Aether Industries IPO – Review and Analysis

Aether Industries IPO Analysis and Review. Find IPO Date, Price, Allotment Date and Listing Date. Should you Invest or avoidAether Industries IPO (Aether Industries Limited IPO) Details

Aether Industries Limited is coming up with an IPO, which would open for subscription on 24th May, 2022. Aether Industries Limited is a speciality chemical manufacturer in India. Company generated strong revenue and margin growth in the last 3 years and 9 months. Should you invest in Aether Industries IPO? What are the risk factors in this IPO? Let me do this IPO review and provide complete analysis.

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About Aether Industries Limited

Company is a speciality chemical manufacturer in India.

It is focused on producing advanced intermediates and speciality chemicals involving completed and differentiated chemistry and technology core competencies.

Its business started in 2013 with a vision to create a niche in the global chemical industry with a creative approach towards chemistry, technology and system which would lead to sustainable growth.

They are focused on the core competency model of chemistry and technology.

According to Frost and Sullivan, chemical companies usually have a single or a couple of chemistry competencies for their entire product portfolio, however the company has eight chemistry competencies to use for its wide array of products. This enables them to cater to niche and advanced intermediate requirements of a wider range of end-products and applications.

Company has 2 manufacturing sites at Sachin in Surat, Gujarat. First manufacturing facility is a 3,500 square metre facility, including R&D and Hydrogenation Facilities and Pilot Plant. Second manufacturing facility encompasses roughly 10,500 square metres, with an installed capacity of 6,096 MT per year spread among three buildings and 16 production streams as of September 30, 2021.

Aether Industries IPO dates, issue details, Size and Price Band

IPO Opening Date 24-May-22
IPO Closing Date 26-May-22
Issue Type Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price band Rs 610 to Rs 642 per equity share
Lot Size 23 Shares
Listing at BSE and NSE
Total Issue Size Rs. 808.04 Crores
    Fresh issue     Rs. 627 Crores
    OFS     Rs. 181.04 Crores

What are the competitive strengths of Aether Industries Limited?

1) Company has differentiated portfolio of market-leading products

2) It focuses on R&D to leverage its core competencies of chemistry and technology

3) It has long standing relationships with a diversified customer base

4) Company has Synergistic Business Models focused on Large Scale Manufacturing, CRAMS and Contract Manufacturing

5) Company focuses on Quality, Environment, Health and Safety (QEHS)

6) It has strong and consistent financial performance

7) Company has experienced Promoters and Senior Management with extensive domain knowledge

What are the Objects of the IPO Offer?

Aether Industries IPO Size is Rs 808.04 Crores which has both OFS and fresh issue.

1) Offer for Sale (OFS) for Rs 181.04 Crores: Under OFS, selling shareholders would get entire money and the company would not get any funds.

2) Fresh issue of Rs 627 Crores: Fresh issue would be used for the following:

  • Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company.
  • Funding capital expenditure requirements for the manufacturing facility (Proposed Greenfield Project).
  • Funding working capital requirements of the company.
  • General corporate purposes.

Who are the promoters of Aether Industries Limited?

Ashwin Jayantilal Desai, Purnima Ashwin Desai, Rohan Ashwin Desai, Dr. Aman Ashvin Desai, AJD Family Trust, PAD Family Trust, RAD Family Trust, AAD Family Trust and AAD Business Trust are the promoters of the company.

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How is the company financial track record?

Here are the total assets, revenues and profits of the company in the last 3 years and 9 months.

Financial Year ending / Period ending (Amt in Mns)
Particulars FY19 FY20 FY21 Dec-21
Total Assets 2,067 3,005 4,529 7,096
Revenues 2,032.8 3,037.8 4,537.9 4,493.2
Profit After Tax 233.4 399.6 711.2 829.1
Profit % 11.48% 13.15% 15.67% 18.45%

Positive Factors in Aether Industries IPO

Here are the key reasons to invest in this IPO.

1) Company is the leading speciality chemical manufacturer in India.

2) Company has differentiated portfolio of market leading products. Company with Synergic Business Models focused on large scale manufacturing, CRAMS and contract manufacturing.

3) Company has generated strong revenue growth in the last 3 years and 9 months.

4) Company has generated strong margin growth in the last 3 years and 9 months.

5) Its debt to equity ratio has reduced to 0.65 for 9 months ended Dec-21 compared to 1.63 for FY21.

Risk Factors of investing in Aether Industries IPO

1) Company is dependent on its manufacturing facilities and are subject to certain risks in the manufacturing process. If there are any shutdown or lockdowns, it can impact company business.

2) Company is subject to certain risks involving manufacture, usage and storage of various hazardous substances.

3) Company derives a significant part of the revenue from major customers and they do not have long term contracts with them. Any loss in such customers can impact business.

4) Company insurance coverage may not adequately protect them against all losses which can affect the business.

5) IPO objects contain OFS and fresh proceeds. While fresh proceeds would be used for company purpose, OFS amount goes to selling shareholders directly.

6) Portion of the net IPO proceeds would be utilized for the repayment or prepayment of loans taken from HDFC Bank, which is one of the book running lead managers.

7) Currently the company has long term fund credit rating as CRISIL A-Stable and short term fund rating as CRISIL A+ (Reaffirmed). Any downgrade of its debt ratings could adversely affect the business.

8) Investors should read complete risk factors indicated in the RHP before investing in this IPO.

Aether Industries IPO valuation

Aether Industries IPO price band is Rs 610 to 642 per share.

1) If we consider last 3 years weighted average EPS of Rs 5.51 and the upper price band of Rs 642, P/E works out to 116x.

3) Similarly, if we consider FY2021 EPS of Rs 7.36 and the upper price band of Rs 642, P/E works out to 87x.

4) If we take 9 months ended Dec-21 EPS and annualize it, the P/E works out to be 65x.

5) Means company is asking the upper price band of IPO price of Rs 642 in the P/E ratio of 65x to 116x.

As per the RHP, there are listed peers like Fine Organics trading at P/E 112x (Highest) and Navin Fluorine trading at P/E 74x (Lowest) and industry average P/E is 83x. Hence, Aether Industries IPO price of Rs 642 at P/E between 65x to 116x is fully priced.

Aether Industries IPO Dates – Subscription, Allotment and Listing Dates

Offer Open 24-May-22
Offer close 26-May-22
Finalization of Allotment 31-May-22
Initiation of Refunds 01-Jun-22
Credit to Demat Account 02-Jun-22
IPO Shares Listing Date 03-Jun-22

How to buy Aether Industries IPO online through Zerodha?

You can login to your demat account, visit the IPO section and apply for this IPO during the subscription dates.

You can also apply this IPO on Zerodha. If you do not have Zerodha account, sign-up here and proceed to the next step.

Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.

Follow below steps to apply this IPO in Zerodha platform:

1) Visit the Zerodha portal and login to Console.

2) Go to Portfolio and click the IPOs link.

3) Visit ‘Aether Industries Limited IPO’ row and click the ‘Bid’ button.

4) Enter your UPI ID, Qty and the Price which you want to bid.

5) Click on ‘Submit’ IPO application form.

6) Visit the UPI App (net banking or BHIM) to approve the mandate.

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Aether Industries IPO Review – Conclusion

Aether Industries Limited is the leading manufacturer of speciality chemicals in India.

Company has generated strong revenue growth in the last 3 years and 9 months.

It has generated strong margin growth too for a similar period.

Its issue price is fully priced.

Considering all these positive and risk factors, investors can invest in this IPO for medium to long term perspective. Since stock markets are taking corrections and recent IPOs have listed with negative gains, investors might not get listing gains even in this IPO.

Source: Aether Industries IPO Prospectus (RHP)

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Suresh KP

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