Everything you need to know about Sanstar IPO

About the company

Established in 1982, Sanstar Limited manufactures plant-based specialty products and ingredient solutions in India for food, animal nutrition, and other industrial applications. The company’s products include liquid glucose, dried glucose solids, maltodextrin powder, dextrose monohydrate, native maize starches, modified maize starches, and co-products like germs, gluten, fiber, and enriched protein, amongst others. According to Frost & Sullivan, the company holds the position of the fifth-largest manufacturer of maize-based specialty products and ingredient solutions in India, boasting an installed capacity of 363,000 tons per annum (1,100 tons per day).

The specialty products and ingredients solutions by the company add taste, texture, nutrients and increased functionality to (i) foods as ingredients, thickening agents, stabilizers, sweeteners, emulsifiers, and additives (in bakery products, confectionery, pastas, soups, ketchups, sauces, creams, deserts, amongst others), (ii) animal nutrition products as nutritional ingredients, and (iii) other industrial products as disintegrants, excipients, supplements, coating agents, binders, smoothing & flattering agents, finishing agents, among others.

The company is a recognized Two Star Export house from the Director General of Foreign Trade, Government of India, while Sanstar Biopolymers Limited, the erstwhile Company that was merged with the Company in 2023 is a recognized Three Star Export House. The company has two manufacturing facilities in Maharashtra and Kutch covering a total area of 245 acres and exports its products to companies in 49 countries including Asia, Africa, the Middle East, America, Europe, and Oceania. The Domestic reach is equitable, with product distribution covering 22 states across India.



Issue size

Funds raised in the IPO Amount
Overall ₹510.15 crores
Fresh issue ₹397.10 crores
Offer for sale ₹113.05 crores

Utilisation of proceeds

Purpose INR crores (%)
Capital expenditure 181.55 (45.7%)
Debt reduction 100 (25.2%)
General corporate purposes 228.6 (29.1%)

Financials

Financial year ended March 2022 March 2023 March 2024
Total assets 207.45 368.35 527.57
Revenue 504.77 1,209.67 1,081.68
Profit After Tax 15.92 41.81 66.77
EPS 1.08 2.98 4.75

*All figures except EPS are in ₹ crores

Strengths

  • One of the largest manufacturers of maize-based specialty products and ingredient solutions in India: The Company ranks as the fifth-largest manufacturer in India of maize-derived specialty products, offering a diverse portfolio. This includes liquid glucose, dried glucose solids, maltodextrin powder, dextrose monohydrate, native maize starch, and modified maize starches, along with co-products like germs, gluten, fiber, and enriched protein.
  • Global presence in a market with high entry barriers: Products have been exported to 49 countries across Asia, Africa, the Middle East, Europe, North America, South & Central America, and Oceania in Fiscal 2024. High entry barriers characterize the industry, including the large capital costs of building manufacturing facilities, substantial time and expenditure for research and development, the need for customer confidence and relationships which come with time, scarcity of necessary raw materials due to alternative uses, the necessity of a specific capacity for economies of scale, and competition from established players.
  • Large, diversified customer base with enduring relationships: Over time, a diversified customer base has developed, spanning industries like food, animal nutrition, pharmaceuticals, paper, textile, personal care, and adhesives. Revenue contribution from the top 10 and 20 customers has significantly reduced, from 73.87% in Fiscal 2022 to 40.53% in Fiscal 2024 for the top 10 customers, and from 83.24% to 53.59% over the same period for the top 20 customers, as per Restated Consolidated Financial Statements.

Risks

  • Lack of long-term contracts with suppliers: There are no current long-term contracts held with suppliers for raw materials. If future costs rise, or if there is a shortfall in the availability of these materials, the ability to navigate or harness relationships with suppliers could adversely affect business operations and outcomes.
  • Exports-related uncertainties: The Company exports products globally, leading to potential exposure to import taxes or restrictions in various countries. An unfavourable shift in foreign exchange rates, the absence of fiscal benefits, or the inability to meet compliance requirements could negatively impact business operations and results.
  • Highly competitive industry: The company operates within the maize-based specialty products and ingredient solutions industry. This industry is known for its fierce competition, including emerging small-scale manufacturers of maize starch and derivatives. This intensifying competition may drive down prices and lead to compromises in quality. Any inability to sustain a competitive advantage could lead to adverse effects on the business, its prospects, and financial performance.

Schedule

Issue period 19-23 Jul 2024
UPI mandate deadline 23 Jul 2024 (5 PM)
Allotment finalization 24 Jul 2024
Refund initiation 25 Jul 2024
Share credit 25 Jul 2024
Listing date 26 Jul 2024
Mandate end date 07 Aug 2024
Lock-in end date for anchor investors (50%) 24 Aug 2024
Lock-in end date for anchor investors (remaining) 24 Oct 2024

Note:

  • The above schedule is tentative. The anchor lock-in period ends 30 days after the actual allotment date for 50% of the shares and 90 days after for the remaining portion.
  • The allotment status will be available by July 25, 2024, on the registrar’s website and the NSE website.
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