Vijaya Diagnostic, Ami Organics IPOs open; Should you invest?
The diagnostics company aims to raise about Rs 1,900 crore through offer for sale route, while the chemicals maker seeks to raise about Rs 570 crore
Two IPOs have hit the street on monday, with Hyderabad based Vijaya Diagnostic and Gujarat based Ami Organics seeking to raise a combined sum of about Rs 2,500 crore. Amid the stock markets hitting new highs every day, the IPO mania continues in full swing. Here are all the details you wanted.
1. Vijaya Diagnostic
Vijaya Diagnostic Centre Limited (“VDCL”) was incorporated on June 5, 2002. VDCL is the largest integrated diagnostic chain in southern India, by operating revenue, and also one of the fastest growing diagnostic chains by revenue for fiscal year 2020. VDCL offers an one-stop solution for pathology and radiology testing services to their customers through their extensive operational network, which comprises 80 diagnostic centres and 11 reference laboratories across 13 cities and towns in the states of Telangana; Andhra Pradesh; the National Capital Region and Kolkata.
Vijaya Diagnostic is offering IPO shares in the price band of Rs 522 to Rs 531 per share. The face value of shares is Re 1. The implied market cap at issue price is about Rs 5,400 crore. The issue opens on September 1 and closes on September 3. The lot size for IPO application is 28 shares, which means the minimum investment is Rs 14,868. The IPO shares will be listed around September 14. The IPO is an offer for sale of Rs 1,895 crore. The objects of the offer are to (i) carry out the OFS of up to 35,688,064 equity shares by selling shareholders; (ii) achieve the benefits of listing the equity shares on the stock exchanges.
At the upper band of Rs 531, the Vijaya Diagnostic IPO is valued at P/E of 64 times its FY21 EPS of Rs 8.26.
Here is what top brokers have to say about Vijaya Diagnostic IPO.
IIFL Securities: “At the upper price band, Vijaya Diagnostic Centre Limited valuation is lower than the industry average of 90.8 times. Considering the future growth potential of healthcare industry, revenue from operation, EBITDA and PAT growth of 13.5%, 23.9% and 35.5% CAGR during FY19 to FY21, respectively, strong ROE and ROCE of 23.64% and 42%, respectively in FY21, debt-free company with plans for acquisition and expansions, diversified service offerings and strong technical capabilities of the company, we recommend ‘Subscribe’ to the issue with a long-term perspective.”
KR Choksey: ” Vijaya has consistently posted strong performance in terms of operating growth and profitability in last few years. Revenues have grown at a CAGR of 13.5% over FY19-21 to Rs 377 crore. VDCL’s ‘hub and spoke’ model has provided economies of scale and cost optimization benefits, resulting in EBITDA growth of 23.9% and even stronger 35.5% growth in PAT over FY19-21. Integrated network and high B2C business has translated into higher cash flow conversion. Company also recorded strong return on net worth of 23.64% and return on capital employed (pre cash) of 42.00% during FY21.”
2. Ami Organics IPO
Ami Organics Limited is a research and development (“R&D”) driven manufacturer of specialty chemicals with varied end usage, focussed towards the development and manufacturing of advanced pharmaceutical intermediates (“Pharma Intermediates”) for regulated and generic active pharmaceutical ingredients (“APIs”) and New Chemical Entities (“NCE”) and key starting material for agrochemical and fine chemicals, especially from their recent acquisition of the business of Gujarat Organics Limited (“GOL”)(“Acquisition”).
They are one of the major manufacturers of Pharma Intermediates for certain key APIs, including Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban. The Company have developed and commercialised over 450 Pharma Intermediates for APIs across 17 key therapeutic areas since inception and NCE, with a strong focus on R&D across select high-growth high margin therapeutic areas such as anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, antidepressant and anticoagulant, for use across the global pharmaceutical market. Their Pharma Intermediates used for manufacturing of APIs and NCEs portfolio has expanded from over 425 products as of March 31, 2019, to over 450 products as of March 31, 2021.
Ami Organics is offering IPO shares in the price band of Rs 603 to 610 per share. The face value of shares is Rs 10. The issue opens on September 1 and closes on September 3. The lot size for IPO application is 24 shares, which means the minimum investment is Rs 14,640. The IPO shares will be listed around September 14. The Ami Organics IPO comprises a fresh issue of Rs 200 crore for repayment/prepayment of certain financial facilities availed, funding working capital requirements and general corporate purposes. The other IPO component is the OFS of Rs 369.6 crore where the company will not receive any proceeds from.
With an EPS of Rs 17.14 as of 31st March 2021, the issue is priced at 35.59 times calculated at the upper price band of Rs 610 per share. The P/BV is 11.51 at a NAV of Rs 52.99 per share.
Here is what top brokers have to say about Ami Organics IPO.
Anand Rathi: “The company has shown consistent financial performance with sales growth at CAGR of 19.5% and restated profit after tax growth at CAGR of 52.3% between the Fiscals 2019 and 2021. The financials for 2020- 21 doesn’t include revenue from the acquisition of the two plants. We are positive on the long-term prospects of the Company. Hence, we recommend a “Subscribe” rating to this IPO.”
Marwadi Financial Services: “The competitive strengths of the company are strong and diversified product portfolio ably supported by strong R&D and process chemistry skills. Extensive geographical presence and diversified customer base with long standing relationships. High entry barriers in the chemicals manufacturing industry in which the Company operates. Strong sales and marketing capabilities. Experienced and dedicated management team. Consistent financial performance.”