Sanginita Chemicals Ltd. (SCL) has initially started production of Cuprous Chloride and Cupric Chloride at its factory situated at 3536/8, Near. GIDC, Chhatral, Dist- Gandhinagar (Unit I). Due to increase in the demand of products it has started Unit II to enhance production capacity by installing additional machinery. However, it sold its Unit I and expanded Unit II to the revised higher capacities for producing the cuprous chloride from 1,00,000 Kgs/month to 5,00,000 kgs/month and additional consent for production of Ferric choloride (5,00,000 KGS/month), Zinc Sulphate (10,00,000 KGS/month) and Manganese Sulphate (5,00,000 KGS/month).
At present, SCL manufactures three major products viz. Cuprous Chloride, Copper Sulphate and Cupric Chloride having installed capacity of 60,00,000 Kgs/p.a., 54,00,000 Kgs./p.a and 3,50,000 Kgs./P.a respectively which is used in dyes and pigment industries, paint industries, pharmaceuticals industries, electroplating industries, metal extraction industries and ink, Carbon paper, PVC pipe coating industries etc.
To part finance its working capital needs and general corpus funding requirement, the company is coming out with a maiden IPO of 4566000 equity share of Rs. 10 each at a fixed price of Rs. 22 per share to mobilize Rs. 10.05 crore. Issue opens for subscription on 01.03.17 and will close on 03.03.17. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge platform. Issue is solely lead managed by Swastika Investmart Ltd and Purva Sharegistry India Pvt Ltd is the registrar to the issue. While it issued major equity at par during 2005 to 2016, it also issued few shares at a price of Rs. 250 per share in March 2010, June 2010 and July 2011. It has also issued bonus shares in the ratio of 1 share for every 2 shares held in December 2016. Post issue, its current paid up equity capital of Rs. 12.70 crore will stand enhanced to Rs. 17.37 crore.
On performance front, after suffering a setback in the fiscal 2012-13, the company has posted turnover/net profits of Rs. 119.03 cr. / Rs. 0.84 cr. (FT14), Rs. 128.93 cr. / Rs. 1.00 cr. (FY15) and Rs. 144.36 cr. / Rs. 1.10 cr. (FY16). For six months ended 30.09.16 of the current fiscal it has posted net profit of Rs. 0.71 crore on a turnover of Rs. 70.79 crore. If we annualize this and attribute to the fully diluted equity post issue then asking price is at a P/E of around 26 plus against peers trading above 60 P/E based on last traded price on the basis of December 2016 ending results.
On merchant banker’s front, this is the second mandate from its stable and the earlier issue gave positive returns on listing date.
Conclusion: Issue appears to have been priced reasonably. Investors having surplus funds may consider investment for long term.
Review By Dilip Davda on Feb 28, 2017
The Sanginita Chemicals IPO Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered IPO Analysts tells you if Sanginita Chemicals IPO worth investing. The Sanginita Chemicals IPO Note sets the IPO expectations in systematic way which tells you if Sanginita Chemicals IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in Sanginita Chemicals IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.
(SEBI registered Research Analyst-Mumbai).
About Dilip Davda
Dilip Davda (SEBI registered Research Analyst-Mumbai), a freelance journalist for more than 25 years, is a stock market analyst and news article writer. Since 1985, he has contributed to print media, electronic media and often appears on TV channels as visiting stock analyst. His articles are regularly publishes in Smart Investment (English and Gujarati weekly published from Ahmedabad), Free Press Journal and many other news papers & magazines. He is also a visiting stock analyst on DD News TV Channel.