Ami Organics’ initial public offering (IPO) that was open for subscription from September 1 to September 3, is oversubscribed 1.18 times by the institutional and retail investors on the first day of the bidding. The subscription data on exchanges showed that retail investors participated with vigour, as the portion of share that was earmarked for them was oversubscribed by 1.39 per cent. The IPO of Ami Organics has total equity shares of 65.42 lakh and the investors have put in bids for 77,42,232 lakh equity shares. However, the portion earmarked for qualified institutional investors was oversubscribed by 1.39 per cent. The non-institutional investors have also put bids for 4,17,456 equity shares. Surat based specialty chemical manufacturer Ami Organics is eyeing Rs 569.63 crore through the initial public offering. The public issue of Ami Organics itself consists of an offer for sale (OFS) of equity share worth Rs 369.64 crore. Ami Organics has set a price band of Rs 603 to Rs 610 for its IPO. Just one day before the subscription for Ami Organics’ IPO was open on September 1, the company raised Rs 171 crore through the anchor investors.
Ami Organics was brought to life in 2004. It is a well known research and development driven manufacturer of specialty chemicals. The company holds multiple types of Advanced Pharmaceutical Intermediates and Active Pharmaceutical ingredients (API) in its diversified product portfolio.
Throwing light on the financial parameters of the company, an analyst from Ventura securities said, “During FY19-21, the company’s revenue grew at a CAGR of 19.5 per cent to Rs 340 crore driven by its mature portfolio and increasing contribution from its Pharmaceutical Intermediates. The API business grew at a CAGR of 21.7 per cent to Rs 301 cr, while the fledgling Specialty chemical business grew at a CAGR of 174.7 per cent to INR 16 cr. Over the same period, EBITDA and PAT grew at a CAGR of 38.0 per cent(to Rs 80 cr) and 52.3 per cent (to Rs 54 cr), respectively. EBITDA margins improved by 642bps to 23.5 per cent due to a better product mix and higher capacity utilizations.”
According to IPO Watch, the shares of Ami Organics are available in the grey market at a premium of ₹150 on September 2, which is a premium of 16.4-21.3 per cent premium over the issue price of Rs 610. The grey market premium has risen from Rs 50 on August 27 to Rs 130 on September 1 and from 130 to 150 on September 2.
“Ami Organics 88 per cent of revenue comes from Pharma intermediates out of which 53 per cent comes from export and 5 per cent of revenue comes from Speciality chemicals out of which 86 per cent comes from export market, based on FY2021 numbers, the IPO is priced at a Price to Earnings of 35.6 times and EV/EBITDA of 25.7 times at the upper price band of the IPO, which is on the higher side, compared to the listed peer group. Company already has a higher market share of 70 per cent-90 per cent in Key API’s which will limit growth in near future. Given the expensive valuation, we are assigning a NEUTRAL recommendation to the Ami Organics Limited IPO,” an analyst from Angel Broking said.
The company is well-known for developing a wide array of pharma medicine across 17 key therapeutic areas i.e. anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant, and anti-coagulant. The company has developed over 450 pharma intermediates and has three manufacturing units in Gujarat.
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