Amy Organics lists at a 49% premium to the issue price

During its share sale, the issue price ₹569.64 cr was subscribed 64.54 times.

Sneha Poddar, Research Analyst, Motilal Oswal Financial Services Ltd. said, “The company is well positioned to tap the opportunity in the rapidly growing specialty chemical market by expanding its strong R&D and product portfolio. Poddar thinks the fair value of the issue is 41.2. times compared to FY21 price on a post-issue basis, while it enjoys high growth.

“We believe that the market would like to give premium valuations to such niche stories. We like Amy Organics given its wide product portfolio in PI, diversification efforts in the other specialty chemical space, strong customer relationships across geographies, and strong financial position,” she said.

Amy Organics Ltd. is focused on manufacturing of Regulated/Generic APIs and Advanced Pharma Intermediates (PIs) for New Chemical Entities (NCEs) and key starting materials for agrochemicals and fine chemicals.

It has a portfolio of over 450 PIs (88% revenue share in FY21) in 17 therapeutic areas. It is one of the leading manufacturers of PIs such as Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban, the first two of which contributed 44% to FY21 revenue.

In FY19-21, Revenue, Ebitda and Net Profit grew at 20%, 22.2 38% and 52% CAGR, while Ebitda margin increased from 17.6% to 23.5%.

Yash Gupta, Analyst at Angel Broking Ltd, believes the valuation of the issue was costly. “Based on FY21 data, the IPO is priced at 35.6 times earnings and EV/EBITDA of 25.7 times over the upper price band of the IPO, which is on the higher side as compared to the listed peer group. Gupta said the company already has a high market share of 70%-90% in key APIs, which will limit growth in the near future.

Some of Angel Broking’s concerns are that some API companies already have a market share of 70-90%, and this reduces the scope for increasing market share in the near future. Also the company has recently acquired two new manufacturing units, both the facility having low EBITDA margin and high working capital requirement, this will put pressure on the financial position of the companies.