When a seasoned brokerage like ICICI Securities initiates coverage on a stock, investors take note. Their latest report on Sanathan Textiles is no exception. With a BUY rating and a target price of INR 461 per share, the report signals a robust 47% upside, driven by strategic expansions, strong demand, and solid financial projections.
Sanathan Textiles: A Cross-Sector Powerhouse in the Making
For those unfamiliar with Sanathan Textiles, this isn’t just another run-of-the-mill textile manufacturer. It’s a company whose presence cuts across three vital verticals:
- Polyester yarn products
- Cotton yarn products
- Technical textiles and industrial-use yarns
A diverse product range is one of its strengths, with over 14,000 yarn varieties and more than 1,90,000 SKUs. This kind of scale puts Sanathan in a league of its own, catering to industries far beyond traditional textiles.
Sanathan Textiles hit the stock market on 27 December 2024 and listed with a 20.98% return on investment. The issue size was INR 550 crore. This IPO oversubscribed 35 times in 3 days. Currently, the IPO is trading at around INR 324 per share, which is close to its IPO allotment price.
Expansion: The Key to Future Growth
Smart investors know that growth is the name of the game, and Sanathan isn’t sitting still. The company is in the final stages of commissioning its greenfield facility in Punjab, it will drastically scale up the company’s operations.
- Phase-1: Set to be operational in FY25.
- Phase-2: Expected completion by FY27, further boosting production capacity.
Beyond this, the company is ramping up cotton yarn production at its Silvassa facility:
- Unit-3: Kicking off in FY24, adding 540 MTPA capacity.
- Unit-4: Launching in FY26, contributing a massive 10,950 MTPA.
By FY27, Sanathan’s total production capacity will jump by 119%, surging from 2,23,750 MTPA in FY25 to 4,90,200 MTPA.
Capacity Utilization: A Telling Indicator
If you’re wondering whether Sanathan’s products are in demand, the numbers don’t lie:
- Polyester yarn: 101.7% utilization
- Cotton yarn: 111.2% utilization
- Technical textiles: 93.9% utilization
Operating at—or above—full capacity is a textbook indicator of booming demand. This underscores why expansion isn’t just strategic; it’s essential.
The Numbers Speak for Themselves
ICICI Securities has put forward some overwhelming projections:
- Revenue CAGR (FY24- FY27): 28%
- EBITDA CAGR: 42%
- EPS CAGR: 24%
They estimate FY27E Profit After Tax (PAT) at INR 300 crore, with a target multiple of 13× FY27 earnings, reinforcing the INR 461 price target. Currently, the market capitalization stands at INR 2,724 crore.
The Bottom Line: Why Investors Should Take Note
For a company expanding at this pace, Sanathan Textiles is firing on all cylinders. It has the demand, the scale, and now, the backing of a major brokerage house.
ICICI Securities’ BUY rating, with its 47% upside potential, isn’t just a casual recommendation—it’s a statement. The company’s strategic manufacturing expansions and its dominant presence in polyester, cotton, and technical textiles make it a compelling bet for the future.
Investors looking for a high-growth textile stock with solid fundamentals should keep their eyes on Sanathan Textiles—it’s weaving its way into a larger success story.
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