Book profits in Sigachi Industries after 3.7x returns: Analysts

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Sigachi Industries shares made a blockbuster market debut on Monday, listing at a premium of 252.76% to the issue price. On the BSE, the chemical manufacturer opened at Rs 575, a markup of 252.76%. While on the NSE it listed at Rs 570 per share implying a premium of 250% from the IPO price of Rs 163 per share. In afternoon trade the counter continued its upward momentum and was trading at Rs 603.75 almost 3.7x its issue price.

With such mouthwatering returns allotted investors are in a fix whether to book profits or hold on to the stock. To solve this quandary of investors Money9 spoke to analysts on the street, here is what they have to say.

According to Akhil Rathi of Marwadi Shares and Finance the strong listing for Sigachi came on the back of strong fundamentals. Companies RONW (Return on Net Worth) stood at 32%, EBITDA (Earnings Before Interest Tax Depreciation & Amortisation) margin of 20%, and PAT (Profit After Tax) margin around 16%.

“Investors can book some portion after strong listing and hold the rest quantity for long term as it enjoys a virtual monopoly in its products and has wide demand,” Rathi suggested.

Likewise, even Rahul Sharma, Co-Founder of Equity99 recommend long-term investors are remain invested considering niche product offering of company. However, considering listing premium short-term investors are advised to book their profits as their capital is almost 3x.

While for fresh investments Sharma suggests investors should wait for declines & not to enter fresh at the listing gains of 267%.

Hyderabad-based Sigachi Industries manufactures microcrystalline cellulose (MCC), which has varied applications in the pharmaceutical, food, nutraceuticals and cosmetic industries. The initial public offering (IPO) of the chemical maker Sigachi Industries received a hefty response from investors as it was subscribed 101.90 times on November 3, the final day of bidding. Investors have put in bids for 54.88 crore equity shares against the IPO size of 53.86 lakh equity shares.

The scrip has been added into the T-segment or trade-to-trade, so the daily circuit limit is only 5% and will remain so for the next few sessions.

(Disclaimer: Stocks recommendations by experts or brokerages are their own and not those of the website or its management. Money9.com advises market participants to check with certified experts before taking any buy, sell or hold decisions.)