Sanstar Ltd's listing on the NSE was positive but fell short of the higher premiums anticipated by analysts. The company's initial public offering (IPO) made its debut on July 26, listing at Rs 109 on the NSE, a premium of 14.7 percent over its issue price of Rs 95. Analysts had anticipated the company's market debut with around 25-30 percent premium.
The company's financial stability and growth prospects were key factors for some experts, who maintained a positive outlook despite the less-than-expected debut. Meanwhile, some analysts shared a cautiously optimistic perspective.
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Sanstar's financial performance was major reason for Prathamesh Masdekar, Research Analyst at StoxBox to hold a positive view of the company. He advised the participants who have been allocated to the issue to hold the shares from a medium- to long-term perspective.
Masdekar said that "Sanstar's financial performance is driven by its established market position in the industry, increasing global footprint, high entry barriers, expanded manufacturing capacities to capture additional market share, and long-lasting customer relationships, which enable it to tap the significant opportunities in existing and future products."
Also Read | Sanstar's IPO makes decent debut on NSE, lists at 14.7% premium over issue price
A similar view was echoed by Narendra Solanki, Head of Fundamental Research - Investment Services at Anand Rathi Shares and Stock Brokers. He advised long term investors to remain invested given the company's potential for strong growth due to its expanding capacities and the increasing global demand for plant-based products. "The company's emphasis on high-margin, value-added products and industry-specific new launches will drive margin expansion, further supported by debt reduction. Looking at these factors we have recommend 'Subscribe – Long Term' rating to the IPO," Solanki said.
Amit Goel, Co-Founder & Chief Global Strategist at Pace 360 said that Sanstar's debut price fell short of the anticipated listing of Rs 125-130 per share, which would have marked a 33 percent gain. Goel suggested that while the issue appeared aggressively priced relative to FY24 earnings, the company's rising product demand and management's confidence in improving trends could support future growth. He recommended booking profits post-listing.
Also Read | Sanstar IPO: Stock likely to debut with 25-30% gains on July 26
Meanwhile, Prashanth Tapse, Senior VP Research at Mehta Equities, noted that while valuations seemed slightly high, Sanstar had garnered a healthy response from investors, especially on the last day of the issue. He too, recommended that allotted investors consider booking profits on the listing day.
Founded in 1982, Sanstar is a key player in the Indian market for specialty plant-based products and ingredient solutions. The Sanstar IPO was heavily oversubscribed by 82.99 times as of July 23. Sanstar's IPO was a book-built issue totaling Rs 510.15 crore.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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