Ami Organics IPO opens today: Anil Singhvi suggests to apply for long-term gains - check details here

As the initial public offering of Ami Organics opens today for subscription, Zee Business Managing Editor and the Market Guru Anil Singhvi in his preview suggests to apply only for the long-term. He says, the market witnessed correction during listing in the last few issues despite being oversubscribed.

Singhvi says, “Issues failed to show bumper listings despite being oversubscribed, while those who didn’t get subscribed much had the good listing.” And, hence the market guru suggests to keep a long-term view as the September series could be a little volatile too.

Positives

The managing editor says, the company so far had an impressive growth in the last 5-10 years in terms of both revenue and profit, the company’s size is small and the growth in such companies is higher and huge. 

Singhvi adds, Ami Organics has a debt of around Rs 140 crore, which will be repaid through this IPO proceeds and will eventually improve their balance sheet. 

Similarly, the valuations are reasonable neither expensive nor cheap, says the market guru, however, believes that the valuations could have been a little lower, and keeps valuations from positive to neutral

Negatives 

The market guru says, it’s difficult to estimate the growth of the company being its small size, and the market capitalisation company would garner is Rs 2200 crore as per the higher band of issue price at Rs 610 per share.

He adds, the listing and response is difficult to estimate, however, believes that this IPO would receive a good response

Another negative, Singhvi says, the company is not utilising its capacity fully, though it increased its capacity in the last 2-3 years despite that it has only been able to reach 63 per cent capacity.

Ami Organics has also made an acquisition in March, the impact of the same is yet to be seen and will mostly be visible in this financial year-end, says the managing editor adding further that the company needs to increase its Capex to grow on a higher base and need to work on its full capacity.