Gem Aromatics IPO

It has been an established manufacturer of specialty ingredients for over two decades, focusing on essential oils and derivatives like mint and clove. In FY25, it held a 65% market share in India for Eugenol and over 58% for Eucalyptus Oil by volume.

It demonstrates strong customer loyalty, with 94.21% of its FY25 revenue (₹474.79 crore) coming from existing or repeat customers. This high retention rate, from its 225 domestic and 44 international customers in FY25, signals stable revenue and strong client relationships.

The company operates three manufacturing facilities with a total installed capacity of 5,346 MTPA as of March 2025. Its dedicated 13-scientist R&D team (FY25) developed innovative, environmentally friendly processes, like the zero-effluent vapor phase method for Anisole production, which will have a 7,000 MT capacity. The R&D expenditure for Fiscal 2025 was ₹1.46 crore, 0.34% of total expenses.

It has a significant global presence, with exports to 22 foreign countries accounting for 50.66% of its FY25 revenue. This list includes USA (31.04%), Brazil (6.41%), China (2.67%), and more, which helps diversify market risk and capture international demand.

It is the third most efficient player among listed peers, with an EBITDA margin of 17.6%, trailing Clean Science and Technology (40.1%) and Privi Speciality Chemicals (21.6%), as of FY25.

The company boasts a wide range of 70 products across four key categories, including mint and clove derivatives, allowing it to serve various industries and diversify its revenue streams effectively.

High customer concentration is a risk, as 56.06% of FY25 revenue came from its top 10 customers. Losing any of these key clients could significantly hurt its revenue and profits.

The company is heavily reliant on mint and mint derivatives, which generated 69.12% of its FY25 revenue. A drop in demand for these products could significantly impact its profitability.

A significant dependence on its top 10 suppliers, which contributed 52.92% of total expenses in FY25, and top 5 forming 38.72%, poses a risk. Supplier issues could disrupt operations and affect profitability.

As of Fiscal 2025, it had a Net Debt to Total Equity ratio of 0.78. This ratio indicates that it has more debt relative to its equity compared to most peers, such as Clean Science and Technology (which had negative net debt, meaning more cash than debt at -0.01), Camlin Fine Sciences (0.55), S H Kelkar and Company (0.52), and Oriental Aromatics (0.51).

The company experienced negative cash flow from operations in FY25 (-₹24.91 crore). Its substantial total borrowings of ₹259.84 crore as of June 30, 2025, create obligations that could strain liquidity.