Gem Aromatics IPO opens today: Should you subscribe to it?

The initial public offering (IPO) of Gem Aromatics is set to open for bidding on August 19, Tuesday. The specialty aroma products player offered its shares in the range of Rs 309-325 per equity share. Investors can apply for a minimum of 46 equity shares and its multiples thereafter, until Thursday August 21, when the issue closes for bidding.

The Rs 451.25 crore IPO of Gem Aromatics includes a fresh share sale of Rs 175 crore and an offer-for-sale (OFS) of up to 85 lakh equity shares worth Rs 276.25 crore by its promoters and existing shareholders. The net proceeds from the issue shall be utilized towards repayment of debt and general corporate purposes.

Incorporated in October 1997, Mumbai-based Gem Aromatics manufactures specialty ingredients, including essential oils, aroma chemicals, and value-added derivatives, with over two decades of experience. It offers various products, from mother ingredients. Its products are used in oral care, cosmetics, nutraceuticals, pharmaceuticals, wellness, pain management, and personal care.

Gem Aromatics raised Rs 135.37 crore from 14 anchor investors as it allocated 41,65,383 equity shares at Rs 325 apiece. Its anchor book included names like Citigroup Global, Societe Generale, Goldman Sachs, Nippon India, SageOne, Nuvama, and Niveshaay Sambhav Fund, Astorne Capital VCC-Arven, Negen Undiscovered Value Fund and more.

For the financial year ended on March 31, 2025, Gem Aromatics reported a net profit of Rs 53.38 crore with a revenue of Rs 505.64 crore. Its net profit stood at Rs 50.10 crore with a revenue of Rs 454.23 crore for the year 2024-25. The company shall command a total market capitalization of Rs 1,697.71 crore.

Gem Aromatics has reserved 50 per cent of the net issue for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) and retail investors will have 15 per cent and 35 per cent of allocation, respectively. Last heard, its grey market premium (GMP) stood at Rs 30 apiece, suggesting 9 per cent uspide.

Motilal Oswal Investment Advisors is the sole book running lead manager and Kfin Technologies is the registrar of the issue. Shares of the company shall be listed on both BSE and NSE on August 26, Tuesday. Here's what a host of brokerage firms are say on the IPO of Gem Aromatic:
 

Arihant Capital Market
Rating: Subscribe for long-term
Gem Aromatics has a well-diversified product portfolio, supported by an in-house R&D team and advanced technologies that enable innovation and higher-margin value-added derivatives. Its strategically located manufacturing facilities ensure raw material access, cost efficiency and strong export capabilities while the B2B model with long-standing customer relationships provides revenue stability, said Arihant Capital Markets.

"However, the business remains exposed to raw material price volatility, regulatory changes and global demand fluctuations. The issue is valued at a P/E ratio of 31.8 times, based on annualized PAT of FY25 EPS of Rs 10.2. We are recommending a 'subscribe for long term' rating for this issue," it added.
 

Canara Bank Securities
Rating: Subscribe with caution
Gems Aromatics has major geographical advantage for procurement of mint and phenol. It is B2B focused and has marquee clientele. It has established itself in a niche domain and has cracked mint and mint derivatives category with an aspiration to move to other categories, said Canara Bank Securities with a 'subscribe' rating for high-risk investors. "However, pending litigation on the key manufacturing facility in Budaun remains a concern," it said.
 

Anand Rathi Shares & Stock Brokers
Rating: Subscribe for long-term
Gem Aromatics is a well-established manufacturer in India, engaged in the production of specialty ingredients such as essential oils, aroma chemicals, and value-added derivatives. It offers an extensive and diverse product portfolio, which continues to expand through ongoing product development and strong in-house research and development capabilities, said Anand Rathi.

"It has built long-standing and trusted relationships with a wide base of reputed customers. It operates strategically located manufacturing facilities that are designed to support large-scale production while also emphasizing environmentally sustainable and efficient manufacturing practices. We believe that the IPO is fully priced," it added with a 'subscribe for long-term' rating.
 

Swastika Investmart
Rating: Subscribe
Gem Aromatics specializes in manufacturing aroma chemicals, specialty ingredients, and value-added derivatives. It has shown consistent growth in both revenue and profitability over the reported periods. Strong customer relationships and repeat business support its operations, said Swastika. "Valuations appear to be on the higher side based on recent financials. Aggressive investors may consider allocating limited funds with a long-term perspective and listing gain," it said.
 

SMIFS
Rating: Subscribe
A net debt-to-equity of 0.78 times underscores balance sheet strength and financial prudence. We recommend subscribing to the issue, as the company’s capacity is set to triple with the upcoming Dahej expansion for citral products, positioning it strongly to capture incremental demand and making it a compelling long term investment opportunity," said SMIFS.
 

SBI Securities
Rating: Subscribe for long term
Gem Aromatics' Ebitda margin has improved 200 bps during FY23-25. Its total capacity has grown at 12.5 per cent CAGR between FY23-25. It is enhancing its manufacturing capacity in Dahej while also widening its product portfolio (new product category citral with products including safranal and damascene) which will aid in deriving sustainable growth, said SBI Securities.

"Its business is working capital heavy due to extended receivable days on exports; higher inventory of mint due to limited procurement period; higher SKUs to cater to client’s requirements. Its IPO is valued at post issue capital FY25 PE of 31.8 times which looks attractive than its peers. We recommend investors to SUBSCRIBE to the issue at the cut-off price for the long term," it said.
 

Ventura Securities
Rating: Subscribe
Gem Aromatics is an established market position with over 20 years of experience. It has a diversified product portfolio across multiple industries, with experienced leadership and global market reach. Strong R&D capabilities for continuous innovation is an added advantage, said Ventura Securities with a 'subscribe' rating.

Ventura has cited high dependence on top customers; product concentration, with 69.12 per cent of revenue from mint derivatives; exposure to geopolitical risks and currency fluctuations in foreign markets; dependence on a few key suppliers; ongoing contingent liabilities as the key risks for the company.
 

BP Equities
Rating: Subscribe
"We believe that the company's leadership position in the F&F market, product diversification, strengthened distribution network and margin-accretive expansion plans provide long-term growth visibility for the business," said BP Equities. "On the upper price band, the issue is valued at a P/E of 28.5 times based on FY25 earnings, which seems fairly valued," it added with a 'subscribe' tag.