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Ami Organics IPO Opens Today: GMP, Price, Company Review, Risks, Should you Subscribe?

By: Rajat Mishra


Last Updated: September 01, 2021, 11:13 IST

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Ami Organics IPO: All investors should also be mindful of the fact that the public issue will come to a close on September 3.

The subscription for Surat based speciality chemical manufacturer Ami Organics IPO is open from today. All investors must be grappling with a big baffling question that whether they should subscribe to Ami Organics IPO or not? So the answer to this question lies in knowing the fundamentals of the company, and in knowing the process to subscribe this IPO. All investors should also be mindful of the fact that the public issue will come to a close on September 3.  The share allotment of this specialty chemical company is expected on 8th September 2021. The company is expected to be listed on the bourses on September 14.

Ami Organics has priced its initial public offering (IPO) between Rs 603 and Rs 610 per share. Bids can be made for a minimum of 24 equity shares and multiples of 24 after that. As far as the subscription is concerned, the retail investors can subscribe for a minimum of Rs 14,640 worth of shares in a single lot, and the maximum would be Rs 1, 90,320 for 13 lots.

In terms of subscriptions, the retail portion has an allotment of 35 per cent for the IPO. The qualified institutional buyers (QIBs) were given a 50 per cent reservation for the issue. Meanwhile, the non-institutional investors (NIIs) have a 15 per cent reservation allotted to them.

According to IPO Watch, the share of Ami Organics are available in the grey market at a premium of 130 on September 1.The grey market premium has risen from Rs 50 on August 27 to Rs 130 on September 1.

Ami Organics IPO comprises a fresh issue of Rs 200 crore and an offer of sale of up to 60,59,600 equity shares by 20 selling shareholders including Parul Chetankumar Vaghasia, Girishkumar Limbabhai Chovatia, Kiranben Girishbhai Chovatia, and Aruna Jayantkumar Pandya.

“Most analysts have maintained neutral outlook for Ami Organics IPO. The company is available at the upper end of the IPO price band at 41.2X, it FY21 earnings with a market cap of Rs 22,227 million. Further on FY21 earnings basis the company is trading below the industry average of 48.91x. Looking at the P/B ratio on the upper price bank book value and P/B are Rs 53 and 11.51x respectively along with a RoNW of 32.35 per cent. We are positive on the long term prospects of the company. Hence, we recommend a subscribe rating to the IPO, “an analyst from Anand Rathi brokerage said.

Specialty chemical company Ami Organics has raised Rs 170.89 crore from 20 anchor investors ahead of the opening of its issue, ahead of the listing. Investors including SBI Mutual Fund, Nippon Mutual Fund, Malabar India Fund, Kuber India Fund, UTI MF, IIFL Asset Management, Sundaram MF, Elara India Opportunities Fund, and Carnelian Capital Compounder Fund participated in the anchor book.

Indian chemicals market is valued at$166 billion (4 per cent share in the global chemical industry) in 2019. It is expected to reach $326 billion by 2025, with an anticipated growth of 12 per cent CAGR, analysts mentioned. The specialty chemical industry forms 47 per cent of the domestic chemical market, which is expected to grow at a CAGR of 11-12 per cent over the same period.

Ami Organics was born in 2004. The company is well known for holding multiple types of Advanced Pharmaceutical Intermediates and Active Pharmaceutical ingredients (API) in its diversified product portfolio.  As of now. The company has 450 developed pharma intermediates in various areas ranging from. anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant, and anti-coagulant. Apart from this, Ami Organics is known for exporting medicines to various countries like USA, China, Israel, Japan, Latin America, etc. In India the company hold three manufacturing units in Gujarat.

Charting out the key risks of Ami Organics IPO, ICICI Securities said in a report, 1) Higher RMAT cost and inability to pass on to impact performance, 2) Loss of customer to impede performance, 3) Regulatory related challenges for any plant to hurt performance. At upper price band of Rs 610, Ami Organics stock is priced at 41.2x FY21 consolidated EPS.

Another analyst from Religare broking said, “As the company aims to strengthen its R&D capabilities, continue to focus on cost efficiency and improving productivity and expand into new geographies. Besides, the company has 15,830 sqmtr land at its Jhagadia facility, so it would look for organic or inorganic expansion opportunities in the future. On the financial front, the company’s performance has been strong. From the long term perspective, we have a positive view on the company.”


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first published:September 01, 2021, 09:08 IST
last updated:September 01, 2021, 11:13 IST