Sigachi Industries makes a great start in the stock markets, listing at a premium of 267%

NS The Initial Public Offering (IPO) in the price band of Rs.125.43 crore got subscribed 101.91 times from 161 163. The objective of the issue is to fund capital expenditure for expansion of production capacity of microcrystalline cellulose at Dahej and Jhagadia, for manufacturing of croscarmellose sodium at Kurnool and for general corporate purposes.

“At the upper end of the IPO price band, Sigachi Industries Limited is offered a price-to-earnings (PE) offering with a market capitalization of 15.1 times its TTM earnings. 5,011 million. Considering that the company is one of the leading manufacturers of Microcrystalline Cellulose in India with more than 30 years of experience, pan India and international market presence, experienced management team and investments, which achieved a high RONW of 32.12% in FY 2011 and Leads future growth with appropriate valuations,” said Anandarathi analyst Raunak Kotecha.

Sigachi Industries Limited (SIL) was incorporated in 1989 as a private limited company with the business of manufacturing Chlorinated Paraffin and Hydrochloric Acid at its manufacturing unit located at Hyderabad.

SIL is engaged in manufacturing of Microcrystalline Cellulose which is widely used in pharmaceutical industry as an adjuvant for finished dosage. The inert non-reactive, free flowing and versatile nature of MCC has diverse applications in the pharmaceutical, food, nutraceuticals and cosmetic industries. It manufactures various grades of MCCs ranging from 15 microns to 250 microns. The major grades of MCC manufactured and marketed by the company are branded as HiCel and AceCel.

“The company’s commercial success is largely dependent on its ability to develop and develop innovative grades of cellulose-based excipients. Its inability to innovate new products will render its existing product portfolio redundant, leading to a glut of products,” HDFC Securities said. Utility may be adversely affected, resulting in loss of revenue and profitability.