Specialty chemical firm Ami Organics, whose IPO share allotment will get finalised on Wednesday, was trading with gains in primary market on Tuesday. Ami Organics shares were quoting at a grey market premium of Rs 170 over the issue price of Rs 610. The shares were seen trading at Rs 780, a premium of 28 per cent over the IPO price in the grey market according to the people who deal in shares of unlisted companies. During the IPO bidding process, the grey market premium in Ami Organics fell to Rs 95, which has now surged to Rs 170. The shares are likely to be listed on 14 September 2021.
Grey market premium surges, what should you do?
Analysts say, in the month of August, markets witnessed a series of negative to flat listings where the IPO euphoria faded away on account of mismatch between growth-valuation equilibrium. “Even in such a ho-hum environment, Ami Organics IPO garnered decent subscription from investors on account of moderate pricing of the issue. From a long term perspective, Ami Organics may break the spree of sluggish listings and re-generate interest in primary markets,” Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares, told Financial Express Online.
Fundamentals of Ami Organics seem to be good along with a lower PE as compared to peers. Analysts advise allotted investors to book partial profit on listing. “Technically, the overall market looks highly overbought and a listing gain of 15-20% should be used to exit half and re-enter after a decent correction,” Pavitraa Shetty, Co-founder & Trainer, Tips2Trades, told Financial Express Online.
Ami Organics IPO was subscribed 64.54 times and the retail portion saw 13.36 times application, which means that one out of 12 investors will get the allotment, said an analyst. Ami Organics IPO was priced at Price to Earnings of 35.6 times and EV/EBITDA of 25.7 times at the upper price band of the IPO based on FY2021 numbers, which is on the higher side, compared to the listed peer group. “We suggest short-term investors to book profit on listing day if they receive the allotment,” Yash Gupta, Equity Research Analyst, Angel Broking, said.
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