Ami Organics, the Surat-based Chemical company, IPO has opened on 1 September.  What should be your investment strategy regarding it after the dud listing of many IPOs recently?  The company plans to raise 570 crores from the Initial Public Offer.

Ami Organics makes different kinds of advanced pharmaceutical intermediates and active pharmaceutical ingredients (API) and agrochemicals. The company claims to have a network with   450 pharma intermediates in 17 key therapeutic areas.

The company will retire a debt of 140 Crore from the capital received from the IPO.

Ami Organics Price Band

The price band has been kept at 603-610 Rs.

 Ami Organics IPO Date, Time Table, Allotment & Listing

• Date of IPO: 1-3 September
• A maximum amount of 24 shares is fixed for the issue. Investors can invest a minimum of Rs 14,640.
• The allotment of shares is likely to start from September 8 while the listing will take place on September 14, 2021.
• Initiation of Refund:9 September

About Ami Organics

From 2019-2020, there was no growth but from 2020-21, revenue grew 42 percent, EBITDA doubled, and significant improvement in margins to 16.5 % from 11.5%.  The revenue grew based on the volume growth and not price growth.

Another positive about the company is they have been able to grow despite tough competition from China in the API segment.  They sell products in 25 overseas companies including the USA, China, Japan, Israel, and their clients include the names like Lauras Labs, Cadila, Cipla.

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They have a strong and diversified product portfolio across 17 therapeutic areas with an extensive and diversified customer base. They have strong R & D capabilities which is a big positive.

Analysts are of the view that the issue is reasonably priced and the company is going to list at the PE of 41.16 which is reasonable compared to its peer companies namely Aarti Industries and Hikal that are trading at PE of 54.20 and 46.13, respectively.

The key risk is its international business which depends on international and environmental regulations and also makes it susceptible to foreign currency risks.

Ami Organics: Grey Market Premium (GMP)

In the grey market, it is trading at 732 Rs which is almost 20% above the price band.

Ami Organics IPO Detailed Review: Should You Apply?

Considering the tepid response of many other IPOs recently and grey market premium. More clarity will emerge only after the second day of subscription.

However, it is not advisable to apply for the IPO for listing gain which is not going to be much. It’s not going to double your money on the day of listing, so the question you should ask yourself is if the risk is worth taking.

Ami Organics: Brokerage Opinion

• Ami Organics: Brokerage Opinion
• Angel Broking | Rating: Neutral
• Marwadi Shares & Finance | Rating: Subscribe

Though Chittorgarh recommends it as the ‘May Apply” category, The Alpha Return view is not in sync with it.

The buzz factor is missing because the anchor investor list is not impressive.  The performance of IPO will depend on the response of HNIs, which is completely missing now.

For long-term investors, they should observe it for some time after listing and if the performance sustains for few quarters, they can invest.