Should you book profits in Sigachi after a rock-solid debut?

New Delhi: Shares of Sigachi Industries made a gravity defying debut on Dalal Street as its shares were listed at Rs 575, at an astounding premium of 253 per cent over its issue price of Rs 163.

On the National Stock Exchange (NSE), the scrip was listed at Rs 570, a premium of 250 per cent. The scrip then rose 5 per cent more to Rs 603.75, taking its listing day gains to 270 per cent on both the exchanges. After this blockbuster listing, investors are wondering if they should book profits or hold the stock to increase the gains.

Astha Jain, Senior Research Analyst, Hem Securities, suggested investors book profits and sell about 70-75 per cent of their holdings. “It is better to take some profits off the table after such listings and hold the remaining portion for a longer period,” she added.

The initial stake sale of Sigachi Industries was open for subscription from November 1-3. It raised Rs 125.43 crore via the primary route, selling its shares in the range of Rs 161-163 a piece.

Vikas Jain, Senior Research Analyst, Reliance Securities, asked investors to book profits and exit the counter as the stock had a superb debut, thanks to solid demand for IPO and small issues. “The scrip is listed in the trade-to-trade segment and will continue to stay there for a few more sessions. Thus, it is better to book profits, anticipating the volatility,” he added.

The scrip has been added into the T-segment or trade-to-trade, so the daily circuit limit is only 5 per cent and will remain so for next few sessions. Ahead of the listing, the scrip was commanding a premium of Rs 220-230 in the grey market, hinting at a robust debut on Dalal Street.

Investors can book profit in some portion and hold the rest for the long term as the company has a virtual monopoly and its products were in demand, said Akhil Rathi, Vice-President-Advisory at Marwadi Shares and Finance

The issue received a hefty response from investors as it was subscribed about 102 times. The quota for qualified institutional buyers was subscribed 86.5 times, whereas the quota for retail buyers was subscribed 80.5 times. HNI investors’ portion was subscribed 172.43 times.

Vishal Balabhadruni, BFSI Analyst at CapitalVia Global Research, said Sigachi Industries seemed to be a good long-term investment and can be held by investors. Short-term investors should book listing gains, while long-term investors should wait for corrections, he added.

Hyderabad-based Sigachi Industries manufactures microcrystalline cellulose (MCC), which has varied applications in the pharmaceutical, food, nutraceuticals and cosmetic industries.

Long-term investors should remain invested, considering the niche product offering of the company, said Rahul Sharma, co-founder, Equity99. “However, considering listing premium, short-term investors are advised to book profits.”

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