Sicagen India - Untested but worth to look


As per website, it says a total strength of 400+ employees, SICAGEN today is a proven organization with a rich legacy and diverse interests across most challenging domains in the business.

The company offers following services:

  1. Building Materials
  2. Governor Services
  3. Drum Manufacturing
  4. Speciality Chemical
  5. Boat Building
  6. Wilson Cables
  7. Danish Steel

Just recently on 12.09.2016 they acquired Danish Steel, a leading provider of trading and marketing of construction related material has acquired Danish Steel, a Bengaluru-based company which specializes in precision fabrication of stainless steel along with carbon steel, mild steel and aluminum.

Lines of Business:

  1. Building Materials
    The distribution of building materials such as MS/GI pipes, precision tubes, seamless tubes, rectangular/square hollow sections, construction steel including TMT steel rebars, PVC pipes, electrical cables, steel fittings, cement, sanitary wares & CP fittings.
    For dealers, contractors, builders and corporate buyers our network of 26 branches across India serve as the single window to top building material manufacturers that include TATA Steel, Jindal Pipes, Steel Authority of India, Finolex Cables, Supreme Industries, Maharashtra Seamless, ACC Cements, Dalmia Cements and Danube.

  2. Governor Services
    Goodwill Governor Services is the business partner and India’s only authorized service centre for WOODWARD, makers of the World’s finest governors and is the Distributor for NORGREN power sector products.

  3. Drums Manufacturing
    Manufacture of drums that are used for the transport of lubricant oil, hazardous and non-hazardous chemicals and pulp.
    These drums are capable of withstanding extreme temperatures.

  4. Speciality Chemicals
    Provides water treatment and process improvement solutions for the petrochemical, fertilizer, refinery, power, pharmaceuticals, agro and pesticide industries.

  5. Boat Building
    Goodwill Engineering Works builds boats, tugs & barges.

  6. Cable Manufacturing – Wilson Cables Private Ltd, Singapore (Subsidiary)
    Manufacture of premium cables for industrial and other critical applications.

As per last Annual Report:

Opportunities & Outlook:
The Company is exploring various avenues for organic growth and is also looking for good alliance partners to expand the product range beyond the existing range by catering to a wide customer base and increasing various product portfolios. The Government initiative of identification of initial 20 smart cities of the total list would bring very high growth in the development of these cities and also our share business in such cities would increase. Secondly, the “make in India” initiative of the Government would boost up the local production and demand for domestic products. We are confident that this measure would enhance the revenues of our Company. The Company expects that the new action plans being taken up by the management shall make the organization more competitive and strong and also equip to face the emerging challenges in the coming years. In order to strengthen the existing market position, the Company is taking up several steps to serve its customers in a more efficient, cost effective, reliable and friendly manner and is channeling its efforts into exploring and utilizing excellence in the areas of customer development. Focus on customers, products delivery, service innovation and trained sales force is expected to deliver customer excellence in the ensuing years.

Risks & Concerns :
The major risks and concerns affecting the Company’s business mainly emanate from several external factors. The risk may arise because of price instability similar to the volatile prices that rattled the industry in the year 2015-16, abnormal demand and supply conditions which our industry witnessed and suffered seriously in 2015-16 due the extensive steel imports that has thrown the domestic steel market out of gear, trade and credit policies, liquidity position, other Government policies, etc. Further, huge competition from the unorganized sector which produces building materials of inferior quality at lower prices that creates serious pressure on selling price and reduces the Company’s margin and profitability across all divisions. High Inflation can have a negative impact on sale of construction materials. Moreover, Iron & Steel industry is subject to cyclical swings like any other industry due to various factors that impact the market share of the Company. The Company, being a major player for trading and marketing of building materials with high level of efficiency, is continuously watching all key risk factors which may impact the profit margins and would take all possible steps to maintain and enhance the Regulations 2015. The Risk Management Committee constituted by the Company has been delegated with powers to oversee the risk management process, risk identification, effective implementation of mitigation plan and risk reporting.

Stock is flying high from past 2 quarters as FII’s stake has increased. Currently the stock is trading at around 0.4x to book value and flirting around 52 week high. It has been also Porinju’s one of the pick when it was trading at Rs. 8/- Although he sold some amount of his holdings at Rs. 33/- but still holds around 100,000+ quantities of shares. I’m quite confident that he might have bought good chunk in his Equity Intelligence PMS kitty as well.

As observed Financials seems to be improving over last 2 years:

Pays dividend regularly:

FII’s stakes increased in last 2 quarter

Your view will be most helpful. Is it worth?

Discl. Invested hold small quantity <3% of Portfolio.

Data source:

Return on Equity
10 Years: 1.4%
7 Years: 1.95%
5 Years: 2.08%
3 Years: 0.84%
TTM: 0.5%

The fundamentals over the past 10 years are abysmal. Is there a trigger that will re-make this company?

While the sales are stagnant or declining but inventories and receivables are increasing, a big red flag

Any information on Sicagen please share. Have noticed a uprise in stocks. Any informative link or leads will be really helpful. Please share