Grey market premium shows Ami Organics may shine on listing while Vijaya Diagnostic may stutter

• Analysts believe Vijaya Diagnostics's tepid subscription, higher valuation and price band may go against the public issue.
• For Ami Organics IPO analysts suggest short-term investors to book profit on listing day if they receive the allotment.
• Check out the latest market news and updates on Business Insider.

Vijaya Diagnostic Centre and Ami Organics are set to be listed on exchanges tomorrow (September 14). However, the fate of the two IPOs may be different, if the grey market premium is considered to be an indicator.

Grey Market is an unofficial market where individuals buy/sell IPO shares or applications before they are officially launched for trading on the stock exchanges. The IPO of companies was open to subscribe from September 1 to September 3.

Ami Organics IPO may see a strong listing gains tomorrow

The speciality chemical company is indicating a strong premium of ₹156 in the grey market ahead of its listing, also reflecting its robust subscription numbers. The IPO received bids for 42.22 crore as against the IPO size of 65.36 lakh shares on the last day of bidding.

In the last few months, another specialty chemical company Clean Science and Technology and Tatva Chintan Pharma Chem made a strong listing on the exchanges.

“We suggest short-term investors to book profit on listing day if they receive the allotment,” said Yash Gupta, equity research analyst at Angel Broking as he believes valuation is expensive.

Ami Organics is all set to open around ₹570 crore initial public offering (IPO) for investors, indicating a premium of ₹156 a share in the grey market .

With the IPO proceeds, the Gujarat-based specialty chemicals company will pay off its debt worth ₹140 crore and become debt free, Naresh Patel, chief managing director of Ami Organics, said in an interview with Business Insider. [hyperlink]

Vijay Diagnostic Centre IPO might open weak on exchanges

The chain of medical testing, Vijaya Diagnostic is trading at a discount in the grey market. Shares were available at a discount of around ₹12 a piece, to the issue price of ₹522, in the grey market.

Analysts believe Vijaya's tepid subscription, higher valuation and price band may go against the public issue. “We are not expecting any big listing gain from Vijaya Diagnostic Centre IPO as we believe that all the short term positives have been priced in the IPO price i.e ₹531,'' said Gupta from Angel Broking.

The IPO received bids for 11.36 crore shares against the 2.50 crore shares on offer.

However, analysts at Ventura Capital recommend subscribing to the IPO for long-term investing with a price objective of ₹672, representing an upside of 27% over the next 24 months attributing the company’s strong cash balance for future growth.

The firm has ₹250 crore cash on its books, Sunil Chandra Kondapally, executive director at Vijaya Diagnostic, told Business Insider.

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