This article provides a detailed analysis of the Gem Aromatics IPO, covering its valuation, financial health, peer comparisons, and key IPO details. Potential investors can use this information to make informed decisions.
Introduction to Gem Aromatics IPO
The Gem Aromatics IPO is generating significant interest in the market. Its valuation is considered superior to the Vikram Solar IPO. This analysis will delve into its peer competitors, IPO rate price band, and the Grey Market Premium (GMP) to offer a comprehensive overview. Stay connected for daily IPO and GMP updates.
Peer Comparison and Valuation Insights
When evaluating Gem Aromatics, it’s crucial to compare its valuation with already listed peer competitors. At its cut-off price, Gem Aromatics’ Price-to-Earnings (P/E) ratio is projected at 28. In comparison, Clean Science & Technology has a P/E of 57, Praveg Specialty Chemicals stands at 50, ASO Industry at 375, S H Kelkar at 42, and Oriental Aromatics at 36.
The average P/E for this sector is approximately 40. Gem Aromatics’ P/E of 28 is notably lower, suggesting that the company has left some scope on the valuation table. This more attractive valuation could lead to a better response in the IPO. In contrast, the Vikram Solar IPO, despite a higher valuation (P/E of 75), saw a good response due to its association with the green energy sector. Gem Aromatics operates in the chemical sector.
Financial Health of Gem Aromatics
An examination of Gem Aromatics’ financial health provides a clearer picture of its performance:
Assets: The company’s assets have shown fluctuations:
- FY23: ₹296 crore
- FY24: ₹369 crore
- FY25: ₹334 crore
Income: Gem Aromatics has demonstrated consistent growth in its income:
- FY23: ₹425 crore
- FY24: ₹454 crore
- FY25: ₹505 crore
Profit: The company’s profit has also seen steady growth:
- FY23: Approximately ₹45 crore
- FY24: ₹50 crore
- FY25: ₹53 crore
EBITDA: EBITDA figures indicate a growing operational profit:
- ₹66 crore
- ₹78 crore
- ₹88 crore
Net Worth: The net worth of the company has consistently increased:
- FY23: ₹179 crore
- FY24: ₹230 crore
- FY25: ₹283 crore
Reserves & Surplus: Reserves and surplus have also shown a positive trend:
- FY23: ₹182 crore
- FY24: ₹224 crore
- FY25: ₹278 crore
Borrowing (Debt): The company’s borrowing has increased over time:
- FY23: ₹89 crore
- FY24: ₹111 crore
- FY25: ₹222 crore The current Debt-to-Equity ratio is 0.78, with room for further improvement.
Key Financial Ratios
Several key financial ratios highlight the company’s fundamental strength:
- Fundamental Score: 18
- Return on Equity (ROE): Above 15% (strong for the sector)
- Return on Capital Employed (ROCE): Good, also above 15%
- Debt-to-Equity Ratio: 0.78 (requires improvement)
- Return on Net Worth: 18.80%
- Profit After Tax Margin: 10.56% (improvement would make valuation more attractive)
- EBITDA Margin: 17.5%
- Price to Book Value: 5.36
- P/E at Cut-off Price: 28.52
- Post-IPO P/E: 32
Utilization of IPO Proceeds and Future Outlook
Gem Aromatics plans to use ₹140 crore from the IPO proceeds to repay its existing debt of ₹222 crore. This significant debt reduction is expected to lower interest payments, thereby improving the company’s profitability and strengthening its balance sheet in the future.
Gem Aromatics IPO: Key Details
The Gem Aromatics IPO is structured as follows:
- Open Date: August 19th
- Close Date: August 21st
- Face Value: ₹2 per equity share
- Price Band: ₹325 (upper price band)
- Minimum Lot Size: 46 equity shares
- Total Issue Size: ₹451 crore
- Fresh Issue: ₹175 crore
- Offer For Sale (OFS): ₹276 crore (by promoters and shareholders)
- Issue Type: Book-building IPO
- Listing: BSE & NSE
IPO Distribution and Important Dates
The shares will be distributed among different investor categories:
- Qualified Institutional Buyers (QIBs): 50%
- Retail Investors: 35%
- Non-Institutional Investors (NIIs/HNIs): 15%
The anchor investor window will open on August 18th, and their book list will be an important indicator.
Tentative IPO Schedule:
- IPO Open: August 19th
- IPO Close: August 21st
- Allotment Date: August 24th
- Refund Date: August 25th
- Demat Credit Date: August 25th
- Listing Date: August 26th
Application Details and Promoter Holding
Minimum Application Amounts:
- Retail (1 Lot): ₹14,950
- Small HNI: ₹93,000
- Big HNI: ₹1,01,650
Promoter Holding: Before the IPO, the promoters held 75%. Post-IPO, their holding will be 55.06%, which is still above 50% and considered a positive factor.
Gem Aromatics IPO Grey Market Premium (GMP)
As of August 16th, the Grey Market Premium (GMP) for Gem Aromatics IPO is ₹35. Based on the upper price band of ₹325, the estimated listing price would be ₹360 (₹325 + ₹35). This indicates a potential listing gain of approximately 11%, or around ₹1600 per lot.
Conclusion
Gem Aromatics appears to be a fundamentally sound company with a reasonable valuation in the chemical sector. While the current GMP suggests a modest listing gain, it is advisable to observe the subscription numbers on the first and second day of the IPO. An improvement in GMP to over 20% along with strong subscription figures would make applying to this IPO a more compelling proposition. Stay updated for further developments.
