Sigachi Industries IPO listing: Shares of cellulose-based manufacturer open on BSE at 250 percent premium

Microcrystalline cellulose manufacturer Sigachi Industries is making headlines after its stocks made a bumper listing on the Bombay Stock Exchange (BSE) today, 15 November. On its stellar debut, the shares of the cellulose-based manufacturer opened at 252.8 percent premium, rising to Rs 598.50 from its issue price of Rs 163. As per the initial public offering (IPO) of the company, the Rs 125.43 crore was subscribed 101.91 times in the price band of Rs 161 to Rs 163. Furthermore, t he purpose of the IPO is to fund capital expenditure for manufctturing microcrystalline cellulose (MCC) at Dahej and Jhagadia, along with expansion of production capacity. Details on Sigachi Industries Ltd (SIL): In the year 1989, the company was incorporated as a private limited company, as per news reports, with business to manufacture hydrochloric acid and chlorinated paraffin in Hyderabad manufacturing unit. The firm is solely engaged in manufacturing MCC, which is used as an excipient for finished doses in the pharmaceutical industry. MCC is also used for various purposes in food, cosmetic and nutraceuticals industries. The company manufactures various brands of MCC known AceCel and HiCel, with grades ranging from 250 microns to 15 microns. Rahul Sharma, Co-Founder, Equity99 said that while the MCC manufacturer listed a premium of 250 percent which was highest in recent times, long-term investors are directed to remain invested, considering niche product offerings of the company. Meanwhile, Parth Nyati, Founder of Tradingo stated that SIL witnessed a bumper listing with approximately 250 percent on the back of robust fundamentals. Additionally, the firm was valued at 16x FY21 with no listed peer but if the demand is sustained for MCC, and the expansion program of the company post the IPO goes ahead, it will provide earnings growth momentum. Sigachi Industries Ltd. is at the upper end of the IPO price band with “price to earnings (PE) of 15.1 times its TTM earnings, with a market capitalization of ₹5,011 million,” said Ronak Kotecha, analyst Anand Rathi. He added that the experienced management team, international market presence and investment-led future growth of the company has led to its success.