Ami Organics IPO plans to raise about Rs. 570-crores at Rs. 603-610 per share. to meet its target. This will comprise a new issue of shares worth Rs. 200 crores and an OFS of 6,059,600 equity shares worth nearly Rs. 370 crores by its promoter Parul Chetankumar Vaghasia and others. Ami Organics Limited manufactures pharma intermediaries for active pharmaceutical ingredients (APIs) and specialty chemicals.  

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Ami Organics IPO Details:

Offer OpensWed, 1st September, 2021
Offer Closes  Fri, 3rd September, 2021
Face Value (₹)Rs. 10 /-
Issue DetailsFresh Issue of Equity Shares aggregating upto ₹ 200 Cr 
 + Offer for Sale of 6,059,600 Equity Shares
Issue Size (₹ Cr)₹ 565 – 570 Cr
Bid Lot24 shares and in multiple thereof
Price Band₹ 603 – 610
Issue Structure : 
QIB50% of the offer 
NIB15% of the offer ( 85.45 Cr)
Retail35% of offer ( 3,268,401 Shares, ₹ 199.37 Cr)
BRLMsAxis Capital, Intensive Fiscal, Ambit Pvt Ltd
RegistrarLink Intime India Pvt. Ltd.

Updates :

  • ANCHOR ISSUE: Ahead of its IPO, Ami Organics IPO garnered raised Rs 170.89 cr from 20 anchor investors. The anchor investors include SBI Life Insurance Company, Kotak Mahindra Life Insurance Company, Aditya Birla Sun Life Insurance Company, Kuber India Fund, UTI Mutual Fund, Sundaram MF and SBI Mutual Fund.. Fidelity Management Research, Fidelity Investments, Aberdeen, Abu Dhabi Investment Authority, Kuwait Investment Authority and Government Pension Fund Global are among the anchor investors. Further ICICI Prudential Mutual Fund (MF), Nippon India MF, Franklin Templeton MF, SBI Life Insurance and Kotak Life Insurance.

About Ami Organics IPO

  • Ami Organics Limited (“Ami Organics”) was incorporated on January 3, 2004.
  • The he company is R&D driven manufacturer of specialty chemicals and is focussed towards the development and manufacturing of advanced pharmaceutical intermediates for regulated and generic active pharmaceutical ingredients (“APIs”) and New Chemical Entities (“NCE”) .
  • Further it undertakes manufacture of key starting material for agrochemical and fine chemicals, especially after the recent acquisition of the business of Gujarat Organics Ltd.
  •  Ami Organics is one of the major manufacturers of Pharma Intermediates for certain key APIs, including Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban. The Pharma Intermediates which they manufacture, find application in high-growth therapeutic areas including anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant and anti-coagulant.
  • Ami Organics Limited has developed and commercialised over 450 Pharma Intermediates for APIs across 17 key therapeutic areas.
  • Ami Organics has 8 process patent applications and 3 additional pending process patent applications for which applications were made recently, in March 2021.
  • Ami Organics Limited supplied its products to more than 150 customers (including international customers) directly in India and in 25 countries overseas,
  •  Ami Organics has 3 manufacturing units located at Sachin, Ankleshwar and Jhagadia in Gujarat with overall installed capacity of 6,060 MTPA.
Welcome to Ami Organics Limited

Ami Organics IPO: Financials

Particulars / (₹ In Cr)202120202019
Revenue from Operations340.61239.64238.51
Revenue Growth (%)42.13%0.47%
EBITDA as stated80.1541.0242.08
EBITDA (%) as stated23.53%17.12%17.64%
Profit Before Tax71.7334.7535.11
Net Profit for the period5427.4723.3
Net Profit (% )as stated15.85%11.46%9.77%
Equity Share Capital31.510.510.5
Reserves135.43101.3171.72
Net worth as stated166.93111.8182.22
RoNW (%)32.35%24.57%28.33%
Net Asset Value (₹ )52.9935.526.1
Return on Capital Employed (%)25.25%22.40%29.11%
FV10
EPS (₹ )17.148.727.4
Equity Post IPO36.44
IPO Price610
EPS (exclusing EO) FY2114.82
PE 41.16
Market Cap2223
Market Cap  /  Sales6.5

Pros

  • Strong and diversified product portfolio ably supported by strong R&D and process chemistry skills
  • Extensive geographical presence and diversified customer base with long standing relationships.
  • High entry barriers in the chemicals manufacturing industry
  • Strong sales and marketing capabilities;
  • Experienced and Dedicated Management Team;
  • Consistent financial performance.

Cons

  • The Company do not have long-term agreements with suppliers for their raw materials.
  • Impact of the COVID-19 pandemic on the business and operations is uncertain.
  • The manufacturing facilities of the company are concentrated in a single state i.e. Gujarat

Ami Organics IPO: Assessment

  • Ami Organics Limited had reduced its fresh issue size to Rs 200 crore from Rs 300 crore after fundraising of Rs 100 crore in a pre-IPO placement at Rs. 603..
  • The company has undertaken diversification of its product portfolio over the years and has strong R&D capabilities;
  • The company use both organic and inorganic routes in the current geographic markets and expanding into new geographic markets;
  • The company has shown consistent financial performance with sales growth at CAGR of 19.5% and profit after tax growth at CAGR of 52.3% between the Fiscals 2019 and 2021.
  • These financials do not include revenue from the acquisition of the two recent plants and this shall be reflected in this year. These newly acquired capacity and ramp up in the existing capacity may lead to better profitability in this year.
  • Ami Organics had seen a 42 per cent jump in revenue in FY21 to Rs 340.61 crore primarily due to increased sales of its products resulting from a robust growth of domestic and export demand. Its net profit grew 97 per cent to Rs 54 crore.
  • Ami Organics 88% of revenue comes from Pharma intermediates out of which 53% comes from export. 5% of revenue comes from Specialty chemicals out of which 86% comes from export market.
  • Some of its domestic customers include Laurus Labs Limited, Cadila Healthcare Limited and Cipla Limited. Key export customers include Organike s.r.l.a Socio Unico, Fermion Oy, Fabbrica Italiana Sintetici S.p.A, Chori Co. Ltd., Medichem S.A. and Midas Pharma GmbH. “
  • From the Rs 200 cr. fresh issue, company intends to repay Rs.140 cr debt and Rs. 90 cr will be used for working capital. The will make Ami Organics Limited debt free post the IPO.
  • Ami Organics IPO is coming at PE of 41.2X its EPS of its FY21 earnings on the post-issue equity share capital of Rs 36.44 crore.
  • Peers like Aarti Industries trades at a PE of 56x , Neogen 69x, Valiant Organics trades at 30x, Vinati Organics trades at 66.5x, Atul trades at 38.4x PE, Hikal trades at PE of 46x.
  • Ami Organics IPO was last reported to be commanding a GMP of about Rs. 125.
  • Ami Organics pre-IPO placement worth Rs. 101 crores to entities such as Platus Wealth Management, Malabar India Fund, and IIFL Opportunities Fund at Rs. 603 per share lends some confidence.
  • Ami Organics IPO is not cheap but scores on overall growth prospects, diversified product portfolio, strong R&D, reasonable track record. I intend to apply in the IPO.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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