ICICI Securities initiated coverage on Sanathan Textiles with a 'buy' rating and a target price of Rs 461 per share. The target price given by the brokerage indicates a potential upside of 47%.
Sanathan Textiles, a prominent player in the Indian textile industry, operates across three key verticals: polyester yarn products, cotton yarn products, and technical textiles. The company is known for its diverse product range, manufacturing over 14,000 varieties of yarn products with more than 1.9 lakh stock keeping units.
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ICICI Securities anticipates robust growth for Sanathan Textiles, projecting a compound annual growth rate of approximately 28% in revenue, 42% in Ebitda, and 24% in earnings per share over FY24-27. This growth is expected to be driven by the commissioning of a new 700 tons per day polyester-oriented yarn unit at Wazirabad, Punjab, scheduled for Q1 FY26.
Sanathan Textiles is also expanding its manufacturing capacity across its three verticals, ICICI Securities noted. The company is in advanced stages of commissioning a greenfield facility in Punjab, with phase-1 expected to be operational in 2025 and phase-2 slated for completion in 2027. The company also plans to enhance its cotton yarn production at its Silvassa facility, with unit-3 commencing operations in FY24 and unit-4 in FY26, the brokerage said.
With its strong presence in the polyester, cotton, and technical textile sectors, Sanathan Textiles is well-positioned to capitalise on the growing demand for diverse yarn products. The company's strategic expansion plans and robust growth projections have led ICICI Securities to recommend a 'buy'.
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