Investors who had put money in this IPO made over ₹12,000 profit on every lot in 2 days

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Investors who had put money in this IPO made over ₹12,000 profit on every lot in 2 days
BCCL
  • Ami Organics recorded 83% returns in two trading sessions crossing the ₹1,000-mark on the second day of listing.
  • The market capitalisation of the company stood at ₹4,086 crore as on September 15.
  • Most analysts are suggesting to hold the stock for a long term considering the company’s strong hold in API and R&D segment.
After a series of lull listings, speciality chemical company Ami Organics’ initial public offering (IPO) not only made a blockbuster debut on exchanges, but continued with another 20% gain on the second day of listing.

Altogether, the company delivered 83% returns in two trading sessions, meaning investors who held onto the stock till September 15 have made ₹12,288 profit in just two days.

Shares of the Gujarat-based company, which debuted at ₹910 per share -- 50% above its issue price of ₹610 -- crossed the ₹1000-mark on the second day of listing.

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The market capitalisation of the company stood at ₹4,086 crore as on September 15.

Most analysts had expected a strong debut for the initial public offering (IPO) betting on the growth prospects in the speciality chemical industry. Recently listed specialty chemical IPOs -- Clean Science and Technology and Tatva Chintan Pharma received a good response while Chemplast Sanmar got a dull one.

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On September 15, shares of Ami Organics were 20% higher at ₹1,122 per share.

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So, should investors hold onto the stocks or sell and book profits?

Most analysts are suggesting to stay for a long term in the stock. Analysts at Motilal Oswal Securities reportedly said that, “We like Ami Organics given its wide product portfolio in pharma intermediates (PIs), diversification efforts into other specialty chemical space, strong clients’ relation across geographies and robust financials. It is well placed to tap opportunity in the fast growing specialty chemical market by leveraging its strong R&D and expanding product portfolio.”

Prashanth Tapse, vice president of research at Mehta Equities reportedly advised investors to hold on to the stock considering long term play. “Being in [a] 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,” said Tapse.

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China Plus One is the business strategy to avoid investing only in China and diversify business into other countries.

Gaurav Garg, head of research at CapitalVia Global Research also reportedly advised to hold the stock for a long term. "The company has been consistently growing revenue from operations and net profit after tax from FY19 to FY21 and around 50% of revenue comes from exports," he reasoned.

The strong traction in the pharma active pharmaceuticals ingredients (API) business and focus on research & development (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.

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