Experts largely advised holding the stock for long term considering its high growth potential and high entry barriers in the sector.
Sunil Shankar Matkar
September 15, 2021 / 12:44 PM IST
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Specialty chemical company Ami Organics extended gains for the second consecutive session after a strong debut in previous trade. The stock crossed Rs 1,000 mark on September 15, a second day of trade on the bourses, rising 20 percent to hit a record high of Rs 1,121.45 amid strong buying demand, on the BSE.
It was trading at Rs 1,087.35, up by Rs 152.80 or 16.35 percent at 11:27 hours IST. In terms of volumes, cumulatively it traded with 44.21 lakh equity shares on the BSE and NSE.
Ami Organics had a strong debut in previous session as the stock opened 48 percent higher at Rs 902 and went up to Rs 967.25 before closing the first day trade at Rs 934.55, up 53.2 percent over issue price of Rs 610 per share.
Its market capitalisation also crossed Rs 4,000 mark, at Rs 4,086.23 crore, making investors wealthier in just two days.
Investor, who had invested Rs 14,640 per lot of 24 equity shares, could be sitting on a cash profit of over Rs 12,000 as the value of those 24 shares stood at Rs 26,914.8 at a price of Rs 1,121.45 per share.
Experts largely advised holding the stock for long term considering its high growth potential and high entry barriers in the sector.
“We advise allotted investors to hold on to the stock considering long term play as the market always rewards a player who has the high growth potential,” said Prashanth Tapse, VP Research at Mehta Equities.
He further said, “Being in high-growth high-margin therapeutic segment and promising outlook in light of the “China Plus One” strategy, Ami Organics is well placed to tap the sectoral growth with low competition and high entry barriers due to complex business nature.”
Gaurav Garg, Head of Research at CapitalVia Global Research also advised that investors can hold the stock for long term. “The company has been consistently growing revenue from operations and net profit after tax from FY19 to FY21 and around 50 percent of revenue comes from exports,” he reasoned.
Ami Organics is one of the major manufacturers of pharma intermediates for certain key active pharmaceutical ingredients (APIs), including Dolutegravir, Trazodone, Entacapone, Nintedanib, and Rivaroxaban. Further, Ami organics has developed and commercialized over 450 pharma intermediates for APIs across 17 key therapeutic areas.
Over the years, the company’s focus on research & development (R&D) and continuous process improvement has positioned them as a preferred supplier to the customers. The strong traction in the pharma API business and focus on R&D and launching on new molecules will drive Ami organics growth going forward, said Arijit Malakar, Head of Research (Retail) at Ashika Stock Broking.
He further said the government’s focus on making India self-reliant by incentivizing the manufacturing through a production-linked incentive (PLI) scheme and China’s one policy is the long-term growth driver for the Pharma API sector and that will augur well for Ami organics going ahead.
Astha Jain, Senior Research Analyst at Hem Securities advised partial profit booking and to hold the remaining allotted shares as with company’s plans to invest in development of products used in manufacture of APIs being used in formulations whose patents are expiring, increase in demand for the pharma intermediates for such APIs can be seen. “Additionally, recent acquisition of Gujarat Organics’ business will also be growth driver of company going forward.”
Ami Organics recently completed the acquisition of two additional manufacturing facilities operated by Gujarat Organics which has added preservatives (parabens and parabens formulations which have end usage in cosmetics, animal food and personal care industries) and other specialty chemicals.
“The acquisition is in line with its inorganic growth strategy of foraying further into the specialty chemicals sector and it will enable company to significantly diversify its existing product portfolio, with an objective of attaining inorganic expansion of company’s business,” Astha Jain said.
Ami Organics raised Rs 570 crore through its public issue which was comprised a fresh issue of Rs 200 crore and an offer for sale of Rs 370 crore by selling shareholders. The issue was subscribed 64.54 times during September 1-3.
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