Sigachi Industries: The unwavering growth trajectory

In the bustling arena of the Indian pharmaceutical industry, Sigachi Industries stands out as a beacon of remarkable growth and unwavering resilience. Its journey began in November 2021, when it made its debut in the primary market, setting the stage for an extraordinary tale of financial success.

Sigachi’s grand entrance into the stock market was nothing short of spectacular. The stock was launched at a price band of Rs 161 to Rs 163 per equity share, with bidders applying in lots of 90 shares. However, the real magic unfolded at the listing, where the stock soared to a staggering Rs 570, a premium of 253% over its issue price.

For IPO investors who held onto their Sigachi shares, the rewards have been nothing short of extraordinary. The company’s unwavering growth trajectory led to a 1:10 stock split, effectively multiplying the number of shares held by investors tenfold. This decision proved to be a masterstroke, as the stock’s value continued to climb, reaching a new 52-week high of Rs 56.

What Driving the Stock Price Higher?

In a bold move to expand its global footprint, Sigachi Industries Limited, a leading pharmaceutical company, has made the formation of a joint venture (JV) with Saudi National Projects Investment Ltd (SNP) to tap into the burgeoning Saudi Arabian market. This strategic partnership, named Sigachi Arabia, will see Sigachi MENA FZCO, a wholly-owned subsidiary of Sigachi Industries, hold a majority stake of 75%, while SNP will hold the remaining 25%.

This strategic alliance has sent shockwaves through the market, causing Sigachi Industries’ stock price to skyrocket, tripling in value. Investors are recognizing the immense potential of Sigachi Arabia, given Saudi Arabia’s rapidly growing pharmaceutical, food, and nutrition sectors. The establishment of a manufacturing facility in Riyadh within three years further cements the JV’s commitment to the region, positioning it as a key player in catering to the local market and eventually expanding to serve the entire GCC region.

Before this Sigachi Industries acquired an 80% stake in API manufacturing company, Trimax Bio Sciences, Raichur, Karnataka.

Stock Performance

The company has consistently delivered impressive profit growth, with a Compounded Annual Growth Rate (CAGR) of 44.5% over the past five years. Additionally, its return on equity (ROE) has been consistently strong, with a three-year ROE of 23.3%. The stock has generated a remarkable gain of 106.83% for investors over the past year, and in the short term, it has accumulated wealth by an impressive 41.18% within the last month.

Financial Highlights

The overall revenue in H1 experienced a robust YoY growth of 13.37%, escalating from Rs 164.61 crores to Rs 186.62 crores.

In Q2 FY24, the net profit recorded an impressive growth of 9.8% compared to Q1 FY24, reaching Rs 15.04 crore. This marks a substantial improvement over the net profit of Rs 10.86 crore reported in the previous quarter. Moreover, the performance in Q2 FY24 reflects a commendable year-over-year increase of 9.5%, as compared to the net profit of Rs 13.76 crore in Q2 FY23.

About the Sigachi Industries

Sigachi Industries Ltd. (SIL) is one of the largest manufacturers of Microcrystalline Cellulose worldwide and has three multi-locational Facilities in Telangana and Gujarat.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.