Grey market signals decent listing for Ami Organics and flat for Vijaya Diagnostic Centre

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After a little dull second-half August activity in the primary markets is slowly picking up. The first week of September will see two IPOs (initial public offerings) namely Vijaya Diagnostic Centre and Ami Organics that will cumulatively raise Rs 2,464.68 crore between September 1 and September 3.

Vijaya Diagnostic Centre plans to raise Rs 1,895.04 crore through its public issue. The price band for the offering is fixed at Rs 522-531 per share having a face value of Rs 1 per share. Investors can bid for a minimum of 28 equity shares and in multiples, thereafter, translating to a minimum bidding amount of Rs 14,868 at the higher end of the price band. A retail investor can at max apply for 13 lots or 364 shares for Rs 1,93,284.

The Rs 1,895.04 crore issue is entirely an OFS (offer for sale) of 35.6 million shares by promoter Dr S Surendranath Reddy. Investor Karakoram and Kedaara Capital Alternative Investment Fund – Kedaara Capital AIF 1.

In the grey market shares of Vijaya Diagnostic Centre is quoting at a premium of Rs 10 or 1.88% over its upper price band of Rs 531. Over the past couple of days the premium has come down from Rs 40 to Rs 10.

“On the upper band of Rs 531, the asking P/E (price to earnings) comes at around 64x which seems to be on higher side, also the issue is purely OFS and recent fiasco in primary markets have tumbled the sentiments of investors so it would be keen to watch for the subscription rush,” said Abhay Doshi of Unlisted Arena.

On the other hand, specialty chemical manufacturer Ami Organics will be raising Rs 569.64 crore through its IPO. The issue comprises fresh issuance of equity shares of Rs 200 crore, and an offer for sale of up to 60,59,600 equity shares totalling Rs 369.64 crore by promoters existing shareholders. Net proceeds from the fresh issues towards repayment of certain debt, funding working capital requirements and general corporate purposes.

The price band of the issue is fixed at Rs 603-610 per share having a face value of Rs 10 per share. Investors can bid for a minimum of 24 equity shares and in multiples, thereafter, translating to a minimum bidding amount of Rs 14,640 at the higher end of the price band. A retail investor can at max apply for 13 lots or 312 shares for Rs 1,90,320.

Unlike Vijaya Diagnostic, the grey market premium for Ami Organics is quite decent. The shares are quoting at Rs 670 per share in the grey market commanding a premium of Rs 60 or 9.83% over the upper price band of Rs 610.

“On the operational metrics looks satisfactory with ROCE (return on capital employed) of 25% and ROE (return on equity) of 32% in fiscal 2021. The capacity utilisation level of the company stood at 63% which is expected to improve owing to utilisations of recently acquired facilities in Ankleshwar and Jhagadia. The asking P/E multiple post fresh issue is 41.16x which is moderate in terms of pricing. Owing to strong product portfolio and market share the issue may see interest from investors having a long term perspective,” Doshi added.

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