August 14, 2025
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Gem Aromatics Limited – IPO Review
by Paresh Gordhandas, CA & Research Analyst
Business Overview
With over two decades of experience, Gem Aromatics is a leading manufacturer of specialty ingredients — including essential oils, aroma chemicals, and value-added derivatives — catering to diverse sectors like oral care, cosmetics, nutraceuticals, pharmaceuticals, wellness, and personal care. The company has a strong global footprint, serving 225 domestic and 44 international customers across 18 countries. A diversified portfolio of 70 products and an in-house R&D team of 13 scientists give it a competitive edge in innovation and value addition.
Financial Performance (Rs. in crore)
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FY23–FY25 Growth: Revenue rose from Rs. 425.09 cr (FY23) to Rs. 505.64 cr (FY25), reflecting consistent top-line expansion.
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Profitability: PAT increased from Rs. 44.67 cr to Rs. 53.38 cr over the same period. EBITDA improved from ₹Rs. 66.19 cr to Rs. 88.45 cr, indicating operational efficiency.
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Margins: FY25 EBITDA margin stands at ~17.5%, PAT margin ~10.6% — healthy for the industry.
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Balance Sheet: Net worth improved from Rs. 179.53 cr (FY23) to Rs. 283.98 cr (FY25). Borrowings have more than doubled to Rs. 222.37 cr, suggesting higher leverage for expansion or working capital needs.
Valuation at Rs. 325/share
At FY25 EPS of ~Rs. 9.79, the IPO is valued at a P/E of ~33.2x, which is on the higher side compared to traditional chemical peers but could be justified by the niche nature of its product mix, export orientation, and stable margins. The rising debt is a point to watch.
Strengths
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Diversified product basket catering to multiple high-growth industries
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Strong export presence reducing domestic demand risk
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In-house R&D enabling higher-margin value-added products
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Long-standing relationships with reputed domestic & global clients
Risks
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Rising debt levels may impact leverage ratios
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Raw material price volatility can affect margins
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Dependence on export markets exposes business to currency and regulatory risks
Chanakya View
Gem Aromatics combines stable growth, strong client relationships, and a niche high-margin product portfolio. However, the IPO is not cheap, and the increased borrowings add a note of caution. Suitable for investors seeking long-term exposure to a specialty ingredients exporter with steady earnings, while aggressive traders may look for listing gains depending on grey market sentiment.
The IPO opens on August 19, 2025 and closes on 21 August 2025.
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