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Syschem (India) BSE RI review (May apply)

Syschem (India) Limited Logo

•    SIL is engaged in the manufacturing and marketing of bulk drugs/intermediates and Specialty Chemicals. 
•    It also does contract manufacturing for its domestic and international customers.
•    It posted losses for FY21 and FY22, and turned the corner from FY23 onwards.
•    Well-informed/cash surplus investors may park funds for long-term rewards.

Syschem (India) Ltd. (SIL) is a listed company engaged in the manufacture of Bulk Drugs/ Intermediates /Specialty Chemicals and contract manufacturing. The company is owned and operated by a group of highly committed techno commercial professionals having vast experience in the bulk drug business. Their comprehensive capabilities, creative approaches to problem-solving, and track record of reliability and compliance make it an ideal business house. 

Its strategy is to globalize the intellectual property assets and enhance value to shareholders and customers. SIL adheres to the principles of corporate governance by consistently endeavoring towards improved operational performance through compliance with various laws, listing agreement and the CODE OF CONDUCT & POLICIES of the company. The company is committed to the CODE OF CONDUCT as required under SEBI (Prohibition of Insider Trading) Regulations, 2015 and the POLICIES as required under Clause 49 of the Listing Agreement and as adopted by the Board of Directors of the Company. 

SIL is a leading Active pharmaceutical ingredients manufacturer in India producing the best and reliable products. It is among the very few research-driven API manufacturing companies in India who provide best in class and customized solutions at commercial scale. It serves national as well as international markets by providing bulk drugs/active pharmaceutical ingredients and advanced intermediates. Through API in pharma industry, it strives to deliver value for partners with a world-class manufacturing unit, strict quality control testing and a team of robust professionals and workers. As of July 31, 2023, it had 85 employees on its payroll. 

The company is offering Rights Issue (RI) of 7972600 shares of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize Rs. 31.89 cr. The issue opens for subscription on October 16, 2023, and will close on October 27, 2023. It is issuing RI in the ratio of 1 for 4 to eligible stakeholders as of the record date of September 29, 2023. The full amount it to be paid with application for the number of shares applied. Post allotment, shares will be listed on BSE. SIL is spending Rs. 0.35 cr. for this RI process and from the net proceeds, it will utilize Rs. 10.08 cr. for expansion of Amoxicillin and Cephalexin manufacturing capacities, Rs. 15.00 cr. for working capital, and Rs. 6.46 cr. for general corporate purposes. 

The RI is self-managed by the company and Beetal Financial & Computer Services Pvt. Ltd. is the registrar of the issue. 

Post-RI, SIL's current paid-up equity capital of Rs. 31.89 cr. will stand enhanced to Rs. 39.86 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 159.45 cr. 

On the financial performance front, for the last three fiscals, SIL has posted a total income/net profit/ - (loss) of Rs. 74.67 cr. / Rs. - (5.57) cr. (FY21), Rs. 65.76 cr. / Rs. - (1.71) cr. (FY22), and Rs. 130.63 cr. / Rs. 4.51 cr. (FY23). For the first four months of FY24 ended on July 31, 2023, it earned a net profit of Rs. 1.39 cr. on a total income of Rs. 59.36 cr. After posting losses for FY21 and FY22, it turned the corner and poised for bright prospects as indicated by its performances. 

The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 67.57 on September 27, 2023, and opened on an ex-right basis at Rs. 64.20 on September 28, 2023. Since then, it has marked a high/low of Rs. 65.95 / Rs. 50.00. The scrip last closed at Rs. 51.33 as of October 10, 2023. For the last 52 weeks' it has posted a high/low of Rs. 65.95 / Rs. 33.34. 

The promoters' holding has been constant at 53.82% for the last three quarters ended with June 30, 2023. The counter is well managed above the RI price to lure investors.

Conclusion / Investment Strategy

SIL has turned the corner in FY23 and is embarking upon expansion plans. The RI appears to have been priced greedily. Based on its recent financial performance, it is poised for bright prospects ahead. However, well-informed/cash surplus investors may consider parking funds for long-term rewards.

Review By Dilip Davda on October 11, 2023

Review Author

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 before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

More Syschem (India) Limited RI Views / Analysis / Recommendations ...

The Syschem India Rights Issue 2023 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Syschem India Rights Issue 2023 worth investing. The Syschem India Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Syschem India Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Syschem India Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.