Ami Organics' initial public offer (IPO) to raise up to Rs 570 crore opened for subscription on Wednesday. The Surat-based specialty chemical maker's IPO comprises of fresh issuance of 32.79 lakh shares worth Rs 200 crore, and an offer for sale (OFS) of 60.60 lakh shares (estimated at Rs 370 crore) by existing stakeholders and promoters.
The Ami Organics IPO will close for subscription on Friday, September 3, and shares will likely get listed on stock exchanges BSE and NSE on September 14.
Shares under the Ami Organics IPO will be available for bidding in a price band of Rs 603-610 in lots of 24 units up to 13 lots (312 shares). At the upper end of the price band, one lot will cost Rs 14,640 for bidding.
The company will not receive any proceeds from the OFS.
Founded in 2007, Ami Organics is an R&D-driven specialty chemical maker that develops advance pharma intermediates for active pharmaceuticals ingredients (APIs). Ami operates in multiple product segments, including agrochemicals, polymers and cosmetics.
So should you subscribe to the Ami Organics IPO? Here's what brokerages say:
The brokerage has a 'subscribe' rating, and is positive on the long-term prospects of the company.
"The company has shown consistent financial performance with sales growth at a CAGR of 19.5 percent and restated profit after tax growth at a CAGR of 52.3 percent between FY2019 and FY2021. The financials for 2020-21 don't include revenue from the acquisition of two plants," Anand Rathi said in a note.
At the upper end of the price band, Ami Organics is demanding a P/E multiple of 41.2x its FY21 EPS of Rs 14.8, which is at a discount to the peer average of 48.3x, according to the brokerage.
"Anticipating lower profitability in the medium term, we feel that the issue is reasonably priced," said Choice Broking, which recommends subscribing to the issue.
Also read: Top market debutants so far in 2021
The brokerage is positive on Ami Organics' dominant market position in the manufacturing of pharma intermediates for certain high-growth high-margin therapeutic areas, its business growth from the specialty chemicals business, and its lower debt levels post-IPO.
Also read: How HNIs invest in IPOs using borrowed money
Ami Organics is one of the major manufacturers of pharma intermediates for
certain key APIs, such as Dolutegravir, Trazodone, Entacapone, Nintedanib
and Rivaroxaban, it said. The company's focus on R&D and continuous improvement in the process has positioned it as a preferred supplier to its customers, according to the brokerage.
Kotak Securities has not assigned any rating or price target to the Ami IPO.
First Published: IST