Gem Aromatics IPO — Should You Subscribe Or Avoid? Read Anand Rathi's Report For Key Details

The manufacturer of specialty ingredients such as essential oils, aroma chemicals, and value-added derivatives Gem Aromatics has fixed the price band in the range of Rs 309 and Rs 325 per equity share..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Anand Rathi Report.Gem Aromatics Ltd.'s initial public offering will open for subscription on Aug. 19 and will conclude on Aug. 21. The manufacturer of specialty ingredients such as essential oils, aroma chemicals, and value-added derivatives has fixed the price band in the range of Rs 309 and Rs 325 per equity share. Investors can place bids starting from a minimum of 46 shares and in multiples thereafter.The Rs 451.25-crore IPO comprises of a fresh issue of 53 lakh shares, worth Rs 175 crore, and an offer-for-sale portion of 85 lakh shares, amounting to Rs 276.25 crore. Motilal Oswal Investment Advisors Ltd. is the book-running lead managers for the public issue while KFin Technologies Ltd. is the registrar to the offer..Objects of the Issue Prepayment or repayment of all or a portion of certain outstanding Borrowings availed by the company.General Corporate Purpose..Strengths: Established manufacturer of specialty ingredients, including, essential oils, aroma chemicals and Value-Added Derivatives in India.Wide product range with continuous product development and R&D capabilities.Long standing relationship with well-established customers in India and globally.Strategically located Manufacturing Facilities with focus on sustainability..Key Strategies: Expansion of manufacturing capacities for existing and new products.Widen their product offerings by expanding chemistry capabilities in order to expand their addressable market size and capture higher client wallet share.Continuing focus on sustainability and reducing operating costs and improving operational and business efficiency.Expanding geographical reach through growing exports..Valuation: Gem Aromatics is a well-established manufacturer in India, engaged in the production of specialty ingredients such as essential oils, aroma chemicals, and value-added derivatives. The Company offers an extensive and diverse product portfolio, which continues to expand through ongoing product development and strong in-house research and development capabilities. Over the years, it has built long-standing and trusted relationships with a wide base of reputed customers, both within India and across international markets. In addition, the Company operates strategically located manufacturing facilities that are designed to support large-scale production while also emphasizing environmentally sustainable and efficient manufacturing practices. At the upper price band company is valuing at P/E of 31.8x to its FY25 earnings, with EV/Ebitda of 21.6x and market cap of Rs 16,977 million post issue of equity shares. We believe that the IPO is fully priced and recommend a “Subscribe-Long Term” rating to the IPO..Key Risk: Company derive a significant portion of their revenue from their top 10 customers. In Fiscal 2025, company derived 56.06% of their total revenue from operations from top 10 customers. The loss of any of these customers may adversely affect their revenues and profitability.Company derive a significant portion of their revenue from top customer dōTERRA Global Limited (formerly known as dōTERRA GH Ireland Limited) (“dōTERRA”) with whom they have entered into a supply agreement, the term of which is ending on December 31, 2028. If dōTERRA chooses not to source their requirements from them, there may be a material adverse effect on their business, financial condition, cash flows and results of operations.Company derive a substantial portion of their revenue from the mint and mint derivatives product category. In Fiscal 2025, 2024 and 2023, they derived 69.12%, 72.89% and 69.98% of their revenue from operations from the mint and mint derivatives product category. Any reduction in demand for products under the mint and mint derivatives product category may adversely affect their revenues and profitability.Company is involved in an on-going litigation in the Supreme Court of India with respect to the land on which their Budaun Facility is located. Any adverse outcome in such proceedings may have an adverse effect on their business, results of operations, financial condition and cash flows.  Company have not entered into any long-term contracts with their suppliers from whom they procure raw materials consumed by them for their manufacturing process and failure by their suppliers to meet their obligations could adversely affect their business, results of operations, financial condition and cash flows.Company have significant dependence on their top 10 suppliers for supply of raw materials. In Fiscal 2025, top 10 suppliers contributed towards 52.92% of their total expenses. The loss of any of these suppliers or and failure by these suppliers to meet their obligations may adversely affect revenues and profitability..Click on the attachment to read the full IPO report:.Patel Retail IPO — Should You Subscribe Or Avoid? Read Anand Rathi's Report For Key Details.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Gem Aromatics IPO — Should You Subscribe Or Avoid? Read Anand Rathi's Report For Key Details

Gem Aromatics' Rs 451.25-crore IPO comprises of a fresh issue of 53 lakh shares, worth Rs 175 crore, and an offer-for-sale portion of 85 lakh shares, amounting to Rs 276.25 crore.

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