We all know that the pharmaceutical industry is a complex ecosystem where countless components converge to produce life – saving medicines. A reliable supply of these components is fundamental for the smooth functioning of this industry, impacting everything from development timelines to patient access to meditation. 

Here’s where Sigachi industries play a major role through their production of Microcrystalline Cellulose (MCC). MCC being a non medicinal ingredient plays a critical role in formulating tablets, capsules and other dosage forms. Sigachi’s MCC acts as a binder, bulking agent and a disintegrant.

With its commitment towards producing high quality MCC’s, Sigachi industries saw a huge growth and as a result the share price rose by 165.82% from 24.49 rupees on 3rd of May 2023 to 65.10 rupees on 3rd of May 2024. Will it continue to rise again? Come let’s have a detailed analysis of this firm.

Industry overview Of Sigachi Industries

The global pharmaceutical industry is poised for robust growth, projected to expand by a cumulative $500 billion between FY2020 and FY2027, regaining pre-pandemic momentum by 2024. While mature markets like North America and Europe will likely see sluggish growth, emerging economies across Latin America, Asia, and Africa are expected to drive the highest volume increases, fueled by burgeoning populations and improved healthcare access. 

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Specialized therapeutic areas are also catalyzing market expansion – oncology spending could nearly double to $370 billion by FY2027, the orphan drug market may reach $230 billion by FY2026, and biotech drugs may comprise 35% of global spend in FY2027. The generics landscape remains lucrative, forecasted at $426 billion by FY2026.

India is a powerhouse within this global pharmaceutical landscape. It ranks 3rd worldwide in drug production by volume and accounts for 20% of global generic drug supply and 60% of vaccine production. The domestic market, pegged at $41 billion in FY2021, is anticipated to grow to $65 billion by FY2024 and $130 billion by FY2030.

 Moreover, Indian pharmaceutical exports have exhibited stellar performance, growing 24% in FY2021 during the pandemic and maintaining a 22% increase from April-October 2022 over pre-COVID levels, catalyzed by robust global demand across over 150 nations.

Company Overview Of Sigachi Industries

Sigachi industries was established in 1989, they focus on manufacturing high quality MCC, a crucial excipient used in pharmaceutical, nutraceutical and food industries. Sigachi industries is headquartered in Hyderabad, India. 

With over 30 years of experience, Sigachi has its production facilities in Gujarat, Telangana. They have established themselves as a global leader, exporting their MCC products to over 50+ countries across Asia, Australia, America, Europe and Middle East. 

Currently RP Sinha and Amit Raj Sinha are the chairman and CEO of the firm. Sigachi industries got listed in Indian stock exchange on 12th of November 2021. Sigachi operates in three different segments which include pharma, food & nutra and cosmetics. 

Out of these segments, Sigachi industries generated 75% of its revenue from pharma followed by food & nutra 20% and cosmetics occupies for 5%

Financials Of Sigachi Industries

FY 2023FY 2022FY 2021FY 2020
Revenue (in crores)302.05250.29192.76139.06
Net profit (in crores)43.5440.0430.2620.32
ROE17.55%24.87%38.12%37.13%
ROCE19.53%27.81%37.56%33.31%

In FY 2023, Sigachi industries saw a substantial increase in revenue, surging by 20.68% to reach 302.05 crore rupees as opposed to 250.29 crore rupees in FY 2022. Analysing a span of three years, encompassing FY 2021 to FY 2023, Sigachi displayed a compounded annual growth rate (CAGR) of 29.51%.

While looking at the net profit of Sigachi industries profit increased by 8.7% because of increase in sales of MCC, followed by increase in contribution by API manufacturing company which was acquired by Sigachi industries in the previous year.  

In FY 23, Sigachi maintained a favourable financial metrics with a return on equity (ROE) of 17.55% and return on capital employed (ROCE) of 19.53%.

Future Plans Of Sigachi industries 

Sigachi Industries plans to diversify its pharma product mix by manufacturing high-grade products and introducing innovative value-added items. The company is expanding its MCC manufacturing capacity by over 50%, increasing from 14,000 metric tons per annum to over 21,000 metric tons per annum.

Sigachi has initiated the establishment of a new CCS (croscarmellose sodium) manufacturing facility at Dahej SEZ (Special Economic Zone). This is a significant step in strengthening the company’s manufacturing infrastructure and augmentation of production capacities.

Sigachi is in the process of expanding its B2B market in Nutritional ventures so that it can feature ingredients and micronutrient premixes. The company also wants to explore the untapped markets around the globe so that they can expand their presence in global markets.

In line with their diversification strategy, they have incorporated Sigachi Arabia, a joint venture with Saudi National Projects Investment Limited. With this move they are planning to have a manufacturing facility in Riyadh within the next three years, so that they can cater to the needs of local and the GCC (Gulf cooperation council) markets.

Sigachi has acquired an 80% stake in Trimax BioSciences, a leading API (active pharmaceutical ingredient) manufacturing company based in Raichur. This acquisition gives Sigachi the complete ecosystem of the pharmaceutical industry, expanding its capabilities beyond excipients. The company is working to obtain regulatory approvals for API manufacturing from the European Union and certain Latin American countries.

Conclusion

Sigachi industries success story is a testament to their unwavering commitment to quality, innovation and customer focus. For over three decades, they have established themselves as a global leader in MCC production, catering to a diverse range of industries.

Going forward, Sigachi industries is well positioned to capitalize on the ever-evolving pharmaceutical, nutraceutical and food landscapes. Their dedication to research and development ensures they stay at the forefront of MCC technology, offering advanced solutions that meet the evolving needs of their clients.

With a strong global presence, robust manufacturing capabilities, and a focus on sustainability, Sigachi industries is a reliable partner for companies seeking high performance MCC solutions. As the demand for MCC continues to grow, Sigachi is poised to play a vital role in shaping the future of various industries that rely on this critical ingredient. What do you think about the performance of Sigachi industries, mention your thoughts in the comments below.

Written by Pavunkumar V M

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