Avoid to Aether Industries: Arihant Capital

eMudhra IPO, eMudhra, IPO

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Arihant Capital IPO report on Aether Industries

Aether Industries Ltd was incorporated in 2013, it’s a manufacturer of speciality chemicals. The chemical products are 4-(2-Methoxyethyl) Phenol (4MEP), Thiophene-2-Ethanol (T2E), Ortho Tolyl Benzo Nitrile (OTBN), 3-Methoxy-2- Methylbenzoyl Chloride (MMBC), Delta Valerolactone, N-Octyl-D-Glucamine and Bifenthrin. The company is doing large scale manufacturing of speciality chemicals and intermediates, contract research and manufacturing services. The company has two manufacturing facilities at Sachin in Surat, Gujarat. The facility I is a 3,500 sq meter facility including Hydrogenation, Pilot plants and R&D facilities. The facility II is a 10,500 sq meter facility including three buildings, 16 production streams having capacity of 6,096 MT as on Q3FY22. The company has 25 products in portfolios which are sold to 34 global companies in 18 countries and to over 154 domestic companies.

Valuation and Outlook

Aether Industries Ltd has witnessed strong revenue growth (49.5% CAGR) from FY19-FY21, strategically located plants, diversified and differentiated product portfolios, long standing relationship customers, focus on R&D, capacity expansion, experienced management and expanding network would lead the business growth going forward. At the upper band of INR 642, the issue is valued at a EV/EBITDA of 60x based on FY21 EBITDA. We are expecting post listing investors would get at discounted prices. We are recommending “Avoid” for this issue.

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