GMP and What Investors Should Expect


Ami Organics Limited had opened its initial public offering (IPO) on September 1. The issue came to a close after three days of trading, as it closed on September 3. The company is now going forward with its listing on the stock exchanges, which is set to take place on September 14, 2021. The company had accredited the successful investors with their shares on September 13. It should be noted that the Ami Organics IPO saw robust participation from investors that left the total subscription at 64.54 times. The public issue had received bids for around 42.22 crore equity shares against the IPO size of 65.42 lakh equity shares, as per the subscription data on the exchanges.

The investors who had subscribed to the issue the most were the non-institutional investors (NIIs). They had subscribed to the issue around 154.81 times over the course of the three-day IPO. Following close behind were the qualified institutional buyers (QIBs) whose subscriptions clocked in at 86.64 times. Then there were the retail individual investors (RIIs) who had subscribed to the issue around 13.36 times over the course of the public issue. The issue had its basis of allotment on September 8, a few days after the trading came to a close.

The grey market premium (GMP) for the issue stood at Rs 150 at the time of writing this article, as per information on IPO Watch. This indicated that the issue was trading at a premium of Rs 753 to Rs 760 on the unlisted grey market.

Speaking on the listing that is going to happen, Yash Gupta, Equity Research Analyst for Angel Broking Ltd said, “Ami Organics Limited expect to get a listing on 14th September 2021 and allotment will be received by the investors in a couple of days. As overall IPO got subscribed 64.5 times and retail portion got subscribed by 13.36 times, so it is expected that one investor out of twelve will get the allotment.”

He then added, “Ami Organics IPO was priced at Price to Earnings of 35.6 times and EV/EBITDA of 25.7 times at the upper price band of the IPO based on FY2021 numbers. Which is on the higher side, compared to the listed peer group. If we look at the current Grey Market Premium is at ₹145 i.e 23 per cent at the upper price band of the IPO. We suggest short term investors to book profit on listing day if they receive the allotment.”

Ami Organics IPO has an issue size of Rs 569.64 crore that consists of both a fresh issue and an offer for sale (OFS). The fresh issue aggregated to around Rs 200 crore and the OFS aggregated up to Rs 369.64 crore with 6,059,600 equity shares. The company had already mobilized around Rs 171 crore from its anchor investors on August 31, 2021, which was a day before the issue had opened. This was achieved at the upper end of the price band which was Rs 610 per equity share. Speaking of which, the company had an IPO price band of Rs 603 to Rs 610 per equity share with a face value of Rs 10 per share.

The object of the offer was to use the proceeds of the public issue to fund the repayment and pre-payment of financial facilities that were availed by the company. The rest is set to go towards funding working capital requirements for the company as well as general corporate purposes. The issue was promoted by Nareshkumar Ramjibhai Patel, Chetankumar Chhaganlal Vaghasia, Shital Nareshbhai Patel and Parul Chetankumar Vaghasia.

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