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SIGACHI INDUSTRIES IPO

  • Writer: Yash Mehta
    Yash Mehta
  • Oct 30, 2021
  • 2 min read



IPO Details:

Price Band: 161-163

Cutoff Price: 163


About Company:


The company was incorporated in 1989, with the business to manufacture chlorinated paraffin and hydrochloric acid in at Hyderabad. The Company diversified its product portfolio to manufacture microcrystalline cellulose (“MCC”) in 1990 and currently manufacture 59 different grades of MCC ranging from 15 microns to 250 microns having varied applications at manufacturing units, situated at Hyderabad, Jhagadia and Dahej, with an aggregate installed capacity of 11,880 MTPY. These excipients are used predominantly in the pharmaceutical, nutraceutical, cosmetic and food industries. With over 30 years of continuous growth, three multi-locational manufacturing facilities and a consistent focus on delivering premium quality product, the Company is one of the leading manufacturers of MCC in India.

The Company has also entered into operations and management agreements with Gujarat Alkalies and Chemicals Limited (“GACL”) for operating and managing the manufacturing units owned by GACL and for contract manufacturing of sodium chlorate, stable bleaching powder and poly aluminum chloride in the said units. Sigachi sells its Cellulose based products. Their laboratory at Dahej R&D Division has been approved and has received an accreditation from Department of Science and Industrial Research (“DSIR”) to undertake research and development activities. The company has successfully filed an application for registering our patent titled as “BARETabPH”.


Competitive Strengths:

  1. One of the leading manufacturers of MCC (cellulose based excipient) in India with over 30 years’ experience.

  2. Pan India and International market presence.

  3. Well experienced management team with proven project management and implementation skills.

  4. Comprehensive product portfolio enables us to serve diverse end-use applications.

  5. Presence across diverse industry verticals with long-standing relationship with the customers.

  6. Growth led by continuous investment and focus on R&D.

  7. Quality Assurance and Quality Control of our products.

  8. Strategically located manufacturing facilities.


Strategies:

  1. Increasing the manufacturing capacity to focus on the growing demand for core products.

  2. Increasing focus on core business segment.

  3. Diversifying and increasing penetration in markets.

  4. Increasing Global presence.

  5. Strengthen marketing network.


Financial Performance:






Revenue is increasing every year for the company. Company is net profitable. With EPS of 13.3, the company's P/E is 12.3.


Objects of the Issue:


The Net Proceeds from the Issue are proposed to be utilised in the following manner:

  1. Funding capital expenditure

Competitors Comparison:

Sigachi Industries' IPO seems to be undervalued based on the P/E ratio and P/B Value.


Grey Market Premium:


Our view: GMP of the IPO is decent and but the price seems to be undervalued after comparing it with listed competitors. I will subscribe to this IPO and might hold for investment.


Disclaimer: Views are shared for an educational purpose. Please consult your financial advisor or planner before taking any action based on the views or facts shared on this blog.

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