Aether Industries IPO opens for subscription on 24 May 2022 and is scheduled to close on 26 May 2022. As part of our comprehensive Aether Industries IPO review, here are the major strengths and risks of the company as well as broker recommendations.
Aether is a developer and manufacturer of advanced intermediates and speciality chemicals involving complex and differentiated chemistry and technology core competencies.
As of 30 September 2021, its product portfolio comprised over 22 products. Aether Industries is the sole manufacturer in India of 4MEP, MMBC, T2E, OTBN, NODG, DVL and Bifenthrin Alcohol, and was among the largest manufacturers in the world by volume for 4MEP, T2E, NODG and HEEP.Â
Aether Industries IPO Review – Strengths
- Differentiated portfolio of market-leading products (portfolio of 25 products marketed to 34 global customers in 18 countries and to 154 domestic customers)
- Focus on R&D to leverage core competencies of chemistry and technology (R&D team includes 92 scientists and 72 chemical engineers)
- Long standing relationships with a diversified customer base (top 10 customers contributed approximately 55.76% in nine months ended 31 December 2022)
- Synergistic Business Models focused on Large Scale Manufacturing, CRAMS and Contract Manufacturing
- Focus on Quality, Environment, Health and Safety (QEHS)
- Strong and consistent financial performance
- Experienced Promoters and Senior Management with extensive domain knowledge
Aether Industries IPO Analysis – Risk Factors
- Risks in operations involving the production, usage and storage of various hazardous substances
- Significant revenues from major customers and Aether does not have long term contracts with all of these customers
- Reliance on Pharmaceuticals (67.6% of revenues in FY2021) and Agrochemicals (20.6%) industries
- Exchange rate risk (exports accounted for over 50% of gross revenues from operations in FY2021)
- Aether does not have long-term agreements with suppliers for raw materials
Aether Industries IPO Analysis – Financial Performance
| Â | FY 2019 | FY2020 | FY2021 | 9M FY2022 |
| Revenue | 203.3 | 303.8 | 453.8 | 449.3 |
| Expenses | 170.7 | 247.3 | 360.0 | 338.0 |
| Net income | 23.3 | 40.0 | 71.1 | 82.9 |
| Margin (%) | 11.5 | 13.2 | 15.7 | 18.4 |
Aether Industries Valuations & Margins
| FY2019 | FY2020 | FY2021 | 9M FY2022 | |
| EPS | 2.48 | 4.24 | 7.36 | 7.45 |
| PE ratio | – | – | 82.88 – 87.23 | 61.41 – 64.63* |
| RONW (%) | 60.54 | 51.04 | 40.79 | 23.01 |
| ROCE (%) | 25.16 | 26.07 | 28.50 | 21.72 |
| EBITDA (%) | 24.40 | 24.27 | 25.59 | 28.47 |
| Net Debt/Equity | 3.27 | 2.18 | 1.19 | 0.65 |
| NAV | – | – | 15.69 | 31.97 |
