This Stock Just Made a Historical Debut on the Exchanges

Shares of Sigachi Industries made a historical debut at the bourses today as the company listed at Rs 575 on the BSE, a 252.8% premium over the issue price of Rs 163. The stock listed at Rs 570 on the NSE at a premium of 250%.

Just a day before listing, the stock was commanding a premium of Rs 220-230 in the grey market, hinting towards a robust debut on the exchanges.

Minutes after the blockbuster debut, the shares rose to a new high of Rs 603.8 apiece, a premium of 270%.

What does Sigachi Industries do?

Hyderabad-based Sigachi Industries manufactures microcrystalline cellulose (MCC), which has varied applications in the pharmaceutical, food, nutraceuticals and cosmetic industries.

The company initially started its journey manufacturing chlorinated paraffin and hydrochloric acid in its manufacturing unit situated at Hyderabad.

The company then diversified its product portfolio to manufacture microcrystalline cellulose (MCC). MCC is widely used as an excipient for finished dosages in the pharmaceutical industry.

The major grades of MCC manufactured and marketed by the company are branded as HiCel and AceCel.

Issue oversubscribed by both retail and institutional investors

The issue opened for bidding on 1 November 2021 and closed on 3 November 2021, along Policybazaar and SJS Enterprises.

The price band of the initial public offering (IPO) was fixed at Rs 161-163 per share.

The offer comprised a fresh issue of 7.7 m equity shares aggregating up to Rs 1.3 bn at the upper price band of Rs 163. At the lower prices band of Rs 161, the issue was worth Rs 1.2 bn.

The IPO received a hefty response from investors as it was subscribed about 102 times. The quota for qualified institutional buyers was subscribed 86.5 times, whereas the quota for retail buyers was subscribed 80.5 times.

The portion for HNI investors was subscribed 172.4 times.

What does it plan to use the proceeds for?

The purpose of the issue is to fund capital expenditure for expansion of production capacity for MCC at its Dahej and Jhagadia plants and to manufacture Croscarmellose Sodium at the Kurnool plant.

It will also use the proceeds for general corporate purposes.

The commercial success of the company is largely dependent upon its ability to develop and devise innovative grades of cellulose based excipients.

Its inability to innovate new products would make its existing product portfolio redundant, which may have an adverse impact on the utility of products resultantly impacting revenue and profitability.

Should you invest in an IPO for listing gains?

Amid the ongoing IPO fever, people are increasingly looking to try and make quick and appealing returns by putting their money in the shares of a company going public.

The idea here is to make listing gains through the purchase and sale of shares in a public issue.

However, there is no guarantee that a stock will always open at a gain.

This is completely dependent on the demand for the IPO, market sentiment, global factors and short-term outlook, among other things.

Hence, it would be wise to invest in companies with longer horizons.

The companies should have solid fundamentals and good long-term growth prospects. One must also understand the business of the company along with the risks involved in investing.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...