The Initial Public Offer, or IPO, for Sigachi Industries has opened for subscription from Monday, November 1. This issue is set to close on November 3, Wednesday, after a three-day bidding process. The manufacturer of cellulose-based excipients has has fixed the price band for the IPO at Rs 161-163 per equity share. As of now, however, the initial public offer of Sigachi Industries has been subscribed 2.84 times. On that note, let’s take a look at the details of Sigachi Industries IPO.
Sigachi Industries IPO Details
The IPO comprises of a fresh issue of 76.95 lakh shares. With this, the Hyderabad based company plans to raise Rs 125 crore, at the upper price band. For a retail investor, bids for a minimum one lot of 90 shares up to maximum of 13 lots have been invited. 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. On the other hand, the registrar of the issue is share Services Private Ltd. The IPO allotment will be done on November 10 while the refunds will be initiated on November 11.
Sigachi Industries IPO Status
Investors have already put in their bids for 1.52 crore equity shares against the IPO size of 53.86 crore equity shares on Monday. Meanwhile, retail investors have subscribed to 5.65 times the shares compared to the parts reserved for them. For non-institutional investors, the issue has been subscribed 7 per cent, while Qualified Institutional Buyers (QIBs) have not put in their bids at the time of writing this article.
Issue Objectives of Sigachi Industries IPO
Sigachi Industries, which has been operating since 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. The proceeds will also be used to 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 GMP
The Sigachi Industries shares were fetching a grey market premium of Rs 150 on Monday, November 1. Sigachi Industries shares were trading at Rs 313 apiece in the grey market, around 92 per cent up over the higher end of the issue price on Monday. The high GMP indicated strong listing for Sigachi Industries shares on NSE and BSE later this month.
Company Details
Sigachi Industries Ltd, set up in 1989, manufactures Microcrystalline Cellulose (MCC) of 59 different grades at its Hyderabad and Gujarat manufacturing units. This company is one of the leading MCC manufacturers in India and has a total installed capacity of 11,880 million tonnes per year. The MCC grades range from 15 microns to 250 microns. MCC is used to make pharmaceutical and nutraceutical products.
Should You Subscribe to Sigachi Industries IPO?
Financial and investment experts’ group Anand Rathi has given Sigachi Indutsries IPO a ‘subscribe’ rating.
“At the upper end of the price band, Sigachi Industries Ltd is offered at a P/E ratio of 15.1x its TTM earnings, with a market capitalisation of Rs 5,011 million. Given that the company is one of the leading manufacturers of microcrystalline cellulose in India with over 30 years of experience, pan-India and international market presence, experienced management team and investment led future growth with high RoNW of 32.12 percent in FY21 and reasonable valuation. We give this IPO a ‘subscribe’ rating,” the group said in a a note.
Marwadi Shares and Finance Limited has also given a similar view. “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,” said the investment group.
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