Ami Organics Limited IPO (Ami Organics IPO) Detail

 Dates: September 1, 2021 to September 3, 2021

 Price Band: Rs. 603 to Rs. 610 per share

Minimum Lot: 24 shares

Minimum Application Amount: Rs. 14,640

Repayment of a few loans to the tune of Rs. 140 crores

Funding working capital requirements of Rs. 50 crores in FY22 and Rs. 40 crores in FY23

General corporate purposes

Among the leading manufacturers of certain Pharma intermediates i.e.,Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban.

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

Extensive geographical presence and long-standing relationships with customers.

High entry barriers in the chemicals manufacturing industry.

Consistent financial performance.

Product concentration: A significant portion of revenue is derived from sale of products in certain therapeutic areas and any reduction in demand and availability of alternatives could have an adverse effect.

Customer concentration, absence of long-term contracts: The company is dependent on a limited number of customers for a significant portion of revenue. For FY21, the top five customers contributed 44.43 percent. Further, absence of long-term contractual arrangements with significant customers is a big risk.

Dependence on select group of suppliers and absence of long-term contracts makes them susceptible to raw material price fluctuations.

Ami Organics is subject to stringent quality requirements, environmental, health and safety laws and regular inspections. The company did receive ‘Notice of Inspectional Observations’ from the USFDA on Aug 12, 2016 and Mar 13, 2020 but both these inspections were closed.

Given a working-capital intensive business, insufficient cash flows or inability to borrow could adversely affect the operations. The working capital days have increased to 117 days in FY21 from 71 days in FY19 which means the company is taking longer to convert working capital to revenue.