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Ami Organics IPO was subscribed 1.54 times as investors placed bids for 1,00,99,176 shares compared to 65,42,342 shares on the block.
Specialty chemical manufacturer Ami Organics Rs 570 crore IPO (initial public offer) sailed through by the afternoon on its first day of bidding, supported by retail investors and QIB.
According to data published on NSE until 2:40 pm, the issue was subscribed 1.54 times as investors placed bids for 1,00,99,176 shares compared to 65,42,342 shares on the block. The buoyancy in the secondary market has brought back retail investors interest in the primary market which was missing for some IPOs in the month of August. This is visible from the fact that the portion reserved for retail investors was subscribed 2.16 times. The portion reserved for Non-Institutional Investors was subscribed 0.32% while that kept aside for Qualified Institutional Buyers (QIBs) was subscribed 1.39 times.
The public issue of Surat-based company comprises a fresh issue of equity shares worth Rs 200 crore and an offer for sale of up to 60,59,600 equity shares by existing shareholders. The company has reduced its fresh issue size to Rs 200 crore from Rs 300 crore after raising Rs 100 crore in a pre-IPO placement.
Proceeds from the fresh issue will be used towards repayment of certain debt and funding working capital requirements. Half of the issue size has been reserved for qualified institutional investors, 35% for retail investors and the remaining 15% for non-institutional investors.
What does it do?
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, and materials for agrochemicals and fine chemicals.
Brokerage views
Anand Rathi has a ‘Subscribe’ on the issue since the company has shown consistent financial performance with sales growth at CAGR of 19.5% and restated profit after tax growth at CAGR of 52.3% between the fiscals 2019 and 2021. The financials for 2020-21 doesn’t include revenue from the acquisition of the two plants.
Whereas Angel Broking has given a ‘Neutral’ rating. “Based on FY2021 numbers, the IPO is priced at a price to earnings of 35.6 times and EV/EBITDA (enterprise value to earnings before interest tax depreciation and amortization) of 25.7 times at the upper price band of the IPO, which is on the higher side compared to the listed peer group. The company already has a higher market share of 70%-90% in key API’s (active pharmaceutical ingredients) which will limit growth in the near future,” said Yash Gupta of Angel Broking.
The issue is likely to finalise the basis of allotment by September 08, and the initialization of refunds will take place by September 09. While the credit of equity shares to depository accounts of the allottee will be done on September 13. The diagnostics chain is expected to make its stock market debut on September 14, 2021.