Considering the FY-21 adjusted EPS of Rs 14.82 on post-issue basis, the stock is demanding a PE of 41.16 with a market cap of Rs 2,222.7o crore. Listed peers, Aarti Industries and Hikal, traded at a PE of 54.20 and 46.13, respectively. Analysts find the issue reasonably priced in the Rs 603-610 band. They have neutral to positive views on the IPO.
“The company has shown consistent financial performance with sales growth at a CAGR of 19.5 per cent and restated PAT CAGR of 52.3 per cent over FY19-21. The financials for FY21 doesn’t include revenue from the acquisition of two plants. We are positive on the long-term prospects of the company,” said Anand Rathi Financial Services.
The issue consists of issuance of fresh equity shares worth Rs 200 crore and an offer for sale (OFS) by promoters and existing shareholders of up to 6,059,600 equity shares.
Choice Broking said it anticipates lower profitability for Ami Organics in the medium-term and believes that the issue is reasonably priced. “Considering the dominant market positioning of the company in the manufacturing of pharma intermediates for certain high-growth high-margin therapeutic areas, business growth from the specialty chemicals and lower debt levels post-IPO, we assign a subscribe rating for the issue,” it said.
The quota for retail investors has been fixed at 35 per cent of the issue size. Investors can bid for a minimum of 28 equity shares and in multiples of 28 shares thereafter. Half of the net issue is reserved for qualified institutional buyers (QIBs), whereas 15 per cent stake will be allotted to non-institutional investors (NIIs).
Ami Organics deals in advanced pharmaceutical intermediates and active pharmaceutical ingredients (API) and materials for agrochemical and fine chemicals. It supplies products to more than 150 customers globally, with overseas clients contributing 52 per cent of the revenues.
It has three manufacturing facilities with an aggregate installed capacity of 6060 Mtpa. The company claims to have developed over 450 pharma intermediates across 17 key therapeutic areas. In FY21, it reported a 96 per cent growth in profit after tax at Rs 54 crore on a 41 per cent growth in revenues at Rs 342 crore. Angel Broking has a ‘neutral’ rating on Ami Organics.
“We assign ‘subscribe’ rating to this IPO as the company has a strong and diversified product portfolio supported by strong R&D and process chemistry skills and is available at reasonable valuation as compared to its peers,” said Marwadi Shares and Finance.
The net proceeds from the fresh issue will be utilised for repaying certain debts and working capital along with general corporate purposes.
