Surat based Ami Organics is coming up for IPO that would open for subscription on 1st September, 2021. Ami Organics Ltd is one of the leading research and development driven manufacturers of specialty chemicals. Company generated strong revenue growth in the last 3 years. Its margins are improving year on year. Should you invest in Ami Organics IPO? What are the risk factors in this IPO? In this article we would provide Ami Organic IPO Details, IPO Dates, its IPO Price, GMP, Analysis and Review.
Also Read: Should you invest in Vijaya Diagnostics IPO?
About Ami Organics Limited
Company is a research and development (R&D) driven manufacturer of specialty chemicals with varied end usage. It is focused on the development and manufacturing of advanced pharmaceutical intermediates for regulated and generic active pharmaceutical ingredients and New Chemical Entities and key starting material for agrochemical and fine chemicals, especially from its recent acquisition of the business of Gujarat Organics Limited.
As per the F&S Report, company is one of the major manufacturers of Pharma Intermediates for certain key APIs, including Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban.
The Pharma Intermediates which they manufacture, find application in certain high-growth therapeutic areas including anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant and anti-coagulant, commanding significant market share both in India and globally.
Ami Organics IPO details
|IPO Opening Date||01-Sep-21|
|IPO Closing Date||03-Sep-21|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 10 per equity share|
|IPO Price band||Rs 603 to Rs 610 per equity share|
|Lot Size||24 Shares|
|Min Order Quantity||24 Shares|
|Listing at||BSE and NSE|
|Issue Size||Total Size: Rs 569.64 Crores
1) Fresh issue: Rs 200 Crores
2) OFS: Rs 369.64 Crores
What are Ami Organics Limited competitive strengths?
1) It is one of the leading manufacturers of certain Pharma Intermediates i.e., Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban.
2) It has strong and diversified product portfolio with 450+ Pharma Intermediates across 17 therapeutic areas.
3) Extensive geographical presence and diversified customer base.
4) Company has strong R&D, sales and marketing capabilities.
5) Company has consistent financial performance track record.
What are the Objects of the Offer?
It has two objects of the IPO offer.
1) Offer for sale (OFS) for Rs 369.64 Crores: Under OFS, selling share holders would sell the shares and company would not get any proceeds from this issue.
2) Fresh issue of Rs 200 Crores: Fresh issue would be utilized for the following:
i) Repayment/prepayment of certain financial facilities availed by the company.
ii) Funding working capital requirements.
iii) General corporate purposes.
Who is the promoter of Ami Organics Limited?
Nareshkumar Ramjibhai Patel, Chetankumar Chhaganlal Vaghasia, Shital Nareshbhai Patel and Parul Chetankumar Vaghasia are the promoters of the company.
How is the company financial track record?
Here are the total assets, revenues and profits of the company in the last 3 years.
|Financial Year ending / Period ending (Amt in Mns)|
|Profit After Tax||233.0||274.7||540.0|
Why to invest in Ami Organics IPO?
If you are wondering “should I buy Ami Organics IPO”, one should look a the the positive factors in this company.
1) Ami Organics is one of the leading manufacturers of certain pharma intermediates. Company has diversified portfolio which consists of 450+ pharma intermediates with extensive geographic presence.
2) Company has consistent revenue growth in the last 3 years. Its revenues for FY19, FY20 and FY21 are at Rs 238.9 Crores, Rs 242.4 Crores and Rs 341.9 Crores respectively.
3) Company margins have improved year on year in the last 3 years. Its margins for FY19, FY20 and FY21 are at Rs 23.3 Crores, Rs 27.4 Crores and Rs 54 Crores respectively.
Risk Factors in Ami Organics IPO
1) Continuing impact of Covid-19 pandemic on company business and operations is uncertain and may be significant and continue to affect in future too.
2) Company is subject to strict quality requirements, regular inspections and audits. Any manufacturing or quality control problems may be subject to regulatory action and can damage the company reputation.
3) Company is subject to increasingly stringent environmental, health and safety laws, regulations and standards. Non-compliance with and adverse changes in health, safety and labor and environmental laws can affect company business.
4) Company derive significant portion of its revenue from the sale of products in certain therapeutic areas and any reduction in demand from such products can affect company business
5) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
Ami Organics IPO dates for subscription, Allotment and Listing
|Finalization of Allotment||08-Sep-21|
|Initiation of Refunds||09-Sep-21|
|Credit to Demat Account||13-Sep-21|
|IPO Shares Listing Date||14-Sep-21|
Is Ami Organics IPO Price is underpriced or overpriced?
Its IPO price band is Rs 603 to Rs 610 per share.
1) On the upper price band of Rs 610 per share and last 3 years average EPS of Rs 12.71, the P/E ratio works out 48x.
2) If we take FY21 EPS of Rs 17.14, the P/E ratio works out 35.5x.
3) Means company is asking issue price in the P/E range of 35.5x to 48x.
4) Currently there are listed peers like Vinati Organics trading at P/E of 75.5x (highest) and Neuland Laboratories at P/E of 31.6x (Lowest) and industry average is 49x. Hence considering the Amit Organics IPO share price at Rs 610 of upper price band at P/E of 35.5x to 48x is reasonably priced.
What is Ami Organics IPO GMP?
Ami Organics IPO Grey Market Premium (GMP) is not yet known as we could not see any major trades happening. GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about IPO price as it is unorganized market.
Ami Organics IPO Review – Should you invest?
Based on the pros and cons indicated above, investors can take decision whether Ami Organics IPO is good or bad for investment.
Ami Organics Limited is one of the leading research and development driven manufacturers of specialty chemicals in India.
Company generated strong revenue growth in the last 3 years.
Its margins are improving year on year.
The IPO share price is fully priced.
As indicated in our earlier articles, markets have become choppy. We could see few IPOs were listed below the listing price.
Considering the positive factors discussed above, investors can invest for medium to long term perspective. Based on current stock market conditions, one may or may not get listing gains.
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