AMI ORGANICS IPO

IPO Details:

Price Band: 603-610

Cutoff Price: 610

About Company:

AMI is a research and development (“R&D”) driven manufacturer of specialty chemicals with varied end usage, focussed towards the development and manufacturing of advanced for regulated and generic active pharmaceutical ingredients (“APIs”) and New Chemical Entities (“NCE”) and key starting material for agrochemical and fine chemicals, especially from our recent acquisition of the business of Gujarat Organics Limited (“GOL”)(“Acquisition”). As per the F&S Report, AMI is one of the major manufacturers of Pharma Intermediates for certain key APIs, including Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban. The Pharma Intermediates which we manufacture, find application in certain high-growth therapeutic areas including anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant and anti-coagulant, commanding significant market share both in India and globally. They have developed and commercialised over 450 Pharma Intermediates for APIs across 17 key therapeutic areas since inception and NCE, with a strong focus on R&D across select high-growth, high margin therapeutic areas such as anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, anti-depressant and anti-coagulant, for use across the global pharmaceutical market. Pharma Intermediates used for manufacturing of APIs and NCEs portfolio has expanded from over 425 products as of March 31, 2019, to over 450 products as of March 31, 2021. AMI believes that their focus on R&D and continuous process improvement has positioned us as a preferred supplier to their customers.

Competitive Strengths:

1. Strong and diversified product portfolio ably supported by strong R&D and process chemistry skills.

2. Extensive geographical presence and diversified customer base with long-standing relationships.

3. High entry barriers in the chemicals manufacturing industry in which the Company operates.

4. Strong sales and marketing capabilities.

5. Experienced and Dedicated Management Team.

6. Consistent financial performance.

Strategies:

1. Diversification of product portfolio by strengthening R&D capabilities.

2. Augmenting scale through organic and inorganic routes in the current geographic markets and expanding into new geographic markets.

3. Continue to focus on cost efficiency and improving productivity while employing environmentally friendly processes.

4. Diversification of our business by focusing on organic and inorganic growth opportunities.

Financial Performance:

Company's Revenue is increasing, and also Net Profit and EPS are increasing year on year. This is the good sign for the company. With EPS of 17.1, the company's P/E is 35.7.

Objects of the Issue:

The Net Proceeds from the Issue are proposed to be utilised in the following manner:

1. Offer for Sale

2. Funding working capital requirement

3. Repayment/prepayment of certain financial activities

Competitors Comparison:

AMI Organics IPO seems to be undervalued based on the P/E ratio and overvalued based on Price to book value.

Grey Market Premium:

Our view: GMP of the IPO is less. I will avoid this IPO.

Disclaimer: Views are shared for an educational purpose. Please consult your financial advisor or planner before taking any action based on the views or facts shared on this blog.

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