HDFC Securities Recommends Buy This Recently Listed Stock For 27% Potential Gains

HDFC Securities has recently published a report on Aether Industries Ltd, a recently listed on the stock exchange. The brokerage has estimated a target price of Rs 1,045/share for 12 months time period. Aether Industries Ltd has a technology-oriented business model and it sells innovations in chemistries and technologies. Competencies in eight chemistries and eight technologies have enabled the company to successfully build all three of its business verticals-large-scale manufacturing, contract manufacturing and contract research and manufacturing services (CRAMS)-in less than six years of operation. The company is more than doubling its manufacturing capacity by the CY23 end. Augmentation of capacity will not only allow it to fulfil the demand of the existing and potential customers for existing products, but also provide an opportunity to launch new products.

Stock Outlook

On Friday, 08 June, the stock of Aether Industries Ltd closed at Rs 828.70/share after falling 0.31%. Today, it was opened at Rs 842.40/share. The stock recently got listed on stock exchange. The stock in the past 1 week has gained over 7% while in the past 1 month, it gained nearly 5.41%.

The recently listed on the stock exchange, on 03 June 2022, it touched its lowest on 03 June 2022 at Rs 701/share, and highest on 07 July 2022 at Rs 874/share/respectively.

The brokerage has estimated a target price of Rs 1,045/share. If an investor buys the stock at the Current Market Price, the stock can surge 27% in 12 months, giving a huge gain to the investor.

Market leadership in products with Rs 37.5bn opportunity size in CY25

In the eight major products that contributed ~75% to the revenue in FY22, Aether is a market leader globally for four products and the second-largest producer globally for two products. The company has achieved these market positions by developing differentiated processes with the use of its core competencies of chemistry and technology. The market opportunity for eight of their major products is INR 37.5bn in CY25. We believe, owing to its market leadership position in these products, the company is well-positioned to capitalise on market opportunities.

Long-standing relationships with marquee customers

Aether has a loyal customer base of over 188 multinational, regional and domestic pharmaceutical, agrochemical, material science, oil & gas and textile companies. Top-20 customers contributed ~73% to the total revenue in FY22 having a relationship in excess of five years with 70% of customers. These enduring customer relationships have helped Aether expand its product offerings and geographic reach.

Brokerage Suggests Buy For A Target Price of Rs 1,045/share

Aether's business model compels it to regularly launch products and add competencies. It is tripling its research and development (R&D) infrastructure and strengthening its team size. Capacity addition and strengthening of R&D infrastructure will support its growth pace.

The brokerage said, "We expect EBITDA and PAT CAGRs of 43/45% over FY22-25E. We initiate coverage on Aether Industries Ltd with a BUY and target price of Rs 1,045 (WACC 11%, terminal growth 6%). The stock is trading at 40.7x on FY24E EPS.

About - Aether Industries Ltd.

Aether Industries Limited, incorporated in 2013 is manufacturer of speciality chemicals. The company focuses on producing advanced intermediates and speciality chemicals involving complex and differentiated chemistry and technology core competencies. The Company offers intermediates and active ingredients for the pharmaceutical, material science, agrochemical, electronic chemical, and specialty chemical industries. Aether Industries serves customers worldwide.

Disclaimer

The stock has been picked from the brokerage report of HDFC Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.