After IPOs that opened in August saw subdued listing, there must be nervousness among those who been allotted the recently opened public issue of Ami Organics and Vijaya Diagnostics. Though, experts in the domain expect the momentum in the IPO market to have improved, here we provide experts take on each of these issues individually.
This IPO garnered a good response of 64.5 times, with retail portion being subscribed over 13 times. As of September 8, the scrip commanded a good Grey market premium of Rs. 150.
A number of positives are playing out for the scrip such as reasonable pricing, strong standing in the critical API space and higher export capabilities. Also, the company received a good subscription response during the IPO period.
The company's business line enables it stand out with a good RoCE as well as RoE for the fiscal year 2021. Further its future plans of reducing its debt as well as acquisitions will only bolster its topline in the future course. Hence it can be held on for good future gains as well.
"China plus one strategy" and "Make for the World strategy"- Make it a good long term bet
China plus one strategy has also uplifted the sentiment for specialty chemicals company in India owing to robust earnings growth anticipation for the upcoming years.
Also, the company is seen to benefit from the ongoing India's mission of "Make for the World strategy" that will provide a push to the county in emerging as a future manufacturing hub for the specialty chemicals industry, wherein Ami Organics is well placed to tap the opportunity.
Listing price: For Ami Organics, given its strong continuing GMP of between Rs. 150- Rs. 175, we may see Ami listing with a 25% premium. So, we can see it to list at somewhere around Rs. 610+ 150 i.e. Rs. 760 per share.
The IPO issue which opened between managed to sail through despite tepid response was mainly due to QIB investor subscription. Retail subscription was at 0.88 times. The company's financial performance has been good over the years, showing consistent improvement.
Revenues, net profit are all good and RoCE pre cash is at a high 42% for FY 2021. Exceptional performance has been recorded in Q1Fy22 but that can be due to Covid situation. Issue price for the offering has been decided at Rs. 531
IPO offering was at a P/E of 64 times its earning for the fiscal 2021. So, valuations wise it is seen to be higher than its peers.
In comparison with peers including Lal Pathlabs, SRL, Metropolis, Thyrocare, it is a smaller entity with presence in just 2 states Telangana and Andhra, but with a considerable share in those markets. The company's margin paints a healthy picture as the company operates in both radiology and pathology segments and further it is seen to expand. The other positives of the company include superior balance sheet, cash generation and decent return ratios.
Expectations around listing price: Experts believe listing price for Vijaya Diagnostics cannot be determined with exactness and it can go either way. Nonetheless, even if it makes a weak listing, one can still hold the scrip owing to its healthy fundamentals.
As per ipowatch.in, the scrip commanded a GMP of just Rs. 5 as on September 10 which earlier inched up to Rs. 35, indicating yet again probability of weak listing. So, the tepid GMP also signals at a par listing for the Vijaya Diagnostic IPO.
The opinion in respect of possible listing gains for the IPO are just taken from what experts said and is no affirmation on the suggested listing.