Sigachi Industries IPO GMP, Subscription, Financials, Valuation. Should you Buy?

Microcrystalline Cellulose major Sigachi Industries has received a strong response from investors for its maiden offer.  Sigachi Industries initial public offer (IPO) was subscribed 9.52 times on the first day of bidding, according to data. The investors put in bids for as many as 5.12 crore equity shares against an IPO size of 53.86 crore equity shares on Day 1, according to National Stock Exchange (NSE). The portion set aside for non-institutional investors has been subscribed 4.44 times while Qualified Institutional Buyers (QIBs) booked bid of 57 per cent. Against the portion reserved for retail investors, 16.81 times worth of share have been subscribed. The leading manufacturer of  cellulose-based excipients will close the issue on Wednesday, November 3. Keeping these in mind, let’s take a look at all the key details of Sigachi Industries IPO.

Sigachi Industries IPO Overview: Key Details & Objectives

The price band for Sigachi Industries IPO has been fixed at Rs 161-163 a share. The Sigachi Industries IPO comprises of a fresh issue of 76.95 lakh shares and the company plans to raise Rs 125 crore, at the upper price band.

This IPO is an entirely fresh issue. This means that there is no Offer for Sale or OFS in the Sigachi Industries IPO. Unistone Capital is the only book-running lead manager to the issue. For a retail investor, bids for a minimum one lot of 90 shares up to maximum of 13 lots have been invited.

Sigachi Industries, which was incorporated as a private limited company in 1989, plans to use the money from the IPO for expansion of production capacity purposes. The funds will be utilised to expand production at their Dahej and Jhagadia units in Gujarat. While Rs 2,815.82 lakh will be used in Dahej, Rs 2,924.13 lakh wil be used in Jharjharia for the expansion. Apart from this, Rs 3,229.87 will be used fund capital expenditure to manufacture CCS at a unit that is yet to be set up at Kurnool. The company also plans to use it for general corporate purposes.

Sigachi Industries IPO Valuation

According to financial service expert Anand Rathi Group, the Sigachi Industries IPO will have a reasonable valuation. “At the upper end of the IPO price band, Sigachi Industries Ltd. is offered at P/E of 15.1x its TTM earnings, with a market capitalisation of  Rs 5,011 Million,” the group said in a note.

Brokerage house Reliance Securities said that the IPO is valued at 16.6x FY21 and 13.9x FY22 annualised earnings, making the deal attractive. Giving it a subscribe rating, the group said that Sigachi enjoys a market share of over 65 per cent with regard MCC products while also having no listed peers.

Financial Details of Sigachi Industries

As of June 30 2021, the net worth of Sigachi Industries was Rs 10,323.87 lakh, while its equity share capital was Rs 768.25 lakh. In terms of net worth, the company has grown around 2.5 times as compared to March 2019, where the net worth was Rs 4,488.27 lakh. The net profit as on June 30 this year was Rs 898.97 lakh, according to the company.

Sigachi Industries IPO GMP

 The Sigachi Industries shares were fetching a grey market premium of Rs 160 on Tuesday. The grey market premium was 99 per cent up over the higher end of the issue price of Rs 163. The high GMP indicated strong listing for Sigachi Industries shares on NSE and BSE later this month.