Monday, Sep 26, 2022

Sigachi Industries IPO Subscribed 9.52 Times On Day 1. Should You Subscribe? Check What Brokerage Houses Say

Sigachi Industries received bids for 5,12,75,610 shares against 53,86,500 shares on offer, according to NSE data.

The initial public offer of microcrystalline cellulose manufacturer Sigachi Industries received 9.52 times subscription on Monday, the first day of the issue.

It received bids for 5,12,75,610 shares against 53,86,500 shares on offer, according to NSE data.

Qualified institutional buyers (QIBs) category received 57 per cent subscription, while that of non institutional investors 4.44 times and retail individual investors (RIIs) 16.81 times.

Price range for the Rs 125.42-crore offer is at Rs 161-163 per share.

The initial public offer is of up to 76,95,000 equity shares. Unistone Capital Private Limited is the manager to the offer.

Sigachi is a leading player in the field of pharma excipients, nutra and food ingredients.

Here is what brokerage houses are saying:

Anand Rathi 

At the upper end of the IPO price band, Sigachi Industries is being offered at price to equity multiple of 15.1 times to its trailing 12-month earnings, with a market capitalization of Rs 501 crore.

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 a high return on net worth (RoNW) of 32.12 per cent in the previous financial year and reasonable valuations we give this IPO a "Subscribe" rating,"

Marwadi Shares and Finance

 The financial firm said considering the FY-21 adjusted EPS of Rs 10.80 on a post-issue basis, the company is going to list at a P/E of 15.10 with a market cap of more than Rs 501 crore. The brokerage has given it a subscribe rating. "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."

Reliance Securities

The brokerage house said the IPO is valued at 16.6x FY21 and 13.9x FY22 annualised earnings, which looks attractive. There is no listed peer for the company in MCC manufacturing and Sigachi has a market share of over 65 per cent in MCC products, it said, suggesting a subscribe rating. Sustained demand for MCC from various industries and the expansion programme, earnings growth momentum looks sustainable.