Gem Aromatics Limited, a leading manufacturer of essential oils and aroma chemicals, launched its Initial Public Offering (IPO) today with a total issue size of ₹451.25 crores. The book-built issue comprises a fresh issue of shares worth ₹175 crores and an offer for sale (OFS) of shares worth ₹276.25 crores. The subscription window is open from August 19, 2025 to August 21, 2025, with share allotment expected on August 22, followed by listing on the BSE and NSE on August 26.

The IPO has a price band of ₹309–₹325 per equity share, and the lot size is 46 shares. At the upper end of the price band, the company will be valued at approximately ₹1,697.70 crores. Retail investors must apply for a minimum of one lot (46 shares) amounting to ₹14,950, while the minimum investment for High-Net-Worth Individuals is 14 lots (₹2,09,300).

Business Overview

Founded by Vipul Parekh, Kaksha Vipul Parekh, and Yash Vipul Parekh, Gem Aromatics has over two decades of expertise in producing specialty ingredients such as essential oils, aroma chemicals and value-added derivatives used in the fragrance, flavours, personal care, and FMCG sectors. The company operates internationally and maintains long-term relationships with major domestic and global customers.

Their commitment to consistent product innovation, stringent quality control, and sustainability-focused practices has helped Gem Aromatics become a recognised player in the niche specialty chemicals segment.

Financial Performance Highlights

The company has delivered steady revenue growth and healthy profitability over the past three financial years:

• Pre-issue EPS: ₹11.39

• Post-issue EPS: ₹10.22

• Pre-issue P/E: 28.53×

• Post-issue P/E: 31.80×

• Industry P/E: ~112×

• ROE (FY24): 18.80%

• ROCE (FY24): 16.02%

These metrics suggest that the IPO is fairly valued compared to industry peers, particularly given its balance of solid earnings and reasonable valuation multiples.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Gem Aromatics is currently around ₹33 per share, implying a potential listing price of ₹358 and reflecting a 10.15% premium over the upper price band of ₹325. While GMP is not an official indicator of future performance, it does show positive sentiment among investors in the unlisted market.

Use of IPO Proceeds

• ₹1,400 million – repayment/prepayment of certain outstanding borrowings of the company and its subsidiary (Krystal Ingredients Pvt. Ltd.)

• Remaining portion – general corporate purposes

IPO Recommendation

Gem Aromatics' consistent financial performance, strong promoter background, and leadership in niche specialty ingredients lend credibility to its public market debut. Moreover, the positive GMP of ~₹33 suggests potential listing gains, making it particularly attractive for risk-tolerant investors.

However, as always, investors should evaluate the IPO in the context of their risk appetite, portfolio exposure, and long-term objectives. While the IPO may offer short-term listing gains, long-term prospects will depend on the company's ability to sustain revenue growth, maintain margins, and manage debt effectively after the issue.

The Upcoming IPOs in this week and coming weeks are Shivashrit Foods, ARC Insulation & Insulators, Mangal Electrical Industries, LGT Business Connextions, Vikram Solar, Gem Aromatics, Shreeji Shipping Global, Patel Retail.

The Current active IPO are Studio LSD.

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