Started in 2004, Ami Organics Limited is Surat Gujarat based research and development ('R&D') driven pharmaceutical intermediate manufacturing company in India involved in the development of a series of advance pharmaceutical intermediates for the generic and regulated active pharmaceutical ingredients ('APIs') and new chemical entity ('NCE'), the synthesis of which is the first step in the process of drug development. Pharmaceutical intermediates are the chemical compounds that are the building blocks used in the production of APIs and are produced during the process of manufacturing or synthesis of APIs and further undergoes molecular changes and processing before becoming an API, which are then used in a finished pharmaceutical product. Since the inception, they have developed and manufactured approximately two hundred and fifty (250) pharmaceutical intermediates for APIs such as Apixaban, Alogliptin, Dolutegravir etc. The strategic and early investments in research and development ('R&D') and manufacturing infrastructure have enabled them to become a supplier of pharmaceutical intermediates for APIs in more than seventeen (17) therapeutic areas to multi-national pharmaceutical formulation companies which cater to the large and fast-growing markets of Europe, China, Japan, Israel, UK and the USA. Company's product portfolio includes pharmaceutical intermediates focussed on therapeutic areas which require the intervention of specialists and super-specialists. In terms of sales, the pharmaceutical intermediates used in the synthesis of Trazadone, Dolutadravir and Quetiapine (APIs) were the top three (3) intermediates responsible for 29%, 21% and 10% of the total revenue from operations for the FY18. They supply their products to more than one hundred and eighty (180) customers directly and through the network of distributors in the overseas markets. Some of the key customers include Organike S.R.L.A. Socio Unico, Fermion Oy, Glenmark Pharmaceuticals Ltd., A.R.Z. Chemicals International Trade Ltd., Magle Chamoswed AB and Natco Pharma Limited. The Company exports its products to more than twenty (20) countries and has a consolidated customer base of around one hundred and eighty (180) customers worldwide. The manufacturing unit is located at Surat, Gujarat spread over an aggregate land area of 11,229 sq. mtrs. and company has recently expanded its installed capacity from 150 MT to 600 MT. The manufacturing unit is equipped with machinery and equipment including: (i) a Zero Liquid Discharge based effluent plant; (ii) a Soil Biological Treatment System ('SBTSystem') based on bioconversion process; (iii) a RO plant with a pre-treatment section; and (iv) a four-effect, forced circulation type Multiple Effect Evaporator ('MEE'). In terms of the R&D spent, company has incurred Rs 27.50 million, Rs 31.11 million and Rs 20.00 million towards the R&D activities during the Fiscal Years 2018, 2017 and 2016, or 1.46%, 1.65% and 1.06% of the total revenue from operations in such periods, respectively. Company has also made an investment in the Joint Venture, Ami Onco-Theranostics, LLC, a Delaware, USA entity ('AOL'), which is engaged in the development of new photo sensitizing compounds used to identify and treat cancer through patent and patent applications and additional know-how regarding the same. AOL has till now developed three products out of which one is at trail phase-2 and two products is at phase-3 trail (last) and has also filed three (3) process patents across various jurisdictions. As per financial performance, ICFL has posted total income/net profits of Rs. 396.91 cr. / Rs. 112.13 cr. (FY14), Rs. 528.06 cr. / Rs. 149.04 cr. (FY15), Rs. 644.05 cr. / Rs. 191.64 cr. (FY16) and Rs. 719.92 cr. / Rs. 210.80 cr. (FY17). For upto Q3 of FY18, it has reported net profit of Rs. 164.08 cr. on total revenue of Rs. 585.95 cr. So company has posted consistent growth over last couple of years. ICFL has posted an average EPS of Rs. 25.53 and average RoNW of 11.62% for last three fiscals. Issue is priced at a P/BV of 2.17 as per NAV of 263.96 on 31.12.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 24. As per RHP, industry average P/E ratio is 28.66 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's growth is consistent and very good, RoNW is 11.62% for last three fiscals and issue is priced at P/E of around 24 as per latest earnings. Company is an NBFC with principal lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Last two business segments (Vehicle Finance & Housing Finance) are started in recent past and it may give further boost to company's growth, but increasing bond yields and FD rates may put pressure on margins. So we give "SUBSCRIBE FOR LONG TERM" rating to this IPO.
✍️ Post a Comment