Sanstar H1 EBITDA rose to Rs 23.7 crore as margin expanded

Sanstar Limited reported EBITDA excluding other income of Rs 23.7 crore in H1 FY2027, up from Rs 40 lakh in H1 FY2026, as gross margin expanded by 8.4 percentage points to 32.9% while operating revenue increased 15.9% to Rs 424.4 crore.

What drove Sanstar’s H1 FY2027 margin expansion?

Sanstar’s H1 FY2027 gross margin rose to 32.9% from 24.5% in H1 FY2026, lifting gross profit 55.4% to Rs 139.7 crore while operating revenue grew 15.9% to Rs 424.4 crore. Cost of goods sold increased to Rs 284.8 crore from Rs 276.2 crore, a Rs 8.6 crore rise that was smaller than the Rs 49.8 crore increase in gross profit.

Management attributed the improvement to operating efficiencies, higher manufacturing scale and a wider product portfolio. Earnings before interest, tax, depreciation and amortisation, or EBITDA, excluding other income, reached Rs 23.7 crore from Rs 40 lakh, and EBITDA margin rose to 5.6% from 0.1%. Profit after tax, or PAT, increased to Rs 15.1 crore from Rs 30 lakh, with PAT margin rising to 3.6% from 0.1%.

Sanstar’s finance cost declined to Rs 90 lakh in H1 FY2027 from Rs 1.2 crore a year earlier, while depreciation and amortisation rose to Rs 10.7 crore from Rs 4.7 crore. The increase in depreciation coincided with the expansion of the manufacturing base, including the commissioned native starch plant at Dhule.

Why did Sanstar’s Q2 EBITDA margin decline from Q1?

Sanstar’s Q2 FY2027 EBITDA margin declined to 3.8% from 7.5% in Q1 FY2027, and the presentation does not assign a specific cause to the sequential movement. EBITDA fell 46.0% to Rs 8.3 crore from Rs 15.4 crore even as operating revenue increased 5.9% to Rs 218.3 crore from Rs 206.2 crore. PAT declined to Rs 5.9 crore from Rs 9.2 crore.

The year-on-year comparison remained positive in Q2 FY2027. Gross profit rose 45.3% to Rs 70.8 crore from Rs 48.7 crore, and gross margin increased to 32.4% from 24.8% in Q2 FY2026. EBITDA increased from Rs 1.4 crore to Rs 8.3 crore, while EBITDA margin rose from 0.7% to 3.8%; however, Q2 trailed Q1’s 33.4% gross margin.

Management said native starch remained a competitive market because of global pricing dynamics. The presentation also cites short-term native starch pricing pressure from Chinese exports into South East Asia and resulting excess supply in India, but does not quantify its effect on the Q2 FY2027 margin decline.

How did exports and capacity support Sanstar’s revenue?

Sanstar’s Q2 FY2027 export turnover rose 17.1% year on year to Rs 75.5 crore from Rs 64.5 crore, exceeding the 11.1% increase in total Q2 operating revenue. H1 FY2027 export turnover was Rs 147.8 crore. Management attributed Q2 export growth to steady overseas demand, established international presence, and improved geopolitical conditions and easing regional uncertainties that supported shipments.

Exports represented 34% of Sanstar’s FY2026 revenue, when export revenue was Rs 265.7 crore and the business served 34 countries. Asia accounted for 49% of export sales, followed by Africa at 22%, the Middle East at 16%, America at 12%, and Europe and Oceania at 1%. The presentation reports a 26% compound annual growth rate in export sales from FY2021 to FY2026.

Sanstar has 2,350 tonnes per day, or TPD, of installed capacity across Dhule, Maharashtra, and Kutch, Gujarat. Initial public offering proceeds of Rs 181.6 crore were allocated to expand Dhule capacity from 1,100 TPD to 2,350 TPD. The native starch plant has been commissioned, while the derivatives facility, which will make products including maltodextrin and liquid glucose, is scheduled for commissioning in FY2026-27.

What does Sanstar’s cash flow say about expansion funding?

Sanstar reported operating cash inflow of Rs 23.4 crore in H1 FY2027, compared with investing cash outflow of Rs 204.1 crore for capacity expansion and strategic growth initiatives. Working-capital movement was a Rs 28.6 crore outflow and tax paid was Rs 2.9 crore, while financing activity provided Rs 207.7 crore during the half year.

Total debt was Rs 30.8 crore at H1 FY2027, compared with Rs 19.9 crore in FY2026. Long-term debt declined to Rs 7.6 crore from Rs 10 crore, but short-term debt rose to Rs 23.2 crore from Rs 9.9 crore. The cash-flow table reported net debt of Rs 11.7 crore, compared with net cash of Rs 3.7 crore in FY2026, and net debt to equity of 0.01 times.

Sanstar commissioned a 3-megawatt captive solar power plant at Kutch during Q2 FY2027 with investment of about Rs 7.5 crore. Management expects the plant to meet about 40% of the Kutch facility’s electricity requirement and generate annual power-cost savings of around Rs 3 crore. Kutch has 350 TPD of installed capacity, while Dhule has 2,000 TPD.

Conclusion

Sanstar’s H1 FY2027 performance showed profitability improving faster than sales, with operating revenue up 15.9%, gross profit up 55.4%, and EBITDA excluding other income rising from Rs 40 lakh to Rs 23.7 crore. The margin improvement was substantial against H1 FY2026, although Q2 EBITDA and PAT were below Q1 levels despite sequential revenue growth.

The next results should indicate whether Sanstar can improve utilisation of its 2,350 TPD manufacturing base and increase the share of value-added products, as management plans. Key disclosed items to watch are the FY2026-27 commissioning of the derivatives facility, management’s expected annual Rs 3 crore Kutch solar saving, and continued native starch pricing pressure from excess supply.