Ami Organics IPO: Last day to subscribe, grey market premium falls; should you still subscribe?


Ami Organics manufacture and market advanced pharmaceutical intermediates used for manufacturing of APIs and NCEs in select therapeutic areas

Ami Organics’ Rs 570-crore IPO has been subscribed 5.7 times so far on the last day of the bidding. The public issue has received bids for 3.7 crore equity shares against 65.42 lakh shares on offer. In the primary market, the grey market premium in Ami Organics has fallen to Rs 95 from Rs 155, earlier this week, over the issue price. On Friday, Ami Organics shares were trading at Rs 705, a premium of 15.57 per cent from the IPO price of Rs 610, according to the people who deal in unlisted shares of the companies.

Ami Organics manufacture and market advanced pharmaceutical intermediates used for manufacturing of APIs and NCEs in select therapeutic areas such as anti-retroviral, anti-inflammatory, antipsychotic, anti-cancer, anti-Parkinson, antidepressant and anti-coagulant. Analysts say as far as Ami Organics is concerned, the IPO pricing looks moderate while the product portfolio and its market share are attractive aspects. “Chemical sector has emerged as an outperformer. So, we may witness interest from investors owing to the positives,” Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares, told Financial Express Online.

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Due to the recent fiasco in the primary market, Doshi added saying that it’s better to avoid grey market premium as an indicator for decision making in applying IPOs. From the last couple of IPOs, grey market premium has failed up to a large extent as a listing indicator. Some of the Ami Organics’ domestic customers include Laurus Labs, Cadila Healthcare and Cipla. Upon its stock market debut, Ami Organics will join the listed industry peers such as Aarti Industries, Hikal, Valiant Organics, Vinati Organics, Neuland Organics and Atul Ltd.

Ami Organics investors wait for listing

Ami Organics fundamentals seem good with a lower PE as compared to peers. “But technically, the broader market remains extremely overbought & a sharp correction may be due anytime. Investors are advised to remain cautious and wait for listing. If subscribed & allotted, hold for some time for decent returns in the coming months,” Pavitraa Shetty, Co-founder & Trainer, Tips2Trades, told Financial Express Online.

Based on FY21 numbers, Ami Organics IPO is priced at a Price to Earnings of 35.6 times and EV/EBITDA of 25.7 times at the upper price band of the IPO, which is on the higher side, compared to the listed peer group, said an analyst. “The company already has a higher market share of 70-90% in key APIs which will limit growth in near future,” said Yash Gupta, Equity Research Analyst, Angel Broking. Given the expensive valuation, the brokerage firm has assigned a ‘neutral’ rating to it.

Ami Organics primarily deals in anti-depressant in pharma which is a niche high demand segment. It will have a great market in the next decade due to the lifestyle of people, said an analyst. “From the valuation point, management has left enough for the investors to dive in. We feel that AMi Organics IPO will sail through easily,” Rajesh Singla, Founder & CEO, PreIPO consulting firm Planify Consultancy, told Financial Express Online.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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