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Amkay Products Limited IPO Review

Updated: May 1



Amkay Products Limited IPO Review


Amkay Products Limited, a name synonymous with healthcare and medical supplies, has carved a niche for itself in the Indian market. Established on October 25, 2007, Amkay Products Limited has been actively engaged in the manufacturing, assembly, and marketing of a wide array of medical devices and disposables. The company's inception was driven by the need to provide high-quality healthcare products that are both effective and affordable.

 

The company's leadership stems from its promoters, Kashyap Pravin Mody and Himanshu Kantilal Batavia, who have been instrumental in steering the company towards success. Their pre-IPO holding was a substantial 99.89%, which post-IPO has adjusted to 73.44%. This change reflects their commitment to growth and the trust they place in their shareholders.

 

Amkay Products Limited has its roots in Thane, Maharashtra, where it began its journey with a rented manufacturing unit in Vasai. Over the years, the company has expanded its footprint, moving to larger manufacturing units to accommodate the growing product line and market demand. This expansion is a testament to the company's dedication to innovation and customer satisfaction.

 

The business started with the aim of addressing a gap in the market for medical products that met high standards of quality while being accessible to a broader audience. Amkay Products Limited began operations in 2008, initially focusing on a single product. The company's portfolio quickly grew, adding more products and eventually branching into branding and trading alongside manufacturing.

 

Today, Amkay Products Limited boasts a diverse product range that includes nebulizers, blood pressure monitors, surgical masks, and more. The company's products cater to hospitals, clinics, and various healthcare institutions across India and beyond. With a strong dealer network and a commitment to quality, Amkay Products Limited continues to be a trusted name in the healthcare industry.

 

The company's ethos revolves around timely delivery, maintaining product standards, and ensuring customer satisfaction. These principles have guided Amkay Products Limited from its inception and continue to be the driving force behind its operations.

 

Amkay Products Limited's journey from a single-product company to a leading healthcare product manufacturer reflects its dedication to quality, customer service, and innovation.



Competitive Strengths


Amkay Products Limited, established in 2007, has carved a niche for itself in the healthcare sector by manufacturing, assembling, and marketing a wide array of medical devices, disposables, and healthcare products. The company's competitive edge can be attributed to several core strengths that have been meticulously developed over the years.


Revenue, Sales, and Profit



For the financial year ending on March 31, 2023, the company reported an operating revenue in the range of INR 1 crore to 100 crores. The net worth of Amkay Products Limited saw a decrease of 1.68%, while EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased by 4.38%. The total assets of the company decreased by 9.73%, and liabilities decreased by 19.70%. The company's debt-to-equity ratio stood at 0.67, with a return on equity of 21.01%. The current ratio, which measures the company's ability to pay short-term obligations, was at 2.08, indicating a healthy short-term financial position. The profit after tax (PAT) for the period ending December 31, 2023, was reported at INR 215.34 lakhs. This is an increase from the previous year's PAT of INR 151.02 lakhs, indicating an improvement in profitability. The company's net worth as of December 31, 2023, was INR 986.96 lakhs, and the total borrowings were INR 476.22 lakhs. The revenue from manufacturing operations for the period ending December 31, 2023, was INR 1836.91 lakhs, while revenue from branding and trading operations was INR 437.71 lakhs.

Amkay Products Limited's financial performance shows a mixed trend with some areas of growth and some areas of decline.


Distribution Network and Geographical Reach


Amkay Products Limited, established in October 2007, has developed a robust distribution network and extensive geographical reach, particularly in India. The company specializes in manufacturing and marketing a wide array of healthcare products, including medical devices, disposables, and essential items like face masks, alcohol swabs, lancet needles, nebulizers, pulse oximeters, and surgeon caps. Their products cater to hospitals, institutes, government bodies, pharmaceutical companies, distributors, and dealers across the nation. With a significant presence in the healthcare sector, Amkay Products Limited has a strong dealer network, which is evidenced by their claim of having over 1000 passionate dealers. They take pride in their 'Make in India' initiative, producing goods in a state-of-the-art, certified plant located in Maharashtra. The company's commitment to quality and customer satisfaction is reflected in their approach to business, which emphasizes timely delivery, product accuracy, and meeting medical standards.


Unique Features


The company's unique features include a vast portfolio of over 30 products, encompassing everything from nebulizers and blood pressure monitors to surgical disposables and personal protective equipment. Amkay Products prides itself on manufacturing and marketing quality medical products, ensuring that each item meets medical standards and accuracy. The company's strength lies in its skilled and trained staff, who are dedicated to achieving customer satisfaction with every product. This dedication is reflected in their business approach, which emphasizes immediate response, on-time product delivery, and honoring committed delivery times. Amkay Products also stands out as one of the top alcohol swab manufacturers, supplying to many multinational corporations and Indian pharmaceutical companies. They are recognized as the largest manufacturer of Blood Lancet Needles - Steel/Plastic in India and a leading manufacturer of Surgical Masks, N95 Masks, Gowns, and many more products. In addition to their product excellence, Amkay Products is committed to innovation and customer service. They manufacture personalized and innovative healthcare products, aiming to empower people to live better, healthier lives. Their client testimonials reflect a high level of customer satisfaction, with many customers being recurring clients due to the reasonable prices, quality, and durability of the products. The company's recent move towards an IPO debut is a testament to their growth and the trust they have built over the years.


Investment in Research and Development


Amkay Products Limited, established in 2007, has shown a commitment to innovation through its investment in research and development (R&D). The company specializes in manufacturing, assembly, and marketing a comprehensive portfolio of medical devices, with a product range that has expanded to include over 30 items. These encompass respiratory disease-related medical devices, surgical disposables, home healthcare products, and other healthcare items. The firm's dedication to R&D is evident in its growth and diversification of products, ensuring they meet the evolving needs of the healthcare industry. While specific figures on their R&D investment are not publicly available, the company's expansion and the broadening of its product line suggest a significant allocation of resources towards innovation and development. This strategic focus on R&D likely supports their goal to provide high-quality medical devices and contributes to their competitive edge in the market.




Amkay Products Limited IPO Details


  • Issue Date: The issue date in an IPO, also known as the initial offering date, is when a company's stock is first made available for public purchase. This date is a significant milestone in the process of an initial public offering, marking the transition of a company from private to public status. (Issue Date: April 30, 2024 to May 3, 2024).

  • Listing Date: The listing date refers to the day when the company's shares are officially listed and begin trading on a stock exchange. This is typically several business days (3-6 days) after the issue date after processes like share allotment and finalization are completed. On this date, investors who were allotted shares during the IPO can begin selling them, and new investors can start purchasing them on the exchange at the prevailing market price. (Listing Date: Wednesday, May 8, 2024).

  • Face Value of Shares: The face value of shares in an IPO, also known as the nominal or par value, is a predetermined fixed price set by the company and mentioned in its memorandum of association. It represents the initial capital contributed by the founders and is used for accounting and regulatory purposes. During an IPO, shares are typically offered at a price higher than the face value, which includes a premium based on market demand and the company's performance indicators. (IPO Face Value: ₹10 per share).

  • Price Band: A price band of an IPO is the range of prices within which the investors can bid for the shares of a company that is going public. The price band is set by the issuer and the lead managers of the IPO, based on various factors such as the demand and supply of the shares, the financial performance and valuation of the company, and the market conditions. (IPO Price: ₹52 to ₹55 per share).

  • Lot Size: In an Initial Public Offering (IPO), the lot size refers to the minimum number of shares an investor can apply for. It is a pre-determined set of shares that investors must bid for, and applications must be in multiples of this lot size. The lot size ensures a standardized bidding process and helps in the fair allocation of shares among investors. (Lot Size: 2000 Shares).

  • Total Issue Size: The total issue size represents the total number of shares the company is offering to raise capital through the IPO. This number is determined by the company and its advisors, considering factors like their funding needs and the expected investor demand. The total issue size is then divided by the lot size to determine the total number of lots available for purchase by investors. (Total Issue Size: 2,292,000 shares (aggregating up to ₹12.61 Cr)).

  • Fresh Issue: A Fresh Issue in the context of an Initial Public Offering (IPO) refers to the creation and sale of new shares by a company to the public. Unlike an Offer for Sale, where existing shareholders sell their shares, a Fresh Issue results in the generation of new capital for the company. This capital is typically used for growth initiatives such as expansion, research and development, or debt repayment.(Fresh Issue: 2,292,000 shares (aggregating up to ₹12.61 Cr)).

  • Issue Type: The type of an IPO can vary depending on the market and regulatory conditions. Some of the common types of IPOs are, Fixed priced IPO, Auction IPO, Book Building IPO, and Hybrid IPO. (Issue Type: Book Building IPO).

  • Listing At: The listing of shares in an IPO refers to the process where a company's shares are introduced to the public stock market, allowing investors to buy and sell the shares through a stock exchange. Once listed, anyone with a brokerage account can buy and sell the company's shares on the exchange. (Listing at: BSE SME).

  • Retail Shares Offered: This refers to the portion of the total shares being made available specifically for individual investors, distinct from institutional investors like banks or hedge funds. Regulatory bodies often mandate a minimum percentage of shares be reserved for retail investors, aiming to promote broader public participation in the capital markets. (Retail Shares Offered: Not less than 35% of the Net Issue).

  • QIB Shares Offered: QIBs are institutional investors such as banks, mutual funds, insurance companies, pension funds, etc., who have expertise and financial resources to invest in the securities market. They are considered as informed and sophisticated investors who can assess the risks and returns of an IPO. QIBs can bid for up to 50% of the total shares offered in an IPO via the profitability route, or up to 75% of the total shares offered in an IPO via the QIB route. QIBs have to pay only 10% of the bid amount at the time of application, and the rest after the finalization of the basis of allotment. (QIB Shares Offered: Not more than 50% of the Net Issue).

  • NII (HNI) Shares Offered: NII stands for Non-Institutional Investors, which includes High Net-worth Individuals (HNIs) who bid for shares worth more than ₹200,000. The NII category is reserved for investors who do not fall under the retail or Qualified Institutional Buyers (QIBs) categories. Typically, a certain percentage of the IPO, usually around 15%, is allocated for NIIs to ensure a wider distribution of shares. HNIs within the NII category often have a higher chance of allotment compared to retail investors, making it an attractive option for those looking to invest larger sums in an IPO. (NII (HNI) Shares Offered: Not less than 15% of the Net Issue).


Competitors of Amkay Products Limited


While the information available on Amkay Products Limited's specific competitors is limited, here's what we can explore to understand the competitive landscape:


Based on Amkay's Product Range:

Amkay deals in various healthcare and homecare products including:

  • Surgical disposables (masks, syringes, etc.)

  • Nebulizers

  • Blood pressure monitors

  • Thermometers

  • Adult diapers

  • Hot water bags

This indicates Amkay competes in several sub-segments of the Indian healthcare and homecare market. Here's how to identify competitors for each segment:


  • Online Research: Search for leading manufacturers and distributors of each product category Amkay offers. Look for companies with a strong online presence and established distribution networks.

  • Industry Associations:  India has associations for medical devices and home healthcare products. These associations often have member directories that can be a good starting point.

  • Market Research Reports: Reports on the Indian healthcare and homecare market might provide insights into major players.

Examples of Potential Competitors:

  • Surgical Disposables: Hindustan Unilever Limited (through brand 'Lifebouy'), 3M India Ltd., etc.

  • Nebulizers: OMRON Healthcare India Pvt. Ltd., Philips India Ltd., etc.

  • Blood Pressure Monitors: Dr. Reddy's Laboratories Ltd. (through brand 'Omron'), Omron Healthcare India Pvt. Ltd., etc.

  • Thermometers:  Honeywell International Inc. (through brand 'TempAssure'), Vega Instruments Pvt. Ltd., etc.

  • Adult Diapers:  Unicharm India Pvt. Ltd. (through brand 'MamyPoko Pants'), The Himalaya Drug Company, etc.

  • Hot Water Bags:  Usha International Ltd., Relaxo Footcare Pvt. Ltd., etc.

Additional Considerations:

  • Distribution Channels:  Amkay's distribution strategy (online vs offline) will determine which competitors they face most frequently.

  • Brand Recognition:  Established brands with strong brand recognition might be Amkay's biggest competitors, especially for non-essential products.

  • Price Point:  Depending on Amkay's pricing strategy (budget-friendly vs premium), they might compete with different companies in each segment.


Conclusion


In conclusion, the Amkay Products Limited IPO presents a unique opportunity for investors to participate in the healthcare sector, specifically in the medical device market. While the company has demonstrated a capacity for growth and expansion, as evidenced by its diversified product portfolio and increased manufacturing capabilities, it also faces challenges in a highly competitive and potentially saturated market. The financial analysis indicates a mixed performance with fluctuating revenues and profitability, yet an overall positive trend in equity and assets. Investors should weigh these factors alongside the company's strategic investments in machinery and working capital, which could position Amkay Products for future success. As with any investment, potential investors should conduct thorough research and consider their financial goals and risk tolerance before participating in the IPO.


Please Read the Detailed Review Here.


Disclaimer: This is not an investment advisory. The article above is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing securities, that suit your needs. The performance and returns of any equity stock can neither be predicted nor guaranteed.


FAQs


Q: What is an IPO? 

An Initial Public Offering (IPO) is the first time a company offers its shares for sale to the public on a stock exchange. This allows the company to raise capital for growth and expansion.


Q: How can I apply for an IPO?

There are two main ways to apply for an IPO:

  1. Retail Investor: You can apply through your trading broker using a Demat account and ASBA facility (explained below).

  2. Institutional Investor: Large investors like banks and mutual funds have a separate application process.

Q: What is ASBA? 

ASBA (Application Supported by Blocked Amount) is a safe and convenient method to apply for IPOs. With ASBA, the funds you bid for the IPO are blocked in your bank account and only debited if your bid is successful. This prevents unsuccessful applicants' money from being tied up.


Q: What is the difference between a fixed-price and a book-building IPO?

  1. Fixed-Price IPO: The company sets a fixed price for the shares offered in the IPO.

  2. Book-Building IPO: The price of the shares is determined based on investor demand during a bidding process.

Q: What are the risks involved in investing in IPOs?

  1. New companies: IPOs often involve young companies with limited track records, so there's a higher risk of their stock price being volatile.

  2. Overvaluation: Some IPOs can be overvalued, leading to a potential drop in share price after listing.

Q: How much should I invest in an IPO?

IPO investments should be a part of a diversified portfolio. Only invest what you can afford to lose, considering the inherent risks involved.


Q: What happens after I apply for an IPO?

The company allocates shares based on the bids received. You will be notified if your application is successful or not. The shares will then be credited to your Demat account after the listing date.


Q: When should I sell my IPO shares?

This is a personal decision based on your investment goals and risk tolerance. Some investors hold for the long term, while others may sell soon after listing to capture potential gains.


Q: Where can I find information about upcoming IPOs?

Many financial websites and brokerage firms provide information on upcoming IPOs, including issue details, timelines, and prospectuses.


Q: What are the tax implications of investing in IPOs?

Short-term capital gains tax applies to IPO shares sold within one year of purchase. Long-term capital gains tax applies if held for over a year, and the rates may vary depending on the country's tax regulations.


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