Sigachi Industries Limited

Few doubts on this entity while reading their conference call and financial statements from stock edge,

Good things,

1. Margins are great, sales increasing with same margins,
2. Company expanding and moving up in value chain
3. Customers are essentials, so demand for customers products is not an issue.

Observation, Doubts,

1. Tax paid is only 11% and conf call notes mentioned that SeZ period of 15 years is going to expire and from next year there will be a tax increase of 5%. This will affect the EPS and the price.
2. Entity has diluted it’s equity twice, first time in 2020 and 2022.
3. They have diluted equity without having long term debt is more scary because any owner wants to retain the ownership and first will take debt to expand. That too in low interest scenario, they have not taken any long term debt.
4. The equity percentile of the promoter is less than 50%, why?? Red flag for me.
5. Debtor days is tremendously increasing and short term borrowings is increasing. More and over the short term borrowings, the 2022 pat is fully consumed by debtors increase. This is happening after IPO. Either the sales can be fake or the customer is beating the MCC market down. High margins become worthless with worst working capital.
6. They are venturing into too many things at the same time, Nutraceuticals, OTC, O&M, capacity expansion, Dubai office. All this is okay, but when we look at this along with cash flow worsening is a worry. Need to get clarity from business
7. The MF invested 5% of the company and next quarter they exited?? Why?
8. At this market where liquidity is high why did the price falll from the roof. Why the price went to so high and why it fell.
9. The retail investors are more than promoter or DII,FII.