Specialty chemical company Ami Organics' initial public offering continued to see healthy demand from investors as it has been oversubscribed by 64.54 times on September 3, the final day of bidding.
The public issue has received bids for 42.22 crore equity shares against the IPO size of 65.42 lakh equity shares, subscription data available on exchanges showed.
Retail investors have put in bids for 13.36 times their reserved portion, while the portion set aside for non-institutional investors was subscribed 154.81 times and that of qualified institutional buyers saw 86.64 times subscription.
Ami Organics plans to mop up Rs 570 crore through its public issue that comprises a fresh issue of Rs 200 crore and an offer for sale of Rs 370 crore by several selling shareholders.
The company already mobilised Rs 171 crore from anchor investors on August 31, a day before issue opening, at a price of Rs 610 per equity share. The net proceeds from the fresh issue and pre-IPO placement money will be utilised for repaying debts and working capital requirements.
"We like Ami Organics given its wide product portfolio in PIs, diversification efforts into other specialty chemical space, strong clients’ relation across geographies and robust financials. It is well placed to tap the opportunity in the fast-growing specialty chemical market by leveraging its strong R&D and expanding product portfolio," said Sneha Poddar of Motilal Oswal.
She further said the issue was reasonably valued at 41.2x FY21 P/E on post issue basis (average peer FY21 P/E of 45x), while it enjoys higher growth. "We believe that the market would like to give premium valuation to such niche stories. We recommend subscribe for listing gains."
Currently, Ami Organics shares trade at a premium of Rs 105-110 in the grey market, IPO Watch and IPO Central data showed. This result in a trading price of Rs 715-720 per share against the upper price band of Rs 610 per share.
The company has built a strong and diversified portfolio of over 450 PI (88 percent revenue share in FY21) across 17 therapeutic areas which are high-growth and high margin, and commands significant market share both in India and globally. It is one of the major manufacturers of PIs like Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban of which the first two contributed around 44 percent of FY21 revenues.
Over FY19-21, its revenue grew at a CAGR of 20 percent, EBITDA (earnings before interest, tax, depreciation and amortisation) at 38 percent, and profit at a CAGR of 52 percent, while EBITDA margins expanded from 17.6 percent to 23.5 percent, led by increasing presence in high margin products. "Synergy benefits with Gujarat Organics would start playing out from FY22 onwards and boost profitability. Post-IPO, Ami will become debt-free. It enjoys healthy return ratios of around 18 percent," said Sneha Poddar.
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