on revenue of Rs 375.4 crore.

Pantomath Capital Advisers has been appointed as the merchant banker for the IPO, overseeing the financial aspects of the offering.