Ami organics Limited | IPO Note
August 31, 2021
1
Ami Organics Limited
August 31, 2021
Ami organics was incorporated in 2004, Company is one of the leading Research
& Development driven company. Ami organics deal in different types of
Advanced Pharmaceutical Intermediates and Active Pharmaceutical Ingredients
(API) and materials for agrochemical and fine chemicals. Ami Organics has 3
manufacturing facilities situated in Gujarat with an aggregate installed capacity
of 6060 Mtpa.
Positives:
(a)
Ami Organics is having high market share in key APIs like
Dolutegravir, Nintedanib, and Trazodone. (b). Company has a diversified
business, company has developed and commercialized 450 pharma intermediates
for API across 17 Key therapeutic area. (c). Companies has recently completed an
acquisition of 2 additional manufacturing capacity from GOL. (d). More than half
of revenue comes from Export, Ami organics export to Italy, Finland, China and
other countries.
Investment concerns: (a) In some of the API company already having market
share of 70-90%, it reduces scope of increasing market share in near future. (b)
Some of the companies key product like – Nintedanib, got covid related
benefit in FY2021, which we don’t expect to continue in future. (c) Company has
recently acquire 2 new manufacturing units, both the facility having low EBITDA
margins and higher working capital requirement, this will create pressure on
companies financials.
Outlook & Valuation: 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. Given the expensive valuation, we are assigning a
NEUTRAL recommendation to the Ami Organics Limited IPO.
Key Financials
Y/E March (₹ cr)
FY19
FY20
FY21
Net Sales
238.5
239.6
340.6
% chg
-
0.5
42.2
Net Profit
23.5
27.6
54.4
% chg
-
17.5
96.9
EBITDA (%)
17.8
18.3
24.0
EPS (₹)
7.4
8.7
17.14
P/E (x)
82.4
70.0
35.6
P/BV (x)
24.6
18.1
12.1
RONW (%)
29%
25%
33%
ROCE (%)
37%
29%
31%
EV/EBITDA
48.1
46.6
25.7
EV/Sales
8.6
8.5
6.2
Source: Company, Angel Research
NEUTRAL
Issue Open: September 1, 2021
Issue Close: September 3, 2021
Issue Details
Face Value: ₹10
Present Eq. Paid up Capital: ₹31.5 Cr
Issue Size: ₹570 Cr
Fresh Issue: ₹200 Cr.
Offer for Sale: ₹370 Cr
Price Band: ₹603-610
Lot Size: 24 shares and in multiple thereafter
Expected Listing : 14th September 2021
Post-issue mkt. cap: * ₹2,199 Cr - ** ₹2,223 Cr
Promoters holding Pre-Issue: 47.22%
Promoters holding Post-Issue: 41.1%
*Calculated on lower price band
** Calculated on upper price band
Book
Building
QIBs
50% of issue
Non-Institutional
15% of issue
Retail
35% of issue
Post issue Shareholding pattern
Promoters
Others
41.1%
58.9%
Ami organics Limited | IPO Note
August 31, 2021
2
Company background
Ami Organics Limited was incorporated on January 3, 2004. The company is one of the
leading research and development driven manufacturers of specialty chemicals with
varied end usage, focussed towards the development and manufacturing of advanced
pharmaceutical intermediates for regulated and generic active pharmaceutical ingredients
(APIs) and New Chemical Entities and key starting material for agrochemical and fine
chemicals, especially from their recent acquisition of the business of Gujarat Organics
Ltd.
Company supply their products to more than 150 customers, which including
international customers and company supply to more than 25 countries. Currently Ami
Organics has 8 process patent applications and 3 additional pending process patent
applications for which applications were made recently, in March 2021.
Company have developed and commercialised over 450 Pharma Intermediates
for APIs across 17 key therapeutic areas since inception. Ami Organics has 3
manufacturing units located at Sachin, Ankleshwar and Jhagadia in Gujarat with overall
installed capacity of 6,060 MTPA. Further, the Jhagadia Facility has 15,830 square metre
free land available for future expansion
Issue details
The issue comprises of offer for sale of upto ₹370 crore (60.59 lakhs share) and
Fresh issue of 200 crores with the price band of ₹603-610.
Pre & Post Share Holding
(Pre-issue)
(Post-issue)
Particular
No of shares
%
No of shares
%
Promoter
1,56,58,710
47.2%
1,49,58,710
41.1%
Public
1,74,99,664
52.8%
2,14,78,352
58.9%
Total
3,31,58,374
100%
3,64,37,062
100%
Source: Company, Angel Research
Objectives of the Offer
Repayment of current borrowing. (140 Cr)
Funding incremental working capital requirements of the Company. (90 Cr)
To meet general corporate purposes.
Ami organics Limited | IPO Note
August 31, 2021
3
Ami Organics 88% of revenue comes from Pharma
intermediates out of which 53% comes from export and 5% of
revenue comes from Speciality chemicals out of which 86%
comes from export market.
Revenue Breakup
Product Category
FY 2021
% of Total
FY 2020
% of Total
FY 2019
% of Total
Pharma Intermediates
301
88%
218
91%
203
85%
Speciality Chemicals
17
5%
7
3%
2
1%
Others
23
7%
14
6%
33
14%
Total
341
100%
240
100%
239
100%
Source: Company, Angel Research
Key Management Personnel
Nareshkumar Ramjibhai Patel is the Promoter, Executive Chairman and
Managing Director of the company and has been associated with the company
since its incorporation. He has 18 years of experience in the specialty chemicals
manufacturing sector.
Chetankumar Chhaganlal Vaghasia is the Promoter, Whole-time Director of
the company and has been associated with the company since its incorporation.
He has 19 years of experience in the specialty chemicals manufacturing sector.
Virendra Nath Mishra is the Whole-time Director of the company. He has been
associated with the company since 2005. He has over 25 years of experience in
the research and operations management specialty chemicals manufacturing
sector.
Girikrishna Suryakant Maniar is the Non-executive, Independent Director of
the company. He was appointed as an Independent Director of the company on
April 23, 2018.
Abhishek Haribhai Patel is the Chief Financial Officer of the company and was
appointed by the company on June 1, 2018.
Ekta Kumari Srivastava is the Company Secretary and Compliance Officer of
the company and was appointed by the company on February 22, 2021.
Ami organics Limited | IPO Note
August 31, 2021
4
Consolidated Profit & Loss Account
Y/E March (₹ cr)
FY19
FY20
FY21
Total operating income
238.5
239.6
340.6
% chg
-
0.5
42.2
Total Expenditure
196.3
198.6
260.3
Raw Material cost
148.4
128.9
179.4
Employee Benefit Expense
11.7
17.8
21.0
Other Expenses
36.2
51.9
59.9
EBITDA
42.2
41.0
80.3
% chg
-
(2.8)
95.9
(% of Net Sales)
17.7
17.1
23.6
Depreciation& Amortization
2.6
3.5
4.1
EBIT
39.6
37.5
76.2
% chg
-
(5.3)
103.2
(% of Net Sales)
16.6
15.7
22.4
Interest & other Charges
4.7
5.5
5.6
Other Income
0.3
2.8
1.4
(% of Sales)
0.1
1.2
0.4
Recurring PBT
35.2
34.8
72.0
(% of Net Sales)
14.8
14.5
21.1
Tax
11.7
7.2
17.6
PAT (reported)
23.5
27.6
54.4
% chg
-
17.5
96.9
(% of Net Sales)
9.9
11.5
16.0
EPS (as stated)
7.40
8.72
17.14
% chg
-
17.8
96.6
Source: Company, Angel Research
Ami organics Limited | IPO Note
August 31, 2021
5
Consolidated Cash Flow Statement
Y/E March (₹ cr)
FY19
FY20
FY21
Profit before tax
35.1
34.7
71.7
Depreciation
2.6
3.5
4.1
Change in Working Capital
(13.1)
(9.6)
(39.2)
Interest Expense
4.5
5.3
5.1
Direct Tax Paid
(13.7)
(8.5)
(14.1)
Others
4.9
7.5
4.1
Cash Flow from Operations
14.9
26.9
27.2
(Inc.)/ Dec. in Fixed Assets
(21.3)
(21.4)
(104.0)
Investment
0.2
(2.7)
3.4
Interest received
0.1
0.1
0.2
Cash Flow from Investing
(21.1)
(24.0)
(100.4)
Procees/Repayment of Borrowing
10.0
5.5
77.2
Dividend paid on equity shares
(4.4)
(5.3)
(5.1)
Cash Flow from Financing
5.6
0.2
72.1
Inc./(Dec.) in Cash
(0.4)
3.3
(1.1)
Opening Cash balances
0.9
0.5
3.8
Closing Cash balances
0.5
3.8
2.7
Source: Company, Angel Research
Consolidated Balance Sheet
Y/E March (₹ cr)
FY19
FY20
FY21
SOURCES OF FUNDS
Equity Share Capital
10.5
10.5
31.5
Other equity
71.7
101.3
135.4
Shareholders Funds
82.2
111.8
166.9
Total Loans
24
23
76
Other liabilities
1.1
2.4
4.3
Total Liabilities
108
137
247
APPLICATION OF FUNDS
Net Block
81
97
187
Current Assets
124
121
216
Sundry Debtors
76
56
121
Inventories
38.6
52.3
60.3
Cash & Bank Balance
0
4
3
Other Assets
9
8
32
Current liabilities
105
94
166
Net Current Assets
19
26
50
Other Non Current Asset
8
14
10
Total Assets
107
137
247
Source: Company, Angel Research
Ami organics Limited | IPO Note
August 31, 2021
6
Key Ratio
Y/E March
FY19
FY20
FY21
Valuation Ratio (x)
P/E (on FDEPS)
82.4
70.0
35.6
P/CEPS
71.7
64.0
34.5
P/BV
24.6
18.1
12.1
EV/Sales
8.6
8.5
6.2
EV/EBITDA
48.1
46.6
25.7
Per Share Data (Rs)
EPS (fully diluted )
7.40
8.72
17.14
Cash EPS
8.5
9.5
17.7
Book Value
24.8
33.7
50.3
Number of share
3.32
3.32
3.32
Returns (%)
RONW
28.6%
24.7%
32.6%
ROCE
37.1%
29.4%
31.4%
Turnover ratios (x)
Asset Turnover (net)
3.0
2.8
1.8
Receivables (days)
116.3
85.9
129.2
Inventory Days
156.4
172.4
136.5
Payables (days)
168.0
145.5
171.7
Working capital cycle (days)
104.7
112.9
94.1
Source: Company, Angel Research
Ami organics Limited | IPO Note
August 31, 2021
7
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and
Portfolio Manager and investment advisor with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking
Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration
number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for
accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed
public offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.
