Gem Aromatics IPO Subscription Status – Day 3
By 11:15 AM on the third day of bidding, the Gem Aromatics IPO had achieved an overall subscription of 5.17 times. Retail investors subscribed to 4.70 times their allocated shares, while Non-Institutional Investors (NIIs) led with a 9.21 times subscription of their reserved quota. Qualified Institutional Buyers (QIBs) also showed steady participation, bidding for 1.56 times their allotted shares.
Gem Aromatics IPO GMP Today:
Gem Aromatics’ IPO is attracting early interest in the grey market, where it is currently trading at a 7% premium above its issue price of Rs 325 per share. However, it’s important to remember that grey market trading is unofficial and unregulated. While this premium indicates positive sentiment and strong demand, the actual performance at listing may still be influenced by overall market conditions and investor sentiment on the debut day.
Gem Aromatics IPO: Key Highlights on Subscription, Pricing, and Valuation
The Gem Aromatics IPO opened for subscription on August 19 and will close on August 21. The specialty ingredients manufacturer aims to raise around Rs 451.3 crore at the upper end of the price band. This includes a fresh issue of approximately 53 lakh shares worth Rs 175 crore, along with an offer for sale (OFS) of about 85 lakh shares totaling Rs 276.3 crore.
Each equity share has a face value of Rs 2, and the lot size is 46 shares, making the minimum investment for retail investors approximately Rs 14,950 at the highest price band.
At the upper price band, the company’s post-issue market capitalization is estimated to be around Rs 1,697.7 crore. This implies a price-to-earnings (P/E) ratio of 31.8x for FY25 and an enterprise value to EBITDA (EV/EBITDA) ratio of 21.6x, indicating its valuation metrics.
Gem Aromatics – Business Overview
With over 20 years of experience, Gem Aromatics specializes in producing essential oils, aroma chemicals, and value-added derivatives used across sectors such as oral care, personal care, wellness, nutraceuticals, and pharmaceuticals.
The company supplies major flavor and fragrance houses as well as FMCG brands, offering a portfolio of around 70 products divided into categories like mint and its derivatives, clove and clove derivatives, phenol, and other synthetic and natural ingredients. It operates three manufacturing facilities located in Budaun, Silvassa, and Dahej.
Gem Aromatics is recognized as one of India’s largest processors by volume of clove oil, eugenol, and eucalyptus oil, while also holding a strong position in mint-based ingredients.
Exports accounted for approximately 50.7% of its operating revenue in FY25, with the United States being its largest international market. The funds raised from the IPO will primarily be used for debt repayment or prepayment and general corporate purposes.
Financially, the company showed consistent growth from FY23 to FY25. Revenue rose from Rs 452.5 crore in FY24 to around Rs 504 crore in FY25, with EBITDA increasing to Rs 88.5 crore and net profit after tax reaching Rs 53.4 crore.
The EBITDA margin improved to 17.6%, and the PAT margin stood at 10.6% in FY25, indicating solid profitability.
Should You Subscribe?
Anand Rathi has given the IPO a “Subscribe – Long Term” rating, acknowledging that while the issue is fully priced, the company’s strong foothold in essential oils and derivatives, diversified product portfolio, solid relationships with reputed clients, and ongoing capacity expansions position it well for future growth.
At a valuation of 31.8 times FY25 earnings, the stock commands a premium relative to many mid-cap chemical peers based on near-term financial metrics. Hence, the investment thesis largely hinges on the company’s ability to successfully execute its growth plans, capture greater market share in the mint and clove value chains, and effectively scale operations at its Dahej facility.
Key risks to consider include high customer concentration—with the top ten clients contributing around 56% of FY25 revenue, notably including a major supply agreement with dōTERRA—dependence on mint derivatives, ongoing land litigation involving the Budaun plant, and reliance on a limited supplier base.
Motilal Oswal Investment Advisors is the book-running lead manager for the IPO, with KFin Technologies acting as the registrar.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)