Sanathan Textiles: growing steadily forever
The Indian textiles sector is one of the oldest industries, dating back several centuries. The industry is extremely varied, with hand-spun and hand-woven textile sectors at one end of the spectrum, and the capital-intensive, sophisticated mills sector at the other. The fundamental strength of the textile industry in India is its strong production base of a wide range of fibres and yarns – from natural fibres like cotton, jute, silk, and wool, to synthetic/man-made fibres like polyester, viscose, nylon and acrylic. According to Crisil Ratings, the organised retail apparel sector is projected to achieve revenue growth of 8-10 per cent in FY25, driven by rising demand from a normal monsoon, easing inflation, and the festive and wedding seasons.
However, Sanathan (meaning ‘Forever’ in Urdu) Textiles Ltd (STL) is just over two decades old. It is one of the few companies (amongst its peer group) in India with a presence across polyester, cotton, and technical textiles. These find application in multiple end-use segments including automotive, healthcare, construction, sports and outdoor, and protective clothing sectors. Its integrated manufacturing model, diverse product portfolio spanning polyester, cotton, and technical textiles, and focus on process innovation, position it well to capture rising global demand and benefit from shifting sourcing trends favouring Indian manufacturers.
As per a Crisil report, STL has a market share of 1.7 per cent in the overall Indian textile yarn industry as of Fiscal 2024. Currently, all three yarn verticals are housed under a single corporate entity. “This has facilitated our diversification into new segments which in turn has helped us in serving a large number of customers across various sectors,” says Sammir Dattani, ED at STL.
The story of Sanathan is deeply rooted in the vision and values of its founding family. “The company was established by visionary entrepreneurs who believed in building a strong, sustainable foundation for future generations,” explains Paresh Dattani, CMD of STL.
Today, the leadership of Sanathan Textiles is in the hands of the second generation. The involvement of the second generation in the company has ensured continuity, innovation, and a seamless transition in leadership. Both generations have been instrumental in driving the company’s growth.
Robust portfolio
The company’s journey, driven by strategic diversification and cutting-edge technology, has resulted in over 14,000 types of yarn products and a robust portfolio catering to domestic and international markets. Sanathan continues to expand its footprint, both locally and globally.
Sanathan maintains a diversified portfolio across three key verticals: polyester filament yarns (PFY), which is the largest revenue segment, contributing 77 per cent to total sales. These yarns are used in a wide range of applications, from apparel to industrial uses. The company also produces value-added yarns such as draw-texturised yarns, air-texturised yarns, and dope-dyed coloured yarns. The second is cotton yarns, which contribute 19 per cent of Sanathan’s total revenue. “With a focus on premium compact cotton yarns, especially finer counts like 60s and 80s, we cater to high-end apparel and home textiles markets. The upcoming expansion plans will see a Rs400 crore investment in a new cotton yarn facility to meet rising demand,” explains Aakash Dattani, Executive President at STL.
The third is technical textiles, which represent around 4 per cent of the company’s revenues. These technical textiles are emerging as a high-growth segment. Sanathan is doubling its technical textile yarn capacity from 9,000 tonnes to 18,000 tonnes as part of its Punjab expansion.
The flagship plant is in Silvassa and remains a cornerstone of its operations, serving markets across Western India and internationally. The facility is equipped with cutting-edge machinery and automated systems, enhancing efficiency and reducing lead times. This integration of technology helps the company maintain a competitive edge whilemeeting growing market demands.
Currently, Sanathan is on an expansion spree. It is setting up a R1,850 crore investment in Punjab with a state-of-the-art greenfield facility in Wazirabad. “This new project is set to be operational by the first quarter of FY26 and will boost our production capacity. The new plant will increase its PFY capacity from 550 tonnes per day to 1,500 tonnes per day over two phases. The first phase will contribute 250,000 tonnes annually, with phase two ramping up production to 355,000 tonnes per year. This expansion addresses the supply gap in North India, particularly in key textile hubs like Ludhiana, Panipat, and Amritsar, and ensures faster deliveries and cost efficiencies for customers. By establishing a local production hub, Sanathan is bridging the logistical challenges traditionally faced by the industry, offering just-in-time supply and reducing delivery timelines and costs,” reasons Sammir.
The new Punjab facility, covering 23 lakh sq ft, will incorporate advanced manufacturing technologies and green practices. “The plant’s design will ensure minimal environmental impact, with features such as zero liquid discharge for wastewater and the use of rice husk as a renewable energy source for heating. Additionally, the facility will reduce the company’s carbon footprint through the use of solar power and other sustainable practices,” says Sammir.
Sanathan Textiles has showcased a decent financial performance over the past two quarters, despite global challenges. For the quarter ending December 2024, the company reported a 12 per cent increase in revenue, driven by strong demand for polyester yarn and technical textiles, which saw substantial growth both in India and internationally. Notably, export revenues accounted for 35 per cent of total sales, underscoring the company’s expanding global footprint.
In the quarter ending March 2025, Sanathan maintained its growth trajectory, posting an 8 per cent rise in revenue. “This continued growth may be attributed to the commissioning of Unit-3 at its Silvassa facility, which improved production efficiency and helped the company meet surging demand.”
For the nine months ending December 2024, Sanathan recorded revenue of Rs2,266 crore, and an operating profit (EBITDA) of Rs195.17 crore, up from Rs147.48 crore in the prior year. The company also reported a substantial increase in PAT, reaching Rs116.80 crore from Rs81.59 crore in the same period last year.
Over the years, the company has established long-standing relationships with consumer brands such as Welspun India Limited, Valson Industries Limited, G.M. Fabrics Private Limited, Premco Global Limited, and Creative Garments Textile Mills Private Limited, among others.
Sanathan came out with an IPO in December 2024 at the upper price band of Rs321 per share. It is currently trading at around Rs461 on the BSE and NSE, with a market cap of Rs3,400 crore. The IPO was then said to be attractively priced at a P/E of 20.2 times on FY24 earnings, compared to peers like KPR Mill and Vardhman Textiles, which trade at higher multiples. Leading brokerage firms like SBI Securities, Marwadi Financial Services, Ventura Securities, and Mehta Equities gave a ‘Subscribe’ rating to the issue, highlighting the company’s strong growth potential driven by a 2.6x capacity expansion over FY24-27 and debt repayment plans.
Core value
“We initiate coverage on Sanathan Textiles with a BUY rating at a target price of R461/share, ascribing a 13x FY27E P/E multiple. We expect Sanathan to deliver a three-year CAGR (FY24-27E) in Revenue/EBITDA/EPS of 28/42/24 per cent respectively. The strong earnings growth will be driven by the commissioning of the 700 tpd polyester-oriented yarn unit at Wazirabad, Punjab, scheduled for Q1FY26. We have ascribed a slightly lower multiple to Sanathan, as we will cautiously observe the timely commissioning and ramp-up of the Punjab plant, and the deleveraging journey here onwards, as we expect net debt/EBITDA to peak at 4x in FY26E from 0.8x in FY24,” states the ICICI Securities report on the company.
Sanathan’s core value lies in sustainability and green manufacturing initiatives. The new Punjab facility will be a model for green manufacturing, with several key initiatives: zero liquid discharge, where all wastewater will be treated and recycled, minimising environmental impact. It will also use renewable energy, with a portion of its energy needs met through solar power, and further plans to expand renewable energy capacity.
“We will also use husk for heating. The facility will use rice husk, an abundant agricultural by-product, instead of conventional fuels, reducing carbon emissions. Then, in sustainable yarn, we produce high-quality recycled polyester yarns made from PET waste, promoting a circular economy and reducing waste. Also, the dope-dyed yarns method eliminates the need for water-intensive dyeing processes, conserving water and reducing pollution,” points out Sammir, who suggests that innovation and R&D are key drivers of Sanathan’s growth. “We continue to invest in research and development, focusing on developing advanced yarns such as fire-retardant, moisture-wicking, and stretch yarns. The new R&D centre at the Punjab facility will support the development of cutting-edge products for diverse applications, including automotive, medical, and apparel industries,” says Sammir.
Meanwhile, the market for Indian textiles and apparel is projected to grow at a 10 per cent CAGR to reach $350 billion by 2030. Moreover, India is the world’s third-largest exporter of textiles and apparel. India ranks among the top five global exporters in several textile categories, with exports expected to reach $100 billion. As per predictions, the textile industry in India is expected to double its contribution to the GDP, rising from 2.3 per cent to approximately 5 per cent by the end of this decade.
The global apparel market is expected to grow at a CAGR of around 8 per cent to reach $2.37 trillion by 2030, and the global textile & apparel trade is expected to grow at a CAGR of 4 per cent to reach $1.2 trillion by 2030. India’s home textile industry is expected to expand at a CAGR of 8.9 per cent during 2023–32 and reach $23.32 billion in 2032 from $10.78 billion in 2023.
Now, the Indian technical textile market has huge potential with a 10 per cent growth rate, an increased penetration level of 9-10 per cent, and is the fifth-largest technical textile market in the world. India’s sportech industry was estimated at around $1.17 million in 2022–23.
Looking ahead, the Dattanis are confident in Sanathan’s growth prospects, aiming to surpass Rs7,500 crore in revenue in the coming years. “This will be driven by continued capacity expansion, product innovation, and strategic market penetration, positioning the company as a leader in both domestic and international markets,” sums up Dattani.