📉 CMP: ₹445.90 | 📉 -3.28% today
📦 Sector: Textiles | 🧶 Category: Yarn Overachievers | 💰 IPO: ₹400 Cr Raised

🔍 At a Glance

Sanathan Textiles, India’s triple-threat yarn master (polyester, cotton, and industrial yarns), wrapped up FY25 with ₹2,998 Cr revenue (+1.4% YoY), ₹263 Cr EBITDA (+16% YoY), and ₹160 Cr profit (+20% YoY). Add a successful ₹400 Cr IPO, a shiny new Punjab plant going live in FY26, and an India–UK FTA windfall — and you’ve got a textile company acting like a tech stock.

But is this loom of growth enough to weave returns for investors at ₹445 per share?

🏭 About the Company

• Founded: ~30 years ago
• Product Range: Polyester Filament Yarn, Cotton Yarn, Technical/Industrial Yarn
• Capacity: 5.5 lakh MTPA by FY28 (currently 550 TPD for polyester filament)
• Plants: Silvassa + upcoming Punjab mega unit
• Customers: 7,000+ across 27 countries
• SKUs: 50,000+ (no, this isn’t Big Bazaar)

🧑‍💼 Key Management

• CMD: Paresh Dattani — Speaks in EBITDA and expansion
• CFO, IR: Jude D’Souza — Also answers all investor emails at lightning speed

📊 FY25 Financial Highlights (YoY)

📌 Q4FY25

• Revenue: ₹732 Cr (down 3.17% YoY)
• EBITDA: ₹67.6 Cr (down 14.5% YoY)
• PAT: ₹43.65 Cr (down 16.5% YoY)

👉 FY25 good. Q4 slightly frayed.

🧵 IPO Update: ₹400 Cr Raised

The company’s successful IPO in FY25 wasn’t just a cash grab — it funded:

• Punjab plant capex (from 550 → 1,500 TPD in polyester)
• Working capital for yarn biz
• Tech upgrades to make warehouses less “millennial storage unit” and more “Amazon-style automation”

🌍 What’s Fueling Growth?

📈 1. Margin Expansion

• 110 bps EBITDA margin bump → operational efficiency
• Raw material price stability helped

🏭 2. New Capacity Addition

• Punjab plant to go live Q1 FY26
• 5.5 lakh MTPA target by FY28 = ~2x polyester capacity

🇬🇧 3. UK FTA = No Duties

• UK just removed import duties on Indian textile exports
• Expect export boost from FY26 onwards

📦 Product & Client Mix

• Clients: 7,000+
• Distributors: 400+
• Global Reach: 27 countries

📉 Risks & Threads to Watch

• 🧵 Raw material volatility – crude-linked input costs like PTA/MEG can swing profits
• 📉 Q4 slip – Revenue and profit dipped vs last year, could be seasonal or trend?
• 🔁 Commodity nature – Low pricing power unless specialized yarn gains traction
• 🇨🇳 Chinese competition – Always looms (pun intended)

📈 Forward Value Estimate

Let’s say PAT of ₹160 Cr sustains and grows 15% CAGR (optimistic).

• FY26E PAT: ₹184 Cr
• At 20x P/E (fair for textile+growth combo)
• Fair Value = 20 × (₹184 Cr / 3.6 Cr shares) ≈ ₹1,022 per share
• CMP = ₹445.90 → Implied Upside: 129%

📌 Assumes capacity scale-up works + UK FTA boosts exports + no price war with Bangladesh/China

🧠 EduInvesting Take

Sanathan isn’t your average yarn spinner anymore.
It’s a “50,000 SKU, IPO-backed, FTA-fueled, warehouse-automating, global yarn play”.
Think of it as the Textile Tata Elxsi, but without the valuation bubble (yet).

💬 CMD Paresh Dattani called it a “transformative year”.
We agree — now let’s see if the Punjab plant, UK deals, and margin tailwinds hold up.

Right now, value investors will see this as a “buy-the-dip” textile compounder.
Momentum investors? They’ll wait for Q1 FY26 triggers.

🎯 Final Verdict

Sanathan has IPO cash, UK FTA tailwind, and capex growth in motion.
It’s not flashy, it’s not viral — it’s quietly scaling into something serious.

At ₹445, it looks undervalued compared to growth potential.
Just keep an eye on Q1 volumes and the Punjab plant rollout.

🗓️ Published: May 27, 2025
✍️ By: Prashant Marathe
🔖 Tags: Sanathan Textiles, IPO 2025, Textile Stocks, Polyester Yarn India, Q4FY25 Results, Yarn Exporters India, UK FTA Textile Impact, EduInvesting