IPO Details
- IPO Open Date: August 19, 2025
- IPO Close Date: August 21, 2025
- IPO Size: ₹451.25 crores
- Fresh Issue: ₹175.00 crores (0.54 crore shares)
- Offer for Sale (OFS): ₹276.25 crores (0.85 crore shares)
- Price Band: ₹309.00 to ₹325.00 per share
- Lot Size: 46 shares
- Retail Individual Investors Allocation: 35%
- QIB Allocation: 50%
- NII) Allocation: 15%
- Lead Manager: Motilal Oswal Investment Advisors Ltd.
- Registrar: Kfin Technologies Ltd.
About the Company
- Gem Aromatics Ltd. (GAL) is an established manufacturer of specialty ingredients, including essential oils, aroma chemicals, and value-added derivatives in India, with over two decades of experience. It offers a diversified portfolio of products, ranging from mother ingredients to value-added derivatives, which are used in industries such as oral care, cosmetics, nutraceuticals, pharmaceuticals, wellness and pain management, and personal care. The company has supplied products to 225 domestic and 44 international customers across 18 foreign countries in FY25, including prominent customers like Colgate-Palmolive (India), Dabur India, Patanjali Ayurveda etc.
- Main Products/Services: Mint and mint derivatives (Peppermint, Menthol, Spearmint), Clove and clove derivatives (Clove Oil, Eugenol and Eugenol Derivatives), Phenol (Anethole), and Other synthetic and natural ingredients (Eucalyptus and Eucalyptol, Lemongrass, Miscellaneous).
- Manufacturing Facilities: Three facilities located in Budaun (Uttar Pradesh), Silvassa (Dadra and Nagar Haveli and Daman and Diu), and Dahej (Gujarat). Total installed capacity is 5,346 MTPA as of March 31, 2025.
- Employees: As of March 31, 2025, it had 295 employees, including 15 contract workers.
- Promoters: Vipul Parekh, Kaksha Vipul Parekh, Yash Vipul Parekh, and Parekh Family Trust.
- Network: Pan-India presence, with exports to the Americas, Asia, Africa, and Australia, including countries like USA, China, Singapore, Brazil, France, Thailand, Spain, Germany, and the United Kingdom.
Financials: (Consolidated figures in ₹ million )
| Particulars | FY2025 | FY2024 | FY2023 |
|---|---|---|---|
| Revenue from Operations | 5,039.53 | 4,524.52 | 4,247.93 |
| EBITDA | 884.52 | 783.54 | 661.86 |
| EBITDA Margin (%) | 17.55% | 17.32% | 15.58% |
| Profit After Tax (PAT) | 533.84 | 501.04 | 446.72 |
| PAT Margin (%) | 10.56% | 11.03% | 10.51% |
Post IPO Market cap: ₹1,697.71 crore. P/E (FY24): 33.89 times. P/E (FY25): 31.80 times.
The company has shown consistent growth in its total income and net profit over the reported periods (FY23-FY25). EBITDA margin improved, reflecting process efficiencies and cost control.
Anchor Investors
Gem Aromatics raised ₹135.4 crore from 14 anchor investors. The top 10 anchor investors with their percentage allocations are: Nippon India Equity Opportunities AIF-Scheme 7 (22.16%), SageOne-Flagship Growth 2 Fund (7.39%), Nuvama Multi Asset Strategy Return Fund (7.39%), Citigroup Global Markets Mauritius Pvt. Ltd. (7.39%), Societe Generale-ODI (7.39%), Goldman Sachs Investments (Mauritius) I Ltd. (7.39%), Sanshi Fund-I (7.39%), Astorne Capital VCC-Arven (7.39%), Negen Undiscovered Value Fund (7.39%), and Niveshaay Sambhav Fund (7.39%). The remaining anchor investors include Resonance Opportunities Fund, Next Orbit Growth Fund-II, Leading Light Fund VCC, and Zinnia Global Fund PCC-Cell Dewcap. No domestic mutual funds participated in the anchor allocation,
Salient Points
- Use of Funds: The net proceeds from the fresh issue, amounting to ₹175 crore, are primarily intended for the prepayment or repayment of ₹140 crore of outstanding borrowings availed by the company and its subsidiary, Krystal Ingredients Private Limited, with the balance allocated for general corporate purposes. This debt repayment is expected to substantially reduce interest costs and boost profit.
- Business Scenario: The Indian chemicals industry, valued at USD 235 billion in FY25 (approximately 4% of the global market), is projected to grow to USD 380 billion by FY30 at a CAGR of 10%. This provides a favorable growth backdrop for specialty ingredients and essential oils.
- Business Verticals: The company operates across four main categories: mint and mint derivatives, clove and clove derivatives, phenol, and other synthetic and natural ingredients.
- Revenue Model: The company primarily generates revenue from the sale of products to existing/repeat customers and new customers.
- Growth Strategies: Key strategies include expanding manufacturing capacity at the Dahej facility to include new product categories like citral (safranal and damascene) and cooling agents. It also aims to widen product offerings by expanding chemistry capabilities, enhance geographical reach through growing exports and warehousing capabilities in American, Asian, and Australian markets, and improve sustainability and cost efficiency through clean technologies and operational techniques.
- Risks: A significant portion of revenue (56.06% in FY25) is derived from its top 10 customers, posing a risk if any of these are lost. The business is also working capital intensive due to extended receivable days on exports and higher inventory requirements for mint.
- Litigations: One entity identified as part of the Promoter Group, Gopinath Dairy Products Private Limited, is undergoing liquidation proceedings and has been identified as a wilful defaulter, along with certain individual members of the Promoter Group.
- Revenue Split by Region (FY25): India (47.55%), USA (31.04%), China (2.67%), and others.
- Revenue Split by Product (FY25): Mint and mint derivatives (69.1%), Clove and clove derivatives (18.9%), Phenol (2.8%), and Other synthetic and natural ingredients (7.4%).
- Capacity and Expansion: Total installed capacity is 5,346 MTPA. The company is expanding its Dahej facility, which is expected to triple its capacity for citral products and add 500 MT of cooling agent capacity.
- Working Capital & Inventory Days: The business is working capital heavy. Net Working Capital Cycle was 205.61 days in FY25, compared to 162.51 days in FY24 and 172.71 days in FY23. Inventories were ₹1,661.18 million in FY25, ₹1,744.77 million in FY24, and ₹1,425.06 million in FY23.
- Receivables Trend: Trade receivables were ₹340.49 million (not due) and ₹441.85 million (<6 months) in FY25.
- CAGR (FY23-FY25): Revenue CAGR of 8.9%, EBITDA CAGR of 15.6%, and PAT CAGR of 9.3%.
- EV/EBITDA (FY25): 19.7x.
Peers
(All figures are for the financial year ended March 31, 2025, consolidated basis)
| Company | P/E (x) | EBITDA Margin (%) | PAT Margin (%) | RoCE (%) | RoE (%) |
|---|---|---|---|---|---|
| Gem Aromatics Ltd. | 28.53 | 17.55% | 10.56% | 16.02% | 18.80% |
| Clean Science & Technology | 46.61 | 43.3% | 31.7% | 26.8% | 20.0% |
| Privi Speciality Chemicals | 50.76 | 21.8% | 8.8% | 15.5% | 16.7% |
| Camlin Fine Sciences | – | 13.2% | -7.9% | 11.1% | -14.6% |
| Yasho Industries Ltd. | 326.11 | 17.3% | 0.9% | 7.0% | 1.5% |
| S H Kelkar | 42.10 | 13.9% | 4.5% | 10.2% | 7.5% |
| Oriental Aromatics | 32.13 | 10.1% | 3.7% | 7.2% | 5.2% |
Management Commentary
Gem Aromatics, founded in 1997, is now a 28-year-old manufacturer focusing on specialty chemical ingredients and value-added products, primarily for the flavor and fragrance industry. The company is diversifying into performance chemicals with its new unit. Its products have therapeutic properties and are used in everyday applications like oral care, vapor rubs, and pain balms. The company operates as a B2B enterprise with a 50% export and 50% domestic revenue split, a trend since 2012. The global flavor and fragrance market is estimated at $40 billion, with India’s market at $2.7 billion, indicating significant growth opportunity. Management emphasizes R&D, technology, and customer stickiness. Their technology focus includes catalysis and flow chemistry for tactical advantages in yields, utilizing indigenous catalysts for process control. The IPO proceeds, primarily ₹175 crore from the fresh issue, will be used to pay off debt incurred for the new plant.
Opinion
I Intend to apply to the IPO despite lower demand and low premium.
- Post IPO equity capital: ₹10.45 crore. P/E for FY24: 33.89 times. P/E FY25: 31.80 times (annualized).
- The company is an established manufacturer with a track record of growth in its top and bottom lines.
- It benefits from long-term customer relationships with repeat orders.
- 30% revenue from USA is now a risk if tariffs persist. Despite this, it may still be attractive given its capacity expansion and double-digit margins. The upcoming expansion at Dahej shall triple capacity for citral products.
- This post is exploratory and educational purposes only.
- Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared 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. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.