Aether Industries IPO has opened for public subscription. Here's all you want to know about the issue in key points.
Aether Industries: Aether Industries Limited, based out of Surat (Gujarat, India), focuses on producing advanced intermediates and speciality chemicals involving complex and differentiated chemistry and technology core competencies. The company's products find application in the pharmaceutical, agrochemical, material science, coating, high performance photography, additive, and oil and gas segments of the chemical industry.
Rs. 802 crore IPO size of which there will be fresh issuance for Rs. 627 crore while the remaining will be OFS.
IPO offer period : May 24- May 26, 2022
Price band- Rs. 610-642 apiece
Bid size: 23 shares minimum and in multiples thereof, so the maximum bids can be made for 13 lots aggregating to Rs. 191958.
Issue objective: Money garnered through fresh issuance will be put towards capex for greenfield projects, repayment of outstanding loans and other corporate purposes.
Key risk-The company is highly dependent on its manufacturing facilities and any disruption will impact the company adversely.
In the Fy21, the company earned a revenue of Rs. 454 crore, while its profits have been at Rs. 71 crore. On an annual basis, there is an increase by Rs. 100 crore in revenue every year.
ICICI Direct gives it an 'Avoid' rating and said ether Industries is a niche player in the speciality chemical business and enjoys dominating market share in few select products with high margins. That said, at the upper price band, it is valued at ~58.9x EV/EBITDA and ~72.4x P/E for 9MFY22 (annualised), which looks demanding. The IPO can be AVOIDED due to stretched valuation.
Also, the concerns and risks mentioned are
Derives a major chunk of revenues from marquee customers without having long term contracts with all of these customers
Dependency on certain industries for significant portion of sales
Dependency on certain export incentives
GMP: As per ipowatch.in, the issue commanded a premium of Rs. 20 per share.