AMI Organics IPO : Subscribe or NOT?

The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

Ami Organics IPO-Incorporated in 2004, Ami Organics Limited is one of the leading research and development driven manufacturers of specialty chemicals.

Business — The company manufactures different types of Advanced Pharmaceutical Intermediates and Active Pharmaceutical ingredients (API) for New Chemical Entities, and material for agrochemicals and fine chemicals. The company has developed over 450 pharma intermediates across 17 key therapeutic areas i.e. anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant, and anti-coagulant.

Region of operation –Company caters to India and in 25 countries overseas i.e. Europe, USA, China, Israel, Japan, Latin America

Offer purpose — The IPO includes an OFS portion of ₹370 crore and a fresh issue of ₹200 crore. The fresh issue proceeds will be utilised to lower the
debt of ₹140 crore (from a recent acquisition) and shore up stretched working capital requirements of the company (₹90 crore).

Risks —

High concentration of revenues from few clients

Export oriented risks

Strength

Leading global market share for some of intermediaries
Strong R&D, sales and marketing capabilities
Consistent financial performance track record
Long term contracts for most of exports with price escalation clauses
Strong relationship with customers over long ter

Future

The strong growth anticipated for Ami Organics, drawing from its product and client profile and strong pipeline presents a good future prospects

Valuations

Valuations are matching considering peers but look reasonable

Should we apply?

People can subscribe for long term only

Add more if it dips below issue price keeping long term horizon mindset

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