Sanstar share price extends gain after positive debut. Buy, sell or hold?

Stock market today: Missing the market estimates, Sanstar share price today was listed on the BSE at ₹106.40 apiece, whereas it was listed on the NSE at ₹109 apiece, delivering around 15 percent listing gain to the lucky allottees. However, after Sanstar's positive debut, the newly listed stock extended its gains and touched an intraday high of ₹127.68 per share on the BSE and ₹128.79 on the NSE.

According to stock market experts, Sanstar's share price has fallen below market estimates, and this rise is nothing but a sentimental surge. The company is operating at 85 percent capacity. The Capex expansion mentioned during the IPO launch and in the Red Herring Prospectus is expected to become operational in the fourth quarter of the current fiscal year. So, the company is operating at its maximum Capex, which would either remain at current levels or go down in FY25.

So, Sanstar share allottees should book profit and exit. Those with a long view may re-enter at a lower level when the stock stabilizes post-listing. Those who missed getting Sanstar shares during the allotment process can also wait for the stock to settle down after listing, as the stock is expected to remain sideways to lower for the entire FY25.

Sanstar share price outlook

On fundamentals of Sanstar shares, Amit Goel, Co-Founder & Chief Global Strategist at Pace 360, said, "Sanstar Limited is engaged in manufacturing speciality plant-based products and ingredient solutions for food, pet food and other industrial applications in India. It includes liquid glucose, dried glucose solids, maltodextrin powder, dextrose monohydrate, native maize starches, modified maize starches, and by-products such as germ, gluten, fibre and fortified proteins. It marked inconsistency in its top lines; the bottom line steadily grew for the reported period. The issue appears to be priced aggressively when considering the FY24 earnings."

Speaking on Sanstar share price outlook, Arun Kejriwal, Founder of Kejriwal Research and Investment Services, said, “The company is operating at 85 percent of its Capex, which means at the maximum Capacity. In RHP, the company has given Capacity expansion guidance, which is expected to become operational from the fourth quarter of the current fiscal. This means the newly listed mainboard company's operational Capex would either remain at the current level or go down in the current financial year. In other words, Sanstar's share price is expected to remain sideways and lower in FY25 as Capex's expansion in Q4FY25 would trickle down the company's balance sheet in the next two to three quarters.”

Sanstar share price: Investment strategy

Unveiling the investment strategy regarding Sanstar shares, Arun Kejriwal said, "Those allottees with a long-term view on Sanstar shares are advised to book profit in the current rally and wait for the stock to settle down post-listing. They can re-enter at the lower level as the stock is expected to decrease after the profit-booking trigger."

Kejriwal suggested to the fresh investors regarding Sanstar shares, "Fresh investors can wait for the newly listed stock to stabilize as the stock is trading at higher valuations. One can start accumulating Sanstar shares from ₹100, maintaining a buy-on-dip strategy."

Disclaimer: The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.