Ami Organics issue subscribed 1.9 times on day 1

The initial share sale of Ami Organics Ltd was subscribed nearly two times on Wednesday, the first of the three-day offering that closes on 3 September, according to data from stock exchanges.
The overall book, excluding the anchor allotment, was subscribed 1.90 times. As of 5pm, the institutional category was subscribed 1.38 times while the portions reserved for high networth investors and retail investors were subscribed 41% and 2.83 times respectively.
“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”, Angel Broking said in a note to its investors.
Specialty chemicals maker Ami Organics IPO comprises a fresh issue of ₹200 crore and an offer for sale of upto 6.06 million shares by its existing promoters and shareholders.
An OFS consist of upto 7 lakh shares by Parul Chetankumar Vaghasia, upto 1.5 lakhs shares by Girishkumar Limbabhai Chovatia, upto 3.05 million shares by Kiranben Girishbhai Chovatia, upto 1.74 lakh shares by Aruna Jayantkumar Pandya.
The price band is fixed at ₹603-610 a share and on the upper price band it will raise around ₹570 crore.
The proceeds from the issue will be used for repayment of financial facilities of upto ₹140 crore. The firm will also use upto ₹90 crore for funding working capital requirements. As of March 2021, its net debt stood at ₹218.73 crore.
Meanwhile, Vijaya Diagnostic has got a lukewarm response with subscribing 30% on the first day of its issue. Institutional investors subscribed 23% while Retail investors subscribed 46%.
The IPO consists of a pure offer for sale of 35.69 million shares by its existing shareholders and promoters. An OFS comprises upto 5.1 million shares by Dr S Surenranath Reddy,  upto 29.49 million shares by Karakoram Ltd, 1.10 million shares by Kedaara Capital Alternative Investment Fund – Kedaara Capital AIF I. On the upper band price, the company plans to raise ₹1895.14 crore.
“Given a sound financial base and strong brand recall, we believe it is well positioned to grow in adjacent regions. Considering the growing diagnostics industry and company’s well integrated model, we have a positive view on the company. At an upper band of ₹531, the EV/EBITDA comes to 32.1x FY21 EBITDA which is lower than its listed peers despite having highest margins” said Nrmal Bang in a note to its investors.