IPO analysis - Ami Organics Limited
IPO rating: Invest for long-term
About the issue:
Ami Organics Limited is one of the leading research & development-driven manufacturers of speciality chemicals. The company is coming out with its initial public offering (IPO) of equity shares with a face value of Rs 10 per equity share. The issue size of the company is Rs 569.64 crore, with a fresh issue comprising Rs 200 crore while the remaining include the sale of shares worth Rs 369.64 crore by existing investors, according to its red herring prospectus. The price band of the issue has been fixed at Rs 603 to Rs 610 per equity share. The IPO opening date is September 01, 2021, while it will close on September 03, 2021. It will be listed on the Exchanges on September 14, 2021. The IPO market lot size is 24 shares. A retail-individual investor can apply up to a maximum of 13 lots (312 shares or Rs 1,90,320). The net proceeds generated from the IPO will be utilised to augment the company's working capital requirements along with repayment/prepayment of certain financial facilities availed by the company and also, for meeting other general corporate purposes.
Ami Organics IPO details
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IPO opening date
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Sep 1, 2021
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IPO closing date
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Sep 3, 2021
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Issue type
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Book built issue IPO
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Face value
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Rs 10 per equity share
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IPO price
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Rs 603 to Rs 610 per equity share
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Market lot
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24 shares
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Minimum order quantity
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24 shares
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Listing at
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BSE & NSE
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Issue size
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[.] equity shares of Rs 10
(aggregating up to Rs 569.64 crore)
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Fresh issue
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[.] equity shares of Rs 10
(aggregating up to Rs 200.00 crore)
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Offer for sale
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60,59,600 equity shares of Rs 10
(aggregating up to Rs 369.64 crore)
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About the company:
Incorporated in 2004, Ami Organics Limited manufactures different types of advanced pharmaceutical intermediates as well as active pharmaceutical ingredients (API) for new chemical entities along with material for agrochemicals & fine chemicals. It is one of the leading research and development-driven manufacturers of speciality chemicals.
The company has developed more than 450 pharma intermediates across 17 key therapeutic areas mainly anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant, and anti-coagulant. It supplies its products to more than 150 customers (including international customers) directly in India as well as in 25 countries overseas including Europe, USA, China, Israel, Japan, Latin America, etc. Laurus Labs, Cadila Healthcare, Cipla Ltd are some of the prominent domestic customers while Organike s.r.l.a. Socio Unico, Fermion Oly, Medichem SA, and Midas Pharma GmbH are some of its international customers.
The company has three manufacturing facilities located in Gujarat at Sachin, Ankleshwar & Jhagadia, with an aggregate installed capacity of 6,060 MTPA.
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
Financials:
The revenue of the company grew at a CAGR of 19.62 per cent for the last two years ending FY21. PAT also grew at a CAGR of 52.26 per cent for the same period. The company posted a healthy ROE of 28.4 per cent on average for the last three years.
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Particulars
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For the year/period ended (Rs in crore)
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31-Mar-21
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31-Mar-20
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31-Mar-19
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Total assets
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413.26
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231.89
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213.15
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Total revenue
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341.98
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242.48
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238.89
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EBIDTA
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80.1
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40
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42.1
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Profit after tax
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53.99
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27.47
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23.29
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Recommendation:
Ami Organics deal in different types of advanced pharmaceutical intermediates as well as active pharmaceutical ingredients (API) and materials for agrochemical & fine chemicals. The company has three manufacturing facilities with an aggregate installed capacity of 6,060 MTPA. Ami Organics is a R&D driven pharma intermediates & speciality chemicals manufacturers with pharma intermediates accounting nearly 88 per cent of revenue while speciality chemical accounts for 5 per cent. It has a diversified portfolio and is not dependent on a single product or any single customer. Its customers include both domestic and international companies with export accounting for more than 50 per cent of the revenue. The company has performed well over the past years and is expected to do so in the future. With a P/E valuation of 41X post issue equity shares, it is fairly valued as against the industry average of 45X. Owing to the above reasons, we recommend investing in the company’s IPO for the long-term.
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