Speciality chemical manufacturer Ami Organics opened its initial public offering (IPO) on Wednesday and completed the second day of trading on Thursday. The IPO of Ami Organics, the specialty chemical company, is witnessing a good response as the public issue is oversubscribed by 3.90 times on September 2, the second day of bidding. Today is the third and the last day for subscribing to the issue. The subscription data available on the exchanges showed that till the second day of public issue it had received bids for 2.55 crore equity shares against the IPO size for 65.42 lakh equity shares. The part earmarked for non institutional investors was oversubscribed 1.51 times. On the other hand, the portion earmarked for qualified institutional buyers witnessed oversubscription by 1.43 times. As far as subscription by retail investors is concerned, this witnessed oversubscription by 6.32 times.
Surat based specialty chemical manufacturer Ami Organics is eyeing Rs 569.63 crore through the initial public offering. The public issue of Ami Organics itself consists of an offer for sale (OFS) of equity share worth Rs 369.64 crore. Ami Organics has set a price band of Rs 603 to Rs 610 for its IPO. Just one day before the subscription for Ami Organics’ IPO was open on September 1, the company raised Rs 171 crore through the anchor investors. However, the company made it clear that issue proceeds will be used for repaying debts and meeting working capital requirements. “We like AOL 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 opportunity in the fast growing specialty chemical market by leveraging its strong R&D and expanding product portfolio. The issue is reasonably valued at 41.2x FY21 P/E on a post issue basis (avg. 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,” an analyst from Motilal Oswal said.
According to IPO Watch, the shares of Ami Organics are available in the grey market at a premium of ₹105 on September 3. The grey market premium has risen from Rs 50 on August 27 to Rs 130 on September 1 and from 130 to 150 on September 2 and finally at Rs 105. Ami Organics was brought to life in 2004. It is a well known research and development driven manufacturer of specialty chemicals. The company holds multiple types of Advanced Pharmaceutical Intermediates and Active Pharmaceutical ingredients (API) in its diversified product portfolio.
According to an analyst from ICICI Securities said, “Higher RMAT cost, inability to pass on to impact performance: The company’s primary raw materials include ethyl alcohol, dimethylformamide, isopropyl alcohol and toluene. Loss of customer to impede performance – Regulatory related challenges for any plant to hurt performance – Since the company operates in intermediates for pharma API, it has to follow stringent norms as per USFDA and REACH certification. Any irregularities can result in a ban on manufacturing activities and thereby impact the financial performance of the company.”
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