Sigachi Industries IPO: Should you apply?

Created on 01 Nov 2021

Wraps up in 6 Min

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Updated on 06 Sep 2023

Sigachi Industries IPO: Date, Price, Review

Medicines. Everyone has had to eat some of them, not a lot of them are likable. One thing that “binds” all medicine, is a little something called an excipient.

So what is this excipient? Some end all, be all miracle chemical that could treat any ailment? Well not really, turns out, an excipient is as simple and as essential as a brick to a house, alone it doesn’t do much, but mixed with a few more things, this chemical is actually the building block to any medicine, food supplement or another retail use drug available to the public.

So what does this story have to do with today’s blog? Turns out one of the largest global excipient makers, Sigachi Industries Limited is bringing an IPO, and here’s what we know about them and think you should too.

Industry Overview

So, along with active ingredients, excipients are also added to medicines. Not only in medicines but this is used in a variety of products. Further, Microcrystalline cellulose (MCC) and Croscarmellose Sodium (CCS) are the most commonly used excipients in the medicine industry.

Sigachi Industries, along with CCS, majorly manufactures Microcrystalline Cellulose (MCC)  which is a refined wood pulp & chemically inert substance used in Pharmaceutical, Cosmetic, Personal Care & Polymer composite products.

The Global MCC Market size is forecasted to reach USD 1.4 Billion by 2025 with a CAGR growth of 7.25% owing to its rising demand in various industries.

As far as the Indian MCC Market is concerned, its market size (Pre-COVID) during 2020 was USD 38 Million projected to reach USD 93 Million by 2025. 

So, the MCC prospects look pretty good but what about the company prospects? Let's find out!

Company overview

Sigachi Industries is a Hyderabad-based company. The company is in the business of producing cellulose-based excipients (the materials present in the medicine apart from the active ingredients, for the maintenance of its medical and structural integrity).  

Sigachi Industries has been manufacturing, exporting, and supplying Microcrystalline Cellulose or (or MCC) since 1989. Microcrystalline contains chemically inert components and refined wood pulp. 

Sigachi produces 59 distinct grades of MCC at facilities in Telangana and Gujarat, with an annual capacity of 11,880 metric tonnes. It is one of the largest manufacturers of Microcrystalline Cellulose worldwide. 

Source: Sigachi Industries Ltd.

Sigachi Industries sells its cellulose-based products under the following brands:

  • HiCelTM

  • AceCel® 

  • CoatCel®

  • GloCel®

That's all with the cellulose update for you all. Now we will dig deep into the financials of the company.

Financials of the company

Talking about the financials of the company, it has total assets of Rs. 1334.07 million as of 31st March 2021. It has generated revenue of Rs. 1960.10 Million as of 31st March 2021. Keeping in view, it earned the Profit after tax of Rs. 302.60 million. 

Looking at these figures we can see that Sigachi Industries has been experiencing accelerated growth in Total Assets, Total Revenues as well as Profit after Taxes. These numerical sure paint a pretty picture for the company as projections following this trend are very flattering.

For the past three fiscal years, SIL has paid a 10% annual dividend. As a result, it is a dividend-paying corporation. Following its IPO, it would maintain a conservative dividend policy based on its financial performance and future prospects. 

So, the IPO is coming, without waiting any further take a look at the key details of the IPO.

Key details of the IPO

IPO Details

IPO Opening date

Nov 1, 2021

IPO Closing date

Nov 3, 2021

Issue Type

Book Built issue IPO

Face Value

Rs. 10 per equity share

IPO Price

Rs. 161 to 163 

Market Lot


Min order quantity


Listing At


Issue size

125.43 Cr

Purpose of the IPO

  • The main objective of the company is to use these funds for the purpose of Expansion. They are planning to expand the production units for microcrystalline cellulose (MCC). MCC is a polymer commonly utilized in the pharmaceutical sector for completed dosages. 

  • Apart from the pharmaceutical sector, it has applications in the food, nutraceuticals, and cosmetic industries. It will use these funds to Increase the Manufacturing Capacity of croscarmellose sodium, which is modified cellulose. 

  • Apart from this, funds will be used for Capital Expenditure purposes for increasing MCC production capacity in Dahej and Jhagadia in Gujarat, and to manufacture CCS at the proposed unit using 32.29 crores

Let’s get to the deciding factor now and take a look at the positives and negatives of Sigachi Industries. Hopefully, the points we are going to cover helps you in your decision-making process of whether you should go for the IPO or not.

Why Should you apply?

Discussing the strengths of the company, 

  • It has an in-house R&D division with all of the essential facilities to conduct all of the experiments required to develop new compounds from concept to commissioning. 

  • It is one of the leading manufacturers of MCC in India with an experience of 30 years strong network base in India as well as in international markets. 

  • The company is able to take advantage of multiple government initiatives such as “Merchandise Export from India Scheme” and “Duty Drawback Scheme ”as well as constant attempts to diversify its product portfolio to cater to a huge range of customers. 

  • Since the industry acquires its raw materials from plant material, a surge in agro-processing businesses, should all drive MCC demand in the future. People's changing lifestyles, increased discretionary income, and the population's demographic mix as people grow more aware of their health shall also act as a driving force.

  • Another reason to invest in this company is the growth of its industry. With a four-year CAGR of 6.3 percent, India's microcrystalline cellulose market is expected to reach $115 million next year. The key drivers behind the MCC market's growth are increased pharmaceutical output, increased demand for processed foods and cosmetics, and increased demand for personal care goods.

  • The same reasons as above apply to the MCC market on a global scale, driving an increase in the demand for products the industry outputs. The market is expected to grow at a CAGR of 7.25% in the CY 2020-2025. The graph below displays the current and projected growth of the global MCC market.

Why Should You avoid it?

  • Sigachi, on the other hand, faces a lot of competition because of the large number of competitors. Du Pont, DFE Pharma, FMC Corp, Friesland Campina, Libraw Pharma, Huzhou City Linghu Xinwang Chemical Co., Shandong Xinda Biotechnology Co. Ltd, JRS Pharma, Avantor, and others are among the major competitors in the MCC industry.

  • Talking about other risks with the business model, its ability to produce and devise unique grades of cellulose-based excipients is critical to its economic success. Its inability to develop new items would render its current product line obsolete, affecting sales and profitability. 

  • Apart from this, The company is heavily reliant on its core raw materials and a few key suppliers that assist them in obtaining them. The company has not entered into a long-term deal with its raw material suppliers. If they are unable to obtain appropriate quantities of raw materials at competitive costs, this can have a negative influence on the company's financial situation. 

  • A considerable amount of the company's revenue is derived from a small number of product customers. Any loss of such consumers, or a drop in sales from them, might have a negative influence on the business.


So from the above analysis, we can make out that the products manufactured by Sigachi are a big deal in various industries. The demand has been on the rise and overall wider global prospects look good. Being one of the market leaders in MCC production gives the company a competitive edge but can it give tough competition to its global peers in the long run? Also, it has been reluctant in innovating and expanding in terms of new products. 

All in all this time we get a mixed bag of good’s & bad’s. So what will be your basis of analysis before investing let us know in the comment section! 

Also if you liked our findings and opinions feel free to share the blog :)

*Disclaimer: The stock discussed above aren't recommendations from Finology, they are only picked to make you understand the concept.

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Kanishka Tayal

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Kanishka is a finance enthusiast, currently pursuing her master's in Banking and financial services domain. She loves to doodle in her spare time. She is a keen learner and is willing to pursue her career as a financial analyst.

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