Review By on February 28, 2017
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 on February 28, 2017
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of Sanginita Chemicals Ltd. offers an early investment opportunity in Sanginita Chemicals Ltd.. A stock market investor can buy Sanginita Chemicals IPO shares by applying in IPO before Sanginita Chemicals Ltd. shares get listed at the stock exchanges. An investor could invest in Sanginita Chemicals IPO for short term listing gain or a long term.
Read the Sanginita Chemicals IPO recommendations by the leading analyst and leading stock brokers.
Sanginita Chemicals IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Sanginita Chemicals IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Sanginita Chemicals IPO?"
Our recommendation for Sanginita Chemicals IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Sanginita Chemicals IPO.
The Sanginita Chemicals IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Sanginita Chemicals IPO allotment status to check.
