Gem Aromatics is an established manufacturer of specialty ingredients, including, essential oils, aroma chemicals and value-added derivatives in India with a track record of over two decades. The company offers a diversified portfolio of products, ranging from the Mother Ingredients to its various value-added derivatives. Its products find application across a broad spectrum of industries, such as, oral care, cosmetics, nutraceuticals, pharmaceuticals, wellness and pain management and personal care. Mint and mint derivatives form 69.12% of total revenues in FY2025 while Clove and clove derivatives formed 18.9%, phenol 2.8% and Other synthetic and natural ingredients (including eucalyptus, eucalyptol, lemon grass, amongst others) 7.39% of total revenues

The company offer 70 products across its four product categories, namely, (i) mint and mint derivatives; (ii) clove and clove derivatives; (iii) phenol; and (iv) other synthetic and natural ingredients. It is among the leading supplier in many of the product lines that it operate in. With a focus on servicing its customers and manufacturing quality products, it commenced its operation in fiscal 1999 in the mint and mint derivative category with products like spearmint and piperita. In order to expand its product portfolio, it commenced production and sale under the clove and clove derivative category in 2009. In continuation with its focus on expanding its product portfolio, it is in the process of introducing products under the new category, being, citral.

The company has been recognised with awards and accolades, including, Export Excellence Award for outstanding performance in category of One Star Export House – MSME (Gold) from Federation of Indian Export Organisation for the years 2017-18 and 2019-20, Export Excellence Award for outstanding performance in category of Two Star Export House – MSME (Silver) from Federation of Indian Export Organisation for the years 2020-21. It has also been accorded the status of a Three Star Export House by the Directorate General of Foreign Trade, Department of Commerce, Ministry of Commerce and Industry Government of India. In fiscal 2024, the Federation of Indian Export Organisations (Western Region) awarded the company as an Associate Bronze Partner of the Western Region 8th and 9th set of export excellence awards.

Further, in 2019, doTERRA Enterprises, Sàrl (doTERRA), invested in the company and while it initially started with supply of spearmint and piperita, during the past three fiscals, it has supplied 15 products to doTERRA Global Limited.

The company operates three manufacturing facilities located in Budaun, Uttar Pradesh (Budaun facility with production capacity of 3800 MTPA as on March 31, 2025), Silvassa, Dadra and Nagar Haveli and Daman and Diu (Silvassa Facility with production capacity of 1500 MTPA) and Dahej, Gujarat (Dahej facility with production capacity of 46 MTPA). As of March 31, 2025, its manufacturing facilities had a total installed capacity of 5,346 MTPA, across a wide range of products.

The company has established long standing relationships with several domestic and global corporate customers such as, Colgate-Palmolive (India), Dabur India, Patanjali Ayurved, SH Kelkar and Company, Rossari Biotech, Symrise, doTERRA, Ventos So Brasil Eireli and Anhui Hautian Spices Co. Ltd. as well as several domestic and global merchant traders. The company supplied products to 225 customers domestically and 44 customers cumulatively across 18 foreign countries globally during fiscal 2025 covering geographies including the Americas, Asia, Africa and Australia. In the domestic market, it sell its products directly to customers on a business-to-business basis and export sales are undertaken through a combination of methods such as (i) direct sales by the company to customers; (ii) sales through its material subsidiary, i.e., Gem Aromatics LLC, based in the USA; or (iii) sales through third party agencies.

The promoters of the company are Vipul Parekh, Kaksha Vipul Parekh, Yash Vipul Parekh and Parekh Family Trust

The Offer and the Objects

The offer comprises fresh issue of up to 5384615 equity shares at the upper price band of Rs 325 and 5663430 equity shares at the lower price band of Rs 309 aggregating Rs 175 crore and an offer for sale up to 8500000 equity shares aggregating Rs 276 crore at the upper price band of Rs 325 and Rs 263 crore at the lower price band of Rs 309.

The company proposes to utilize the net proceeds from the issue towards repayment and/or repayment, in full or in part, of all or a portion of certain outstanding borrowings availed by the company and its subsidiary, Krystal Ingredients Private Limited amounting Rs 140 crore and the balance towards general corporate purposes. As on June 30, 2025, the total borrowings under the various financing arrangements of the company and its subsidiaries aggregated to Rs 259.842 crore.

Promoter Vipul Parekhpost offer shareholding will decrease to 17.6% from pre offer shareholding of 26.6% while promoter Kaksha Vipul Parekhpost offer shareholding will decrease to 8.4% from pre offer shareholding of 12.7% and promoter Yash Vipul Parekhpost offer shareholding will decrease to 8.7% from pre offer shareholding of 13.1%

Strengths

The company is one of the prominent essential oils and value-added derivatives manufacturers in India, based on value and volume manufactured, specializing in products that are derived from mint and clove oil.

The company track record, diverse product portfolio and brand recall has helped it establish several leadership positions within its product portfolio, for instance, in India, it has a dominant presence in essential oil-based products and derivatives that are manufactured from mint, clove, eucalyptus oils and other essential oils. The largest segments under essential oil are – Orange oil, Mint oil, Clove oil, and Eucalyptus oil. It is present in three of the four major categories. It is one of the largest procurers of piperita oil, and one of the largest processors of DMO, clove oil, eugenol and eucalyptus oil during FY 2025 in India, in terms of volume manufactured. As on FY 2025, its share of DMO and Eugenol in India was 12% and 65%, respectively, in terms of volume manufactured.

The company in-house manufacturing and R&D capabilities have contributed towards its track record of product innovation and launches and assisted it with maintaining consistent product quality. With over two decades of experience, it has developed its expertise in advanced organic synthesis through application of complex chemistries like Grignard’s, amide coupling, Friedel-Crafts reactions, cross-coupling chemistry, photochemical reactions, and methoxylation using green chemistry. Its advanced capabilities also extend to high-pressure reactions, continuous processes, fixed-bed systems, and process automation.

The Indian flavours and fragrances market was estimated at US$ 2.7 billion in 2025 and is expected to reach at US$ 4.1 billion by 2030.

The company has a wide product portfolio across the demand spectrum and is not dependent on a single demand factor.

The company R&D team is capable of understanding and handling complex chemistries, including, Grignard’s, amide coupling, friedel-crafts reactions, cross-coupling chemistry, photochemical reactions, and methoxylation using green chemistry, while on the technology side, has capabilities to undertake operations such as continuous and high-pressure reaction technology, fixed-bed reactions, process automation, and high-vacuum fractional distillation, among others.

The formulated flavours and fragrance blends segment is dominated by global players due to high R&D costs, need for IP protection, strong branding, and customer loyalty which are key barriers for new entrants. FMCG firms avoid changing suppliers, as altering a product’s fragrance or flavour risks losing customers, making established suppliers hard to displace.

Weaknesses

The company derived 56.06% of its total revenue from operations from its top 10 customers. The loss of any of these customers may adversely affect revenues and profitability.

A large portion of revenue (around 70%) is derived from mint and mint-related products. Any drop in demand within this category could negatively impact overall earning

The company had negative cash flows from operating activities in the past.

Raw materials like clove, eucalyptus, and mint can be price-sensitive and are also imported from various countries. Moreover, exports expose the company to forex risk, which could strain margins.

Changes in technology may render its current technologies obsolete or require it to make substantial capital investments

The company is subject to strict quality requirements and any failure by them to comply with quality standards could adversely affect business, results of operations, cash flows and financial condition

The company has substantial working capital requirements and capital expenditure and may require additional capital to meet those requirements, which could have an adverse effect on business, results of operations, financial condition and cash flows.

The company is subject to various safety, health and environmental laws and labour, workplace and related laws and regulations which may increase its compliance costs and as such adversely affect business, results of operations and financial condition

Valuation

For FY2025, sales were up by 11% to Rs 503.95 crore. OPM rose30 bps to 17.6% which led to 13% increase in operating profit to Rs 88.45 crore. Other income fell 5% to Rs 1.69 crore and interest cost increased 29% to Rs 8.08 crore while depreciation increased 17% to Rs 7.34 crore. PBT increased 11% to Rs 74.71 crore. Tax expenses were 22% higher at Rs 21.33 crore. Net profit increased 7% to Rs 53.38 crore.

FY2025 EPS on post-issue equity works out to Rs 10.2. At the upper price band of Rs 325, P/E works out to be 32

Total outstanding borrowings amounted to Rs 259.842 crore as at June 30, 2025. As much as 53.9% of the debt will be repaid from the issue proceeds, bringing down interest costs substantially and boosting profit. The EPS works out to Rs 11 if 53.9% of its interest cost is removed, keeping all other items, including tax rate, same. The re-worked P/E at the upper price band moderates to 29.

As of 13 August 2025, its listed peers Clean Science and Technology traded at FY2025 P/E of 49,Privi Speciality Chemicals trades at FY2025 PE of 51, Camlin Fine Sciences at negative 25, Yasho Industries at 327, S H Kelkar and Company at 41 and Oriental Aromatics at 32.

For FY2025, Gem AromaticsEbitda margin and ROE stood at 17.6% and 18.8% as compared to 40.1% and 18.7% for Clean Science and Technology, 21.6% and 16.7% for Privi Speciality Chemicals, 11.9% and (-)17.5% for Camlin Fine Sciences and 16.4% and 1.5% for Yasho Industries, 11.1% and 5.7% for S H Kelkar and Company and, 5.7%and 5.2% for Oriental Aromatics,respectively.