Ami Organics' Public Issue to Open Next Week. Key Details to Know

India's specialty chemicals manufacturer Ami Organics' initial public offering (IPO) will open next week on 1 September 2021, along with the public issue of healthcare chain Vijaya Diagnostic. Both IPOs will close on 3 September 2021.

The price band of Ami Organics has been fixed at Rs 603-610 per share. The Surat based chemicals maker is eyeing to raise about Rs 5.7 bn through its primary offering.

This is the Ami Organics' second attempt to go public. In 2018, Ami Organics had filed preliminary papers with the market regulator and received the approval to launch the issue. However, it did not float the IPO.

The company, in consultation with book-running lead managers, has undertaken a pre-IPO placement of equity shares worth Rs 1 bn.

Intensive Fiscal Services, Ambit Private Limited and Axis Capital are the book running lead managers to the issue.

Ami Organics IPO Details

Issue Type	Book Built Issue IPO
Face Value	Rs 10 per equity share
IPO Price	Rs 603 to Rs 610 per equity share
Market Lot	1 lot - 24 shares
Issue Size	Rs 5.7 bn
Fresh Issue	Rs 2 bn
Offer for Sale	Rs 3.7 bn
Basis of Allotment Date	Wednesday, September 8, 2021
IPO Listing Date	Tuesday, September 14, 2021

Data Source: Company's Red Herring Prospectus (RHP)

The fresh issue size has been reduced to Rs 2 bn from Rs 3 bn after the company raised Rs 1 bn in a pre-IPO placement issue.

The promoters and existing shareholders of the company participating in offer for sale (OFS) include Parul Chetankumar Vaghasia, Girishkumar Limbabhai Chovatia, Kiranben Girishbhai Chovatia, Aruna Jayantkumar Pandya, Atulkumar Shah, among others.

Post issue, promoters holding will come down to 41.05% from 47.23%.

Category-wise reserved portion

As far as investor portions go, the IPO has given qualified institutional buyers (QIBs) a reservation of 50%.

The non-institutional investors (NIIs) have a reservation of 15%. Retail investors will have 35% of the issue size ear-marked for them.

Objects of the issue

The net proceeds from the fresh issue will be utilised to repay debt and working capital along with general corporate purposes.

The total debt of the company as of 31 March 2021 was about Rs 2.2 bn.

About Ami Organics

Incorporated in 2004, Ami Organics is one of the leading research and development driven manufacturers of specialty chemicals.

The company manufactures different types of advanced pharmaceutical intermediates and active pharmaceutical ingredients (API) for new chemical entities (NCEs), and material for agrochemicals and fine chemicals.

The firm has developed and commercialised over 450 pharma intermediates for APIs across 17 key therapeutic areas since inception and NCE, with a strong focus on research and development (R&D) across select high-growth, high margin therapeutic areas.

These include anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant, and anticoagulant, for use across the global pharmaceutical market.

Company's global reach

The specialty chemicals maker has presence across many different states in India. Along with the domestic market, the firm said it supplies pharma intermediates used for manufacturing of APIs and NCEs to various multi-national pharmaceutical companies.

These cater to the large and fast-growing markets of Europe, China, Japan, Israel, UK, Latin America, and the US.

Competitive strengths

• One of the leading manufacturers of certain pharma intermediates i.e. Dolutegravir, Trazodone, Entacapone, Nintedanib, and Rivaroxaban.
• Strong and diversified product portfolio with 450+ pharma intermediates across 17 therapeutic areas.
• Extensive geographical presence and diversified customer base.
• Strong R&D, sales, and marketing capabilities.
• Consistent financial performance track record.

Financial snapshot of the company

For the fiscal year 2021, the company reported a revenue of Rs 3.4 bn versus Rs 2.4 bn a year ago.

Its profit before tax for the year stood at Rs 717.3 m compared to Rs 347.5 m recorded in the same period last year.

Net profit for the period stood at Rs 539.9 m against Rs 274.7 m last year.

Key Parameters

(Rs m)	FY19	FY20	FY21
Revenues	2,385.1	2,396.4	3,406.1
Revenue Growth (%)		0.5%	42%
Expenses	2,037.9	2,077.3	2,702.6
Profit Before Tax (PBT)	351.1	347.5	717.3
Net Profit	233.0	274.7	540.0

Data Source: Company's RHP

For more details, check out Ami Organics' Red Herring Prospectus.

Comparison with listed peers

Upon successful listing, Ami Organics will join the likes of Aarti Industries, Hikal , Valiant Organics, Vinati Organics, and Atul.

Company	Revenues (Rs bn)	Net Profit (Rs bn)	Return on Net Worth (%)
Aarti Industries	45.1	5.4	14.9%
Hikal	17.2	1.3	14.3%
Valiant Organics	7.5	1.3	22.5%
Vinati Organics	3.9	8.0	17.5%
Atul	37.3	6.5	17.1%
Ami Organics	3.4	0.5	32.4%

Data Source: RHP, Equitymaster
Figures in Rs bn and as on 31 March 2021

Recent acquisition by the company

Recently, Ami Organics has completed the acquisition of two additional manufacturing plants operated by Gujarat Organics (GOL) in line with its inorganic growth strategy of foraying further into the specialty chemicals sector.

Specifically, subsequent to the acquisition, it has acquired the preservatives (parabens and parabens formulations which have end usage in cosmetics, animal food, and personal care industries) and specialty chemicals business of GOL (with end usage in inter alia the cosmetics, dyes, and agrochemicals industries).

Ami Organics grey market premium?

Shares of the specialty chemicals company is available at a premium of Rs 60 in the grey market today.

That means it is trading up by 10% to its issue price of Rs 610.

The grey market is an unofficial platform, wherein trading starts after the announcement of the IPO price band till the listing of the shares.

What's the ideal IPO strategy to follow?

In the past few months, a large number of corporate houses have submitted proposals for floating IPO. A number of IPOs are also expected to hit the market soon.

As companies line up to raise funds from the market amid high valuations, investors need to consider numerous factors before investing their money in an IPO.

If you are investing in an IPO, weigh in all the positive and negative factors affecting the company.

Take a close look at the company's financials and valuations. It would give you a clear picture of what's brewing.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more here...