Diversified Product Portfolio Supported by R&D and Process Chemistry
The company has developed and commercialised over 450 Pharma intermediates which
includes Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban and NCEs
across 17 therapeutic areas, such as anti-retroviral, anti-inflammatory, anti-psychotic,
anti-cancer, anti-Parkinson, anti-depressant, and anti-coagulant. Following table
shows the market share of the company’s products:
Source:RHP
The company, as a result of its R&D capabilities, have been able to file 11 process innovation patent applications in India out of these 3 were pending for which applications were made in March 2021. The R&D centre at Sachin has been approved by DSIR and has a team of 66 people across various sections including R&D, regulatory affairs, quality control, quality assurance and analytical development laboratory.
Diversity Across Geographies and Customers
Ami Organics caters to domestic as well as multi-national pharma companies in Europe,
China, Japan, Israel, UK, Latin America, and the USA. In FY20 and FY21, the revenue
from exports was ~46% and ~52%, respectively. The company supplies products across
25 countries and enjoys long standing relationships with various domestic and international
companies. Some of its domestic customers include Laurus Labs and Cipla and export
customers includes Organike s.r.l.a Socio Unico, Fermion Oy, Fabbrica Italiana Sintetici
S.p.A, Chori Co. Ltd., Medichem S.A., and Midas Pharma GmbH. The top ten customers
as of FY21 have been engaged with the company for over 3 years and contributed to
~61% to the topline.
Particulars | % Exports | ||
---|---|---|---|
FY19 | FY20 | FY21 | |
Pharma Intermediates | 56.09% | 46.52% | 53.47% |
Speciality Chemicals | 100% | 100% | 86.30% |
Others | - | - | - |
Total Rev. from Operations | 49.61% | 45.89% | 51.57% |
Consistent Financial Performance
On a consolidated basis, the company’s revenue has grown at a CAGR of 17.3%
over FY16 – FY21. Its operating margin has also witnessed consistent improvement;
in FY16, EBITDA margin stood at 11.8% and in FY21, the margin jumped to 23.5% (17.1%
in FY20). In absolute terms, the company’s bottom line has grown at a CAGR
of 33.7% and margins has also witnessed an improvement from 8.2% in FY16 to 15.9%
in FY21. The company’s ROCE has improved in last three years, as on March
2021, ROCE stood at 25.9% (21.5% in FY20). ROE as of March 2021 was 32.3% (24.6%
in FY20). As of March 2021, the total borrowings stood at Rs. 136.64 crores and
the company propose to use Rs. 140 crores from fresh issue to repay certain indebtedness.
The company intends to reduce its debt levels by Rs. 140 crores from the proposed
fresh issue.
Rs. in Crores | Net Sales | EBITDA | EBITDAM | PAT | EPS | ROE |
---|---|---|---|---|---|---|
FY19 | 238.5 | 42.1 | 17.6% | 23.3 | 22.2 | 28.3% |
FY20 | 239.6 | 41.0 | 17.1% | 27.5 | 26.2 | 24.6% |
FY21 | 340.6 | 80.2 | 23.5% | 54.0 | 17.1 | 32.3% |
Source: AceEquity
Diversification of Business by Focussing on Organic and Inorganic Growth Opportunities
To supplement its organic expansion, the company plans to pursue strategic acquisitions
and partnerships. The company's management believes that by pursuing strategic
acquisitions, such as the recently completed GOL acquisition, it will improve its
capabilities and technical expertise, as well as form partnerships to strengthen
product infrastructure and manufacturing capabilities in the specialty chemicals
sector. The management may pursue brownfield expansion opportunities on portion
of the 15,830 sq. mtr of land at the Jhagadia site.
Peer comparison
Particulars (Rs. in Crores) FY21 | Revenue CAGR (FY19 - FY21) | OPM (%) | PAT (%) | RoE (%) | RoCE (%) | EPS | PE (x) |
---|---|---|---|---|---|---|---|
Ami Organics | 19.50% | 23.53% | 15.85% | 32.35% | 25.80% | 17.14 | 35.59 |
Aarti Industries | 3.98% | 21.78% | 11.62% | 14.94% | 13.56% | 15.02 | 62.12 |
Hikal | 4.03% | 18.77% | 7.74% | 14.26% | 16.14% | 10.80 | 59.81 |
Valiant Organics | -2.63% | 27.39% | 19.96% | 22.83% | 27.94% | 42.13 | 30.86 |
Vinati Organics | -8.02% | 37.02% | 28.23% | 17.45% | 23.80% | 26.20 | 68.36 |
Neuland Labs | 18.53% | 15.70% | 8.61% | 10.25% | 12.69% | 62.99 | 26.59 |
Atul | -3.87% | 24.60% | 17.57% | 17.14% | 24.69% | 221.54 | 41.32 |
Incorporated in January 2004, Ami Organics Ltd. is engaged in the development and manufacturing of pharma intermediates for active pharmaceuticals ingredients (APIs) and key starting material for agrochemical and fine chemicals, especially from the recently acquired Gujarat Organics Ltd (GOL). The company acquired two plants from GOL which has added preservatives (parabens and parabens formulations – end use in cosmetics, animal food and personal care industries) and other speciality chemicals in the company’s portfolio. Ami organics is one of the major manufacturers of pharma intermediates for certain key APIs such as Dolutegravir, Trazodone, Entacapone, Apixaban, Nintedanib, etc.
Since inception, the company has developed and commercialised over 450 pharma intermediates across 17 therapeutic areas which are supplied to over 150 customers in India and 25 countries overseas. Currently, the company has 8 process patent applications and 3 additional pending process patent applications, for which applications were made recently, in March 2021. The company also supplies pharma intermediates to various multi-national companies in Europe, China, Japan, Israel, UK, Latin America, and the USA. In FY21, exports contributed 51.6% to the topline vs. 45.9% in FY20. Currently, the company has three manufacturing units located in Gujarat. Sachin facility has an installed capacity of 2,460 MTPA while facilities at Ankleshwar and Jhagadia has installed capacity of 1,200 MTPA and 2,400 MTPA, respectively.
Particulars (Rs. in Crores) | FY19 | FY20 | FY21 | |||
---|---|---|---|---|---|---|
Revenue | % | Revenue | % | Revenue | % | |
Pharma Intermediates | 203.39 | 85.3% | 217.88 | 90.9% | 301.14 | 88.4% |
Speciality Chemicals | 2.22 | 0.9% | 7.43 | 3.1% | 16.59 | 4.9% |
Others | 32.91 | 13.8% | 14.33 | 6.0% | 22.88 | 6.7% |
Total | 238.52 | 100.0% | 239.64 | 100.0% | 340.61 | 100.0% |
Source: RHP
Outlook and Valuation
Ami organics has large global market share (refer table in key strengths and strategies
section) in some of the key products/pharma intermediates such as Dolutegravir,
Trazodone, Entacapone, Nintedanib, Rivaroxaban, etc. and these products are expected
to see gradual volume growth over next five years. The company enjoys long standing
relations with its key customers; it supplies products to over 150 customers, out
of which, thirteen have been engaged with the company from a decade now and fifty
of them have been engaged for five years. On financial front, the company has performed
well over the years and returns ratios has also seen an improvement. At an upper
price band of Rs. 610, the issue is priced at 35.6x of FY21 earnings. We recommend
to “Subscribe” the issue.
Use of Proceeds:
The total issue size is Rs. 569.6 crores, of which Rs. 200 crores is fresh issue
and balance is OFS. The company will utilise the net proceeds from the fresh issue
by repaying certain financial facilities, funding working capital requirements,
and for general corporate purposes. Details are as follow:
Objects | Amount (Rs. in Crores) |
---|---|
Repayment/Prepayment of Certain Financial Facilities | 140 |
Funding Working Capital Requirements | 90 |
General Corporate Purpose | - |
The company has undertaken a Pre-IPO Placement at a price of Rs. 603 per share, aggregating to Rs. 100 crores. Details are as follows:
Name of the Entity | Amount (Rs. in Crores) |
---|---|
Plutus Wealth Management LLP | 30 |
Malabar India Fund Limited | 44 |
IIFL Special Opportunities Fund – Series 7 | 20 |
Malabar Value Fund | 6 |
Total | 100 |
Book running lead managers:
Intensive Fiscal Services Private Limited, Ambit Private Limited, and Axis Capital
Limited.
Management:
Nareshkumar Ramjibhai Patel (Promoter, Executive Chairman and Managing Director),
Chetankumar Chhaganlal Vaghasia (Promoter and Whole-time Director), Virendra Nath
Mishra (Whole-time Director), and Abhishek Haribhai Patel (Chief Financial Officer).
Year End March (Rs. in Crores) | 2018 | 2019 | 2020 | 2021 |
---|---|---|---|---|
Net Sales | 188.22 | 238.51 | 239.64 | 340.61 |
Growth % | 26.72% | 26.72% | 0.47% | 42.13% |
Expenditure | ||||
Material Cost | 112.95 | 148.43 | 128.91 | 179.50 |
Employee Cost | 9.89 | 11.75 | 17.81 | 21.01 |
Other Expenses | 34.86 | 36.25 | 51.90 | 59.95 |
EBITDA | 30.52 | 42.08 | 41.02 | 80.15 |
EBITDA Margin | 16.21% | 17.64% | 17.12% | 23.53% |
Depreciation & Amortization | 1.91 | 2.60 | 3.52 | 4.19 |
EBIT | 28.62 | 39.48 | 37.50 | 75.96 |
EBIT Margin % | 15.20% | 16.55% | 15.65% | 22.30% |
Other Income | 2.96 | 0.38 | 2.84 | 1.38 |
Interest & Finance Charges | 3.23 | 4.75 | 5.59 | 5.62 |
Profit Before Tax - Before Exceptional | 28.35 | 35.11 | 34.75 | 71.73 |
Profit Before Tax | 28.35 | 35.11 | 34.75 | 71.73 |
Tax Expense | 9.85 | 11.82 | 7.28 | 17.73 |
Effective Tax rate | 34.75% | 33.65% | 20.96% | 24.71% |
Net Profit | 18.50 | 23.30 | 27.47 | 54.00 |
Net Profit Margin | 9.83% | 9.77% | 11.46% | 15.85% |
Consolidated Net Profit | 18.50 | 23.30 | 27.47 | 54.00 |
Net Profit Margin after MI | 9.83% | 9.77% | 11.46% | 15.85% |