Sigachi Industries IPO opens today, experts give 'Positive' rating

The initial public offering of Sigachi Industries will open for subscription today, the third IPO to be available for bids on the day along with Policybazaar and SJS Enterprises.

The price band for the offer, which closes on November 3, has been fixed at Rs 161-163 a share. Sigachi Industries, which makes cellulose-based excipients, plans to raise Rs 125.43 crore at the upper price band by issuing 76.95 lakh shares.

The Hyderabad-based company plans to utilise the proceeds for capital expenditure, expansion of production capacity for microcrystalline cellulose (MCC) and manufacturing of croscarmellose sodium, a modified cellulose.

Promoters Rabindra Prasad Sinha, Chidambarnathan Shanmuganathan, Amit Raj Sinha, and RPS Projects and Developers hold 53.32 percent stake in the company.

The company has received various quality certifications and operates three manufacturing units namely, Unit I at Hyderabad, and two manufacturing units, Unit II and Unit III at Jhagadia and Dahej, in Gujarat, with an aggregate installed capacity of 11,880 MTPY. It has an in-house R&D division equipped to carry out all necessary trials to develop molecules from concept to commissioning.

Considering the FY21 adjusted EPS of Rs 10.80 on the post-issue basis, the company is going to list at a P/E of 15.10 with a market cap of Rs 5,011 million. There are no listed companies in India whose business is comparable with that of the company’s business. We assign a ‘subscribe’ rating to this IPO as 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.