IPO review of Sigachi Industries Limited

Sigachi Industries Limited incorporated in 1989, is engaged in manufacturing microcrystalline cellulose (MCC) which is widely used as an excipient for finished dosages in the pharmaceutical industry. It manufactures MCC of various grades ranging from 15 microns to 250 microns. The major grades of MCC manufactured and marketed by the company are branded as HiCel and AceCel.

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The company has received various quality certifications and operates 3 manufacturing units namely, Unit I situated at Hyderabad, and two manufacturing units, Unit II and Unit III situated at Jhagadia and Dahej, in Gujarat. The company started manufacturing premium grade microcrystalline cellulose by successfully commissioning a spray drier and a multi-fuel furnace, which in turn also increased its manufacturing capacity from 720 metric tonnes per annum to 1,080 metric tonnes per annum. Presently, it manufactures 59 different grades of MCC at the manufacturing units, situated at Hyderabad and Gujarat with an aggregate installed capacity of 11,880 MTPY.

Promoters & Shareholding:

Rabindra Prasad Sinha, Chidambarnathan Shanmuganathan, Amit Raj Sinha and RPS Projects & Developers Private Limited are the company promoters.

Pre Issue Share Holding64.64%
Post Issu Share Holding

Public Issue Details:

Offer for sale: Fresh issue of approx. 7,695,000 equity shares of Rs. 10 aggregating up to Rs. 125.43 Cr.

Total IPO Size: Rs. 125.43 Cr.

Price band: Rs. 161 – Rs. 163.

Objective: For funding capital expenditure for expansion of production in Dahej & Jhagadia and for general corporate purposes.

Bid qty: minimum of 90 shares (1 lot) for Rs. 14,670 and maximum of 13 lots.

Offer period: 1st Nov 2021 – 3rd Nov 2021.

Date of listing: 15th Nov 2021.

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  • One of the leading manufacturers of MCC.
  • Pan India and International market presence.
  • Professional and experienced management team.
  • Comprehensive product portfolio to serve diverse end-use applications.
  • Strong in-house R&D capability.


  • Highly depend on its major raw materials and a few key suppliers.
  • Company has experienced negative cash flow in the past.
  • Its wholly owned subsidiary has incurred losses in the past.
  • Its subsidiary had a negative Net Worth in the past.

Subscribe or avoid?

Sectorial outlook – The global MCC (Microcrystalline Cellulose Market) size is forecast to reach $1.4 billion by CY 2025, growing at a CAGR of 7.25% during CY 2020-2025. Pharmaceutical was the largest application of MCC in CY 2020, in terms of value and volume hence the steadily growing pharmaceutical industry is expected to support the market growth of microcrystalline cellulose over the forecast period. The microcrystalline cellulose (MCC) market size in India during CY 2020 is $38 million, estimated at $49 million in CY 2021 and is projected to reach $93 million by CY 2025, with a CAGR of 13.84% from CY 2021 to CY 2025. The growth of the MCC market is primarily triggered by the increasing demand for processed food and growing production of pharmaceutical and cosmetic & personal care products hence this is expected have positive impact on the company and its business. 

The financials (revenue and net profit) are shown in graph below:

Valuation – For the last 3 years average EPS is Rs. 10.88 and the P/E is around 15x. On the upper price band of Rs 163 and EPS of Rs. 13.13 for FY21, the P/E ratio works out to be 12.4x. There are no listed peers. Since the company is asking P/E for 2021 is between 12.4x and 15x, the listing seems to be reasonably valued.

Recommendation – Considering all the above factors, we recommend Investors to “SUBSCRIBE” for medium to long term to this IPO.

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