Ami Organics shares surge 4% on plans to acquire 55% in Baba Fine Chemicals

Ami Organics shares jumped over 4 percent in early trade on April 24 on the company’s plan to acquire 55 percent stake in Baba Fine Chemicals.

Ami Organics will pay Rs 68.21 crore for the deal, expected to completed in six months from approval.

Baba Fine Chemicals  makes custom specialty chemicals used in the semiconductor industry. It reported a revenue of Rs 47.07 crore in FY23, up 29 percent over the previous year.

“It also marks Ami Organics’ foray in the high entry barrier semiconductor industry. The acquisition is in line with Ami Organics’ strategy of expanding its speciality chemicals division to focus on niche products manufactured using advanced technology with low competition and high entry barriers,” the company said in an exchange filing.

At 11.46am, shares of Ami Organics were trading Rs 1,070.90, up 1.35 percent on the National Stock Exchange. The stock also touched an intraday high of Rs 1,099.75.

Two lakh shares of the company changed hands on the exchanges so far, as against the one-month daily traded average of 83,000 shares.

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“Our synergies will help scale up Baba Fine Chemicals’ niche product basket, given that they are the only manufacturers in the country in their product category. The acquisition is in line with our focus of expanding our presence in complex speciality chemicals industry and will complement our product basket of electronic chemicals,” Naresh Patel, Executive Chairman and Managing Director, Ami Organics, said in the exchange filing.

The company has developed two electrolyte additives used in lithium ion batteries, which are awaiting commercial orders from its customers. On that account, the acquisition will give Ami Organics access to the complementing products of Baba Fine Chemicals that are also focused on the electronic industry, mainly semiconductors.

Ami Organics posted a 14.45 percent on year jump in its net profit for the December quarter to Rs 22.8 core. Revenue in the quarter also rose around 8 percent to Rs 152.36 crore.