The company 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, research analyst, Motilal Oswal Financial Services Ltd. Poddar thinks that the issue is reasonably valued at 41.2 times FY21 price to earnings on post issue basis, while it enjoys higher growth.
“We believe that the market would like to give premium valuation to such niche stories. 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," she said.
Ami Organics Ltd is focused on manufacturing of advanced pharma intermediates (PI) for regulated/generic APIs and new chemical entities (NCE) and key starting material for agrochemical and fine chemicals.
It has a portfolio of over 450 PI (88% revenue share in FY21) across 17 therapeutic areas. It is one of the major manufacturers of PIs like Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban of which first two contributed 44% of FY21 revenues.
Over FY19-21, revenue, ebitda and net profit grew at 20%, 22.2 38% and 52% CAGR, while ebitda margins expanded from 17.6% to 23.5%.
Yash Gupta, analyst, Angel Broking Ltd, feels valuation of the issue was expensive. “Based on FY2021 numbers, the 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. Company already has a higher market share of 70%-90% in key API’s which will limit growth in near future, Gupta said.
Few concerns flagged by Angel Broking are that some of the API companies already have a market share of 70-90%, and it reduces scope of increasing market share in the near future. Also the company has recently acquire two new manufacturing units, both the facility having low EBITDA margins and higher working capital requirement, this will create pressure on companies financials.
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