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Company Profile – Aether Industries Ltd
Founded in 2013, Aether Industries Ltd (AIL) is one of the fastest-growing specialty chemical companies in India. It produces advanced intermediates and chemicals that incorporate important, diverse basic chemistry and technology skills. They started building an internal research and development team (R&D) in 2013 and started commercial operations in FY17.
The company operates three business models:
- Extensive production of its medium and specialty chemicals.
- Contract research and production services.
- Special production
The AIL portfolio included more than 25 chemical products as of March 31, 2022. Their key clients are based in North America, Europe, and India. Prominent clients include Adama Ltd (Israel), BYK Group (Germany), UPL Limited, Divi’s Labs, and Drs. Reddy’s Labs. The company earns 62.6% of revenue in the pharmacy sector and 22.9% in the agrochemical sector. Exports account for ~ 49% of its gross domestic product, which also serves as a natural fence against the backdrop of unripe raw materials found overseas. He owns and operates two production centers in Surat, Gujarat.
Aether Industries has grown at an annual rate (CAGR) of 49.5% between 2019 and 2021. The company’s vision is to create a niche in the global chemical industry in the creative way of chemical and technological systems.
About the IPO
1: Who was the first woman President of India?
The public issue of Aether Industries Ltd opens on May 24 and closes on May 26. The company has established Rs 610-642 per share as an IPO price band.
New share issuance (face value of Rs 10 each) combined with Rs 627 crore. The IPO also incorporates the sale of goods (OFS) by early developers and investors, including Rs 181.04 crore. Individual investors can bid for a minimum of 23 equity shares (one place) and at a rate of 23 shares thereafter. You will need a minimum of Rs 14,766 (at a fixed amount) to apply for this IPO. The maximum number of shares a potential investor can use is 299 shares (13 lotteries).
The Company will use all proceeds from the IPO for the following purposes:
- Repayment/prepayment of borrowings – Rs 138 crore
- Funding capital expenditure requirements (greenfield project in Surat) – Rs 163 crore
- Funding working capital requirements – Rs 165 crore
- General corporate purposes.
The total promoter holding in Aether Industries will decline from 96.96% to 87.09% post the IPO.
7 important things to know about Aether Industries IPO
1) Aether Industries Ltd has applied for an IPO of Rs.1,000 crore with SEBI which includes a new release of Rs.757 billion and an OFS sales offering of approximately Rs.243 million. Aether Industries Ltd is one of the largest manufacturers and suppliers of specialty chemicals and caters to Indian and foreign markets.
Aether Industries Ltd focuses on producing advanced intermediates and specialized chemicals that combine complex and diverse chemistry. This allows the company to create a niche and reduce entry barriers.
2) While the price of the IPO is yet to be announced, let’s look at the sales component (OFS) first. The company plans to offer 27.51 lakh equity shares as part of the OFS community as part of the IPO. OFS that transfer of ownership will not result in any reduction in equity and any refinement of EPS.
Instead, the company will only see a reduction in promoters’ assets and an increase in public assets. As a result, the company will witness an increase in the free float of stock, which will aid in listing.
3) Part of the new release will cost approximately Rs.757 crore for Aether Industries IPO. In part of the new release of Rs.757 billion, the company has set aside an amount of Rs.136 crore for the bank to release its capital expenditure plans, Rs.212 crore to pay off the company’s debt while Rs.165 crore will be. allocated to finance the operating costs of the company.
In the meantime, the company is also planning an IPO pre-set Rs.131 million. If placement on HNIs, family offices and QIBs is successful, then the size of the new releases will be reduced equally.
Pre-IPO placement is done prior to IPO in order to provide a good indication of the stock. Pre-IPO placement comes with a longer lock than a solid investment but the price path is also high.
4) The company’s finances were tight. During the FY21 financial year, the company reported Rs.454 million in sales revenue more than double over the past 2 years indicating strong corporate growth in line with the top line.
At the same time, a surplus profit of Rs.72 billion was reported on FY21, which increased almost 3 times with FY19, which also boosted total revenue. The company EBITDA has also increased more than 2.5 times in the last 2 years showing a good top line and low line sequence. This should be good for stock measurement.
5) The company, Aether Industries Ltd, started as a R&D unit in 2013 and entered commercial production only in 2017. It covers a wide range of growing industries such as pharmaceuticals, agrochemicals, material science, electrical chemistry, advanced. image processing and oil and gas industry in India.
6) Aether Industries Ltd recently raised Rs.100 crore for early investors such as White Oak Capital and IIFL in the pre-IPO round. White Oak is an investment fund founded by Prashant Khemka, former head of Goldman Sachs India. The White Oak wallet business is run by Aashish Somaiya. They are both veterans in the field of investment.
7) The IPO of Aether Industries Ltd will be led by HDFC Bank and Kotak Mahindra Capital Company. They will serve as a guide for leading managers or BRLMs on the issue.
Aether Industries IPO Subscription Status (Bidding Detail)
The Aether Industries IPO is subscribed 6.26 times on May 26, 2022 5:00:00 PM. The public issue subscribed 1.14 times in the retail category, 17.57 times in the QIB category, and 2.52 times in the NII category.
| Category | Subscription (times) |
| QIB | 17.57 |
| NII | 2.52 |
| Retail | 1.14 |
| Employee | 1.06 |
| Total | 6.26 |
Aether Industries IPO Listing Date
| Listing Date | Friday, June 3, 2022 |
| BSE Script Code | 543534
|
| NSE Symbol | AETHER |
| Listing In | B Group of Securities |
| ISIN | INE0BWX01014 |
| IPO Price | ₹642 per share |
| Face Value | ₹10 per share |
Listing Day Trading Information
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Company Contact Information
Plot No. 8203,
GIDC, Sachin,
Surat- 394230
Phone: +91 261 660 3360
Email: compliance@aether.co.in
Website: https://aether.co.in/
Aether Industries IPO Registrar
Phone: +91-22-4918 6270
Email: aether.ipo@linkintime.co.in
Website: https://linkintime.co.in/
Aether Industries IPO Review
Aether Industries IPO Recommendation Summary
| Review By | Subscribe | Neutral | Avoid |
|---|---|---|---|
| Brokers | 9 | 1 | 0 |
| Members | 9 | 1 | 4 |
Objects of the issue
- The company aims to use the net proceeds from the issue to make repayment or pre-payment, in whole or in part, of all or a portion of the company’s borrowings.
- It aims to use the funds as capital expenditure for their manufacturing facility (proposed greenfield project).
- A portion of the funds would be used for general corporate objectives.
- Some amount would be used in funding the working capital requirements of the company.Before applying to the IPO of Aether Industries, have a look at these crucial points…
#1 About the Company
Aether Industries was founded in 2013, with the goal of designing a space in the global chemical industry using a unique approach to chemicals, technologies, and systems.
It is one of the fastest-growing specialty chemical companies in India, with a CAGR of 60% revenue for the 2018 and 2021 financial years.
Aether Industries is one of the CRAMES (Contract Research and Manufacturing Services) with a production capacity of 6,000 million tons (MT).
#2 Financial Position of Aether Industries
The chemical industry is a major supplier of agriculture, medicine, and food processing, among many other industries.
In recent years, specialized chemical stocks have become more baggage-based due to the prosperity of industry prospects. It gains power due to strong domestic demand and export opportunities.
The industry is in a good position as many international players are lowering their confidence in China after the Covid-19.
Recent pollution control measures in China have also led to the closure of many factories in that country. It directly benefits its Indian counterparts.
So Aether seems to be in a good position to spend this on good money.
Excellent research and development skills and product portfolio have benefited the company. It has shown good growth with an increase of almost 50% annual revenue.
The company’s operating limits have also been expanded as it takes steps to save.
The company’s debt / equity ratio is 1.19 as of March 2021 while its EBITDA stands at Rs 1,161.3 m.
Financial Snapshot
| Particulars (Rs m) | Mar-21 | Mar-20 | Mar-19 |
|---|---|---|---|
| Revenue | 4,537.80 | 3,037.80 | 2,032.70 |
| Revenue Growth % | 49.3 | 49.4 | |
| Net Profit | 711.1 | 399.5 | 233.6 |
| Net Profit Margin | 15.6 | 13.15 | 11.49 |
| Net Worth | 1,744.30 | 782.8 | 385.5 |
| Earnings per share (EPS) | 7.36 | 4.24 | 2.48 |
#3 Competitive Strengths
Aether Industries produces a wide variety of products for different categories. It therefore has a distinct portfolio of leading products in the market.
The foundation of a company is its ability for internal research and development. This utilizes its basic chemistry and technology skills.
By consistently delivering quality products, the company has more than 130 diverse clients in international, international, regional, and local companies.
The company has integrated business models focusing on mass production, CRAMS, and contract production. These business models are profitable, and interactive, alone.
Aether Industries is led by experienced facilitators and senior executives with extensive domain experience. This has helped the company to become known as India’s leading specialty chemical manufacturer.
#4 Risk factors
- The success of Aether Industries depends largely on the research and development (R&D) of new products. If a company cannot deliver, it could have a negative impact on the business.
- Lack of long-term contracts with suppliers and customers can be part of the uncertainty in unfavorable circumstances.
- The Company remains vigilant to receive notices from regulatory authorities including environmental authorities, which may result in litigation, fines, penalties, or cancellation or suspension of operating licenses.
#5 Peer Comparison
Let’s take a look at how Aether Industries performs when compared to peers.
| Particulars | Total Revenue (Rs in m) |
Net profit (Rs in m) |
EPS (basic) |
|---|---|---|---|
| Aether Industries | 4,537.80 | 711.1 | 7.3 |
| Clean Science and Technology | 5,380.50 | 1,983.80 | 18.8 |
| PI Industries | 47,019.00 | 7,189.00 | 49.9 |
| Navin Fluorine International | 12,584.30 | 2,329.80 | 52 |
The growth of the chemical sector nationally and globally has benefitted all players in the sector. Aether Industries is experiencing competition from bigger players.
Strengths
1. One of the company’s strongest suits for its internal R&D skills in chemistry and technology
2. They have a very diverse portfolio of leading products in the market
3. Aether Industries has maintained long-term relationships with their broad customer base
4. The 3 components of their business model work together in perfect harmony
Risks
1. The Company is subject to certain risks due to its operations which include the construction, use, and storage of various hazardous materials.
2. The Company receives a significant portion of its revenue from major customers, and does not have long-term contracts with all of these customers, therefore, if one or more customers choose not to meet their needs at Aether, or terminate their customer service. long-term contracts, the business will be adversely affected
3. The company relies on specific products to generate the highest revenue
4. Exchange rate fluctuations may adversely affect the performance of a company as its exports and part of the cost are made in foreign currencies.
