Ami Organics Share Price Gains After Morgan Stanley Invests in Ami Organics

In a morning trade on August 30, Ami Organics share price surge by 2% following the news that Morgan Stanley Singapore had acquired a 1.7% stake in the pharmaceutical company. 

Morgan Stanley Singapore Invests in Ami Organics

Morgan Stanley Asia Singapore made a significant move by purchasing 621,898 equity shares, equivalent to a 1.7% stake in Ami Organics, through open-market transactions on July 29. These shares were acquired at a price of ₹1,250 each, totaling a transaction value of ₹77.73 crore. Simultaneously, high-net-worth investor Girishkumar Limbabhai Chovatia sold 6.25 lakh shares of the company at an average price of ₹1,250.39 per share, amounting to a total transaction value of ₹78.14 crore.

Ami Organics' Financial Performance

Ami Organics reported robust financial results on August 11, revealing a net profit of ₹17 crore for the April-June quarter of the current fiscal year. This marked a 13% increase from the ₹15 crore reported in the year-ago period. The company's revenue from operations also displayed growth, rising 8.65% year-on-year (YoY) to ₹142.35 crore, compared to ₹131.01 crore in Q1FY23.

The earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter grew by 9.7% YoY to ₹25.20 crore, with EBITDA margins expanding by 20 basis points YoY to 17.7%.

Ami Organics' Expansion Plans

Ami Organics, engaged in research, development, and manufacturing of advanced pharmaceutical intermediates, active pharmaceutical ingredients, and specialty chemicals, has ambitious plans for further growth. Besides its operational units in Sachin and Jhagadia, the company intends to establish a new plant in Ankleshwar, dedicated to the production of advanced pharmaceutical intermediates.

To support its growth ambitions, Ami Organics announced a substantial capital expenditure (capex) of approximately ₹190 crore in its Ankleshwar unit II. This capex is deemed sustainable until 2026, with potential additional capex in the pharma segment beyond that point. As a net debt-free company, Ami Organics possesses the flexibility to raise funds through debt if required.

Sustained Growth and Market Presence

With a strong focus on exports, Ami Organics has successfully expanded its revenue streams, with pharmaceutical intermediates accounting for 84% of its total revenues, while specialty chemicals contribute to the remaining 16%.
Naresh Patel, the Executive Chairman and Managing Director at Ami Organics articulated the company's strategy for continued growth, aiming for a 100 basis point improvement in margins every quarter. The company's consistent growth over the years, supported by both organic and inorganic strategies, is evident in its financial performance. From FY19 to FY23, Ami Organics witnessed substantial revenue growth from ₹240 crores to ₹617 crores, accompanied by an increase in EBITDA from ₹40 crore to ₹142 crore and profit after tax from ₹23 crore to ₹83 crore in FY23.

As a net debt-free company, Ami Organics is well-positioned to raise funds through debt if necessary. Mr. Patel expressed confidence in the company's ability to maintain its growth rate of 20-25% in the foreseeable future. He emphasized that this sustainable growth is the result of factors such as product innovation, efficient operations, and a strong customer base.

Conclusion

Ami Organics, with its strong foundation and strategic vision, aims to become a leading player in the chemical industry while consistently delivering shareholder value. Morgan Stanley's investment in the company is a testament to Ami Organics' growth potential and its commitment to long-term success.