Sanstar FY26: Expansion Commissioned, Margins Recover in Q4, Ingredion Partnership Announced

Sanstar ended FY2026 calling it a transition year. The numbers show why. Revenue from operations declined to Rs. 7,846 million in FY26 from Rs. 9,534 million in FY25, while EBITDA fell to Rs. 377 million from Rs. 560 million. But the year also included two clear turning points: a visible recovery in profitability in the second half, and the commissioning of a large capacity expansion at Dhule that took total installed capacity to 2,350 TPD.

In Q4 FY26, revenue from operations stood at Rs. 2,168 million, up 7.4 percent quarter-on-quarter from Rs. 2,018 million in Q3. EBITDA for Q4 rose to Rs. 194 million, and PAT came in at Rs. 205 million with a PAT margin of 9.5 percent, compared with 6.8 percent in the previous quarter. Management attributed the improved trajectory to higher utilization, normalized production, better product mix, and operational efficiencies.

The operating backdrop remained challenging for much of the year. Management said native starch faced pricing pressure due to elevated exports from China into Southeast Asian markets, which pulled down realizations in the region including India. Export demand stayed steady, but realizations were affected by weak global starch prices in the first half and geopolitical uncertainties in certain markets during the second half.

FY26 performance: gross margin improved, EBITDA softened

Even with lower revenue, Sanstar’s gross margin expanded. FY26 gross profit was Rs. 2,362 million versus Rs. 2,443 million in FY25, but gross margin improved to 30.1 percent from 25.6 percent. In Q4 FY26, gross profit increased to Rs. 745 million from Rs. 470 million in Q4 FY25, and gross margin expanded to 34.4 percent.

EBITDA margins, however, declined for the full year. FY26 EBITDA margin was 4.8 percent compared with 5.9 percent in FY25, reflecting the impact of pricing pressure and operational issues in the first half. Management described H1 as being affected by maintenance shutdowns, lower utilization, and weak pricing, before a gradual recovery in H2.

Exports remained a meaningful part of the business model. Exports contributed 34 percent of revenue and FY26 export revenue was Rs. 2,657 million, down from Rs. 3,432 million in FY25. The company exported to 34 countries, with Asia contributing 49 percent of exports, followed by Africa at 22 percent, the Middle East at 16 percent, America at 12 percent, and Europe and Oceania at 1 percent.

Capacity expansion: Dhule changes the scale of the company

A key milestone during FY26 was the commissioning of expanded native starch manufacturing capacity at Dhule. The company stated that, while it had originally planned a 1,000 TPD expansion at the time of the IPO, it scaled installed crushing capacity to 1,250 TPD. This took total installed capacity across plants to 2,350 TPD and, as per the presentation, positions Sanstar as India’s second-largest maize-based specialty products manufacturer.

The manufacturing footprint includes Dhule, Maharashtra at 2,000 TPD and Kutch, Gujarat at 350 TPD. Dhule also has 50,000 MT of maize storage silos. The company highlighted supply chain resilience with about 30 percent of maize requirements sourced directly from local farmers, with the remaining 70 percent through distributors and other channels such as mandis, stock houses and traders.

The next leg of product expansion is expected to come from derivatives. Management said the derivatives facility at Dhule is expected to be commissioned within FY2026-27. The company expects better diversification and improved stability in margins as the contribution from value-added products increases.

Balance sheet and cash flows: heavy capex, low leverage

Sanstar reported a strengthened leverage profile. Total debt declined to Rs. 199 million in FY26 from Rs. 271 million in FY25. Cash and cash equivalents were Rs. 236 million in FY26 versus Rs. 1,207 million in FY25, resulting in net debt of Rs. (37) million in FY26. Net debt to equity was reported at (0.01)x.

The cash flow bridge in the presentation pointed to a large investing cash outflow of Rs. 1,785 million in FY26, linked to capacity expansion. Operating cash flow was reported at Rs. 420 million, and the company cited a working capital inflow of Rs. 476 million during FY26.

A new strategic partnership: Ingredion comes in, and a JV is planned

Soon after the FY26 results communication, Sanstar announced a strategic partnership with Ingredion through a preferential issue and a joint venture.

On May 28, 2026, the Board approved a preferential issue of equity shares aggregating to approximately Rs. 198.3 crore to Corn Products Development Inc., a wholly owned subsidiary of Ingredion Incorporated, subject to shareholder approval. The issue price was stated at Rs. 110 per equity share in accordance with the ICDR Regulations. Post completion, the allottee is expected to hold approximately 9.0 percent stake in Sanstar.

In parallel, Sanstar and Ingredion affiliates executed a definitive shareholders’ agreement on May 28, 2026 to establish a jointly owned entity in India to manufacture, sell and distribute a portfolio of specialty pharmaceutical and other specialty ingredient products. The proposed manufacturing location is to be finalized, with Gujarat and Maharashtra shortlisted. Commercial operations are targeted within 30 to 36 months of incorporation, subject to approvals and commissioning. The announcement stated that Ingredion would contribute proprietary formulation and process technology and global application know-how, while Sanstar would contribute local manufacturing, procurement and regulatory expertise.

From an investor’s lens, this adds a second strategic layer beyond the near-term derivatives ramp-up at Dhule. The preferential issue is positioned as balance sheet strengthening and a long-term partnership, while the JV is positioned as a route into higher value end markets that demand precision and purity, particularly pharma excipients.

What to track from here

Sanstar’s FY26 narrative is split between a difficult first half and a recovering second half, alongside a major step-up in capacity. The company’s commentary suggests that utilization normalization and product mix will remain central to sustaining the Q4 recovery.

Key milestones that management has explicitly put on the table are the commissioning of the Dhule derivatives facility within FY2026-27, and the development of the new JV platform with Ingredion with an intended commercial start within 30 to 36 months of incorporation. If executed as described, these projects would shift the company toward more value-added products and potentially reduce the volatility associated with commoditized native starch cycles.

At the same time, management acknowledged that native starch pricing remains competitive, and export realizations can be influenced by global starch prices and geopolitical conditions. With expanded capacity now in place, the operating leverage could work in either direction, making pricing, utilization, and ramp-up execution the most important variables for FY2026-27 and beyond.