Sigachi Industries IPO — Grey market premium rises to ₹160, here’s what analysts are saying about it

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Sigachi Industries IPO — Grey market premium rises to ₹160, here’s what analysts are saying about it
BCCL
  • The Hyderabad-based manufacturer of cellulose-based excipients, Sigachi Industries, is looking to raise ₹125.43 crore.
  • Analysts believe the company’s consistency in paying a dividend continuously for the last three years bodes well.
  • The grey market premium of the company shares have risen to ₹160 per share from ₹150 earlier.
  • Overall, the IPO received bids for 4.94 crore as against 53.86 lakh shares offered for sale.
The Hyderabad-based manufacturer of cellulose-based excipients, Sigachi Industries, has already been subscribed over 9 times on the second day of the initial public offering (IPO).

Shares reserved for retail investors have been oversubscribed by 17.21 times on the second day of the IPO bidding process as of 1:38 p.m., on November 2. Overall, the IPO received bids for 4.94 crore as against 53.86 lakh shares offered for sale.

Investors are excited about the IPO also because the shares of the company commanded a strong premium of ₹160 in the grey market today. The grey market premium rose to ₹160 per share on Tuesday from ₹150 earlier.

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The company is looking to raise ₹125.43 crore through the IPO with a price band of ₹161 to ₹163 per share. It is engaged in the manufacturing of microcrystalline cellulose, the polymer that is widely used for finished dosages in the pharmaceutical industry.

“With over 30 years of continuous growth, three multi-locational manufacturing facilities and consistent focus on delivering premium quality products, the company is one of the leading manufacturers of cellulose based excipients in India, in terms of volume,” said a report by JM Financial.

Brokerage firm Reliance Securities reportedly said, “Sustained demand for microcrystalline cellulose (MCC) from various industries and the expansion programme, earnings growth momentum looks sustainable. It has been paying a dividend consistently for the last three years, which bodes well.”

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Meanwhile analysts at Marwadi Shares and Finance reportedly said that, "The company is one of the leading manufacturers of MCC [cellulose-based excipient] in India with a presence across diverse industry verticals and is available at reasonable valuation on an absolute basis."

Sigachi Industries operates through three manufacturing units in Hyderabad and Jhagadia, Dahej located in Gujarat. The proceeds from the issue will be used for expansion of production facilities of MCC at Dahej and Jhagadia in Gujarat.

Net profit of the chemical manufacturer has been increasing steadily over the past three financial years.
ParticularsRevenueProfit
FY21₹255 crore₹47 crore
FY20₹221 crore₹41 crore
FY19₹240 crore₹37 crore

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