28 Comments
Jan 28, 2023Liked by Tar

A good detailed write up on the company

There’s a company by the name of Pracheen Chemicals based out of Gujarat who make the same products as Sigachi, namely MCC and CCS and nearly 70-75% of their revenue comes from Sigachi

So the question is raised here is does Sigachi actually make MCC at their Gujarat plants??

Because they always refuse for plant visits whenever requested

Also if you see their cash conversion is very poor, hardly any of the EBITDA is converted to OCF

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Jan 28, 2023·edited Jan 28, 2023Author

Thank you for reading!

I cannot comment on if they are actually producing it in their plant or not as I do not have any data related to it.

The cash conversion is indeed very poor at a mere ~9%. The incentives are clearly at increasing the topline rather than bottom line.

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Nice explanation sir.

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Wonderful report. Expect more such reports. Good work done.

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Thank you! One deep dive publishing every month

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Great analysis

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Thank you Mohit

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Jan 29, 2023Liked by Tar

Thanks for the detailed blog

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Thank you for reading!

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Thanks for valuable information

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Thank you Harish!

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Jan 28, 2023Liked by Tar

U missed 315 crores fund raise part for a 1000 cr company . Might be another earnings trigger?

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I havent called it out specifically, but its being raised as part of convertible warrants at a price of 285.3/share

Not necessarily an earnings trigger, I dont get why they are issuing warrants now considering the company already has ~200cr on books with low debt of ~66cr

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They have mentioned the purpose.1) 160 crore for aquisition.(inorganic triger).setting up new api manufaturing facility, 2)73 crores. 3) 50 crores or smthng for expanding mcc capacity in Hyderabad plant. The rest money for general corporate purposes and working capital requirements. Won't the 2) and 3) become earnings trigger?. And 1) becoming inorganic trigger

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Very nice and easy to understand. I applied volume profile to sigachi’s chart and it shows the POC at 342 and anchored VWAP at 352. Safe to go long once stock can close above those levels. Thanks for providing a detailed business analysis of the company.

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Jan 28, 2023·edited Jan 28, 2023Author

Thank you! glad you found it useful.

A weekly close above 370 is better to be on a safer side. Lot of false breakouts in this market!

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Great work bro, 1 question isn't your discount rate of 8% and 10yr terminal multiple low.

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Thank you!

Those are standard in Tijori, I didnt change them. Even if I increase the discount rate and terminal multiple, the implied growth rate will further reduce which still seems unlikely considering the company is on track to improve output by ~50%.

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Jan 28, 2023·edited Jan 28, 2023Liked by Tar

Incisive and well-researched. Thanks. I liked your conclusion that it would be better to be a trader than an investor here.

Also I read that the company is in the process of issuing convertible warrants to promoters, their relatives, KMP etc and certain non promoters. The convertible warrants are to be issued at an issue price of Rs 285.30. The details are available at https://www.bseindia.com/xml-data/corpfiling/AttachHis/9f265fae-4eda-4275-b1d8-aac79e9d8169.pdf.

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Yes, they are. If you see my technical chart, 285.3 is highlighted there :)

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Ohh. Yes.

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It's a great and detailed summary on Sighachi. I loved specially the red flags mentioned in it. One should know the risks before thinking for investment. Thank you for sharing this analysis.

Best

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Thank you, glad you found it useful.

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Thank you for your quality content.

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Really good write up Sir. I was following the company from last quarter. I had completely missed the rental expenses part during my studies.

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Thank you Souveek, glad you found it useful

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Anything multiplied by 0 is 0. Clearly the management's behavior is unethical (just like Rolex Ring promoters). Bad management produces negative surprises.

Great post Tariq. Thank you for sharing this.

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Thank you for reading Pranjal. Glad I was able to help 🤝

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