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Ami Organics IPO: Stock lists tomorrow, grey market premium strong; analysts see up to 35% listing gains

Ami Organics IPO, Ami Organicsgmp, Ami Organics grey market premiumAmi Organics is a Pharma intermediates player that sells to API players focusing on high-growth therapeutics

Ami Organics is scheduled to make its stock market debut on Tuesday, 14 September, after receiving over 64 times subscription during IPO. Ahead of listing, Ami Organics shares were seen quoting at a premium of Rs 157 over the issue price of Rs 610 in the primary market. On Monday, the shares of the specialty chemical firm were trading at Rs 767 apiece, a premium of over 25 per cent over the IPO price, in the grey market, according to the people who deal in shares of unlisted companies. Upon its stock market debut, Ami Organics will join the listed industry peers such as Aarti Industries, Hikal, Valiant Organics, Vinati Organics, Neuland Organics and Atul Ltd.

Ami Organics is a Pharma intermediates player that sells to API players focusing on high-growth therapeutics. It caters to 150 customers (including Laurus Labs, Cadila Healthcare, Cipla and MNC players, etc). Their high asset turnover ensures a good return on capital, said an analyst. The GMP of Ami Organics is around Rs 155 which suggests a possible listing price in the range of Rs 760-780, around 25 to 30 per cent gains on the day of listing. “The company has been consistently growing revenue from operations and net profit after tax from FY19 to FY21 and around 50 per cent of revenue comes from exports. The P/E multiple at the upper band of issue price is around 35.58 times FY21 earnings which is lower than the industry average of 48.91 times. Therefore, investors who are allotted the shares in the IPO may hold it for long term. Investors who missed the bus can consider buying them on the listing day with a medium to long term time frame,” Likhita Chepa, Senior Research Analyst at CapitalVia Global Research, told Financial Express Online.

Since operations of the company are dependent on the ability to collaborate and innovate; a key trackable — newly acquired plants (60% of total capacity) from Gujarat Organics might not yield effective results, analysts advise to remain cautious. “Better be cautious rather than aggressive in betting on a new company (not to forget, in a sector which is currently valued as if nothing can go wrong) with so many unknowns; even the valuations are not in our favour,” analysts at JST Investments, told Financial Express Online.

Ami Organics primarily deals in anti-depressant in pharma which is a niche high demand segment. “Ami Organics shares should list well with market sentiment going north again in the last one week. The demand for stock post listing will be strong and we expect listing to be above Rs 700 range,” Rajesh Singla, Founder & CEO, PreIPO consulting firm Planify Consultancy, told Financial Express Online.

Ami Organics IPO was priced attractively for the investors. “As financials seem to be strong, we might see 30-35% listing gain,” Santosh Meena, Head of Research, Swastika Investmart, told Financial Express Online. Meena also added that however, the company may perform well in the long-run on the back of strong domestic and global opportunities, China +1 strategy may also provide robust growth to the specialty chemical companies in India. “We would recommend the stock to hold from a long-term perspective,” he added.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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