Ami Organics IPO: Information analysis

Ami Organics is a speciality-chemical company based out of Gujarat. The company was incorporated in 2007 and is one of the country's leading manufacturers of pharma intermediaries. Its pharma intermediaries are used in regulated and generic APIs (Active Pharmaceutical Ingredients) of anti-cancer, antipsychotic, anti-Parkinson medicines, and many more. The company has 450 pharma intermediaries in 17 therapeutic areas. As of FY21, almost 88.4 per cent of the company's revenue comes from pharma intermediaries, and 4.8 per cent from agrochemicals, primarily through their recent acquisition of Gujarat Organics, and 6.7 per cent from other products. The company supplies to over 150 customers in India and 25 overseas countries like Italy, France, US, and UK, to name a few. Around 50 per cent of the company's revenues come from exports. It has over 70 per cent market share in Trazodone, Dolutegravir, and Entacapone, which are used in anti-depressants, HIV/AIDS, and Parkinson's medication. The company leverages its R&D to be a leading player in the industry. According to the Frost & Sullivan report, the Indian speciality chemicals industry is set to grow by 11-12 per cent CAGR until 2025. Low labour costs and overseas clients wanting to diversify their supply base away from China are significant reasons for India's potential growth in this industry. Strengths The company highly leverages its R&D to ensure growth and be a leader in the field. It has increased its pharma intermediaries from 425 in 2019 to 450 in 2021 and considers its R&D an asset. The company has a significant presence in the international market as around 50 per cent of its revenue comes from exports. Both its domestic and international customer base is well diversified. It operates in a high entry barrier industry. To become an established player, new entrants have to get major approvals and customer validation. Revenue of the company grew at a CAGR of 19.5 per cent from 2019 to 2021, and profit after tax grew at a CAGR of 52.25 per cent from 2019 to 2021. Weaknesses The company operates in one of the most polluting industries in the world. Any stringent laws in the future may affect its profitability. China has also been shutting down some of its chemical plants to comply with its Blue Sky policy. All of its manufacturing facilities are in Gujarat. Any issues in