Specialty chemical manufacturer Aether Industries‘ initial public offering (IPO) will hit primary markets on Tuesday, May 24. Aether Industries intends to raise close to Rs 808 crore through this IPO. Out of this, Rs 627 crore will be raised through fresh issue of equity shares while the remaining Rs 181.04 crore will be raised through an offer for sale (OFS). The tentative date for the announcement of share allocation is May 31, 2022. The likely date for share listing is June 3.
Aether Industries’ IPO: Price Band & Lot Size
The price band of the company’s public issue has been set at Rs 610-642 apiece. An investor can bid for a minimum of one lot of 23 shares, totaling to Rs 14,766 per lot. The maximum bid can be placed for 13 lots, totaling to Rs 191,958.
Aether Industries’ IPO: Objective
Aether plans to utilise Rs 627 crore of fresh issue to fund capital expenditure requirements of Greenfield projects, repayment of outstanding borrowings, and general corporate purposes.
Aether Industries’ IPO: Financials
Aether reported 18.45 per cent growth in net profit for nine months that ended in December 2021 from 14.30 per cent, a year ago. However, revenue fell to 49.04 per cent for twelve months that ended in March 2021 from 50.02 per cent in FY20.
Aether Industries’ IPO: GMP Today
In the grey market, shares of Aether Industries were trading at Rs 10 premium to its upper price band. Once listed, Aether will join its peers like Clean Science and Technology, Navin Fluorine International, Vinati Organics, PI Industries, and Fine Organic Industries.
Aether Industries’ IPO: About the Company
Aether Industries, which is based out of Surat, Gujarat, focuses on producing advanced intermediates and specialty chemicals involving complex, differentiated chemistry and technology core competencies.
The company’s products are used in pharmaceutical, agrochemical, material science, coating, high-performance photography, additive as well as oil and gas segments of the chemical industry.
Aether Industries’ IPO: Should You Subscribe?
Brokerage firm, Religare Broking, believes that the company is well-placed to benefit from growing industry trends given its differentiated portfolio of market-leading products. A constant focus on research and development (R&D) and long-standing diversified customer base will help the company outperform industry growth.
Analysts believe that the Indian specialty chemicals market is expected to grow at 11.2 per cent CAGR over CY20-25. Given this, the company is primed to benefit from its product portfolio expansion and diversification in other business segments.
However, the brokerage firm believes that despite a strong financial performance, valuations appear expensive at ~71x FY22 annualized post EPS. Volatile raw material prices and high debt level continue to shadow the company’s performance; hence, the brokerage firm recommended a ‘neutral’ stance on the IPO.
Analysts at Angel One believe that Aether Industries’ IPO valuations seem to be reasonable considering its historical top-line and bottom-line CAGR of ~50 per cent and ~75 per cent, respectively over FY19-21. Aether’s diversified customer base, strong financial track record, and higher return on equity makes it a favorable subscription, it said. Hence, the brokerage firm recommended ‘subscribe’ ratings on the issue.