Gem Aromatics Limited, a respected player in the specialty ingredients industry with a sharp focus on essential oils, aroma chemicals and value-added derivatives, has opened its ₹451.25 crore initial public offering (IPO) for subscription. The issue will be open from August 19, 2025 to August 21, 2025, and the company’s shares are slated to be listed on the BSE and NSE with an expected listing date of August 26, 2025.

The IPO consists of a fresh issue of ₹175.00 crore and an offer for sale of ₹276.25 crore, priced within a band of ₹309–₹325 per equity share. The lot size is 46 shares, translating into a minimum application size of ₹14,950 for retail investors. As of 10:30 AM on Day 2, the IPO has been subscribed 0.68 times, with stronger participation expected on the final day.

Positive Grey Market Sentiment

Unlike many recent issues, Gem Aromatics is witnessing meaningful traction in the grey market, with the latest Grey Market Premium (GMP) standing at ₹33 per share. At the top end of the price band, this translates into an estimated 10–11% listing premium. Though not a guarantee of performance, the positive GMP indicates solid secondary market interest and growing optimism among speculative traders and short-term investors.

Business Overview and Competitive Strengths

With over two decades of experience, Gem Aromatics has built a diverse and reputed product portfolio of specialty ingredients that cater to both domestic and global markets. The company emphasises product innovation, sustainability and customer retention, which has helped it secure a number of leadership positions across sub-segments such as natural essential oils, aroma chemicals and fragrance intermediates.

The business is promoter-led, with Vipul Parekh, Kaksha Parekh and Yash Parekh at the helm — all of whom bring extensive domain expertise and longstanding industry relationships.

Financial Performance

The company’s financials reflect steady growth across key metrics:

The consistent rise in revenue and profitability highlights the company’s resilience, strong client base, and operational discipline.

Return ratios are healthy with ROCE at 16.02% and ROE at 18.80%, which reflect efficient use of capital. Critically, the post-issue P/E works out to 31.80x, which is significantly lower than the industry average of ~112x, suggesting that the IPO is fairly priced relative to peers.

Use of IPO Proceeds

The net proceeds will be utilised for:

• ₹1,400 million for repayment/prepayment of borrowings (both at the company and subsidiary level).

• General corporate purposes.

This repayment of debt is expected to improve the leverage profile and support stronger cash flow in future periods.

Analyst View and Investment Outlook

Most analysts believe that Gem Aromatics is a well-rooted, fundamentally sound business with stable growth prospects in specialty ingredients — a segment that continues to witness consistent global demand from sectors such as FMCG, flavours and fragrances, and cosmetics.

That said, subscription levels are still moderate at 0.68x (Day 2), and the opportunity is best suited for investors with a moderate risk appetite. The positive GMP of ₹33 offers attractive potential for short-term listing gains, but such investors should also monitor final-day subscription momentum to gauge broader demand.

In contrast, long-term investors may prefer to assess post-listing price movements before committing, as the specialty ingredient segment — despite strong potential — can still face cyclical fluctuations linked to raw material prices and exchange rate changes.

Conclusion

The Gem Aromatics IPO offers a balanced opportunity with a fair valuation, consistent financial growth, and a visible 10% grey market premium. With the fundamentals intact and a credible management team, the issue may generate reasonable listing gains for investors who are comfortable with the inherent risks of the capital markets. Risk-tolerant investors looking for short-term gains may consider applying, while conservative investors could wait to observe the final subscription data or post-listing performance before entering the stock.

The Upcoming IPOs in this week and coming weeks are NIS Management, Sattva Engineering Construction, Globtier Infotech, Current Infraprojects, Anondita Medicare, Classic Electrodes (India), Vikran Engineering, Shivashrit Foods, ARC Insulation & Insulators.

The Current active IPO are Mangal Electrical Industries, LGT Business Connextions, Vikram Solar, Gem Aromatics, Shreeji Shipping Global, Patel Retail, Studio LSD.

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