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Avoid to Aether Industries: ICICI Direct

ICICI Direct has come out with its report on Aether Industries. The research firm has recommended to ''Avoid'' the ipo in its research report as on May 24, 2022.

May 24, 2022 / 03:43 PM IST
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ICICI Direct IPO report on Aether Industries

Incorporated in 2013, Aether Industries focuses on producing advanced intermediates and speciality chemicals involving complex, differentiated chemistry and technology core competencies. Its products find application in pharmaceutical, agrochemical, material science, coating, high performance photography, additive and oil & gas segments of the chemical industry. Sole manufacturer in India for advanced intermediates such as 4MEP, MMBC, T2E, OTBN, NODG and Bifenthrin alcohol (Pharma Applications) and speciality chemical DVL (coating additive). One of the largest manufacturers in the world by volume for 4MEP, T2E, NODG and HEEP. Product portfolio comprised over 25 products. Staff consists of 92 scientists and 72 chemical engineers Two manufacturing sites at Sachin in Surat. Facility 1 is a 3500 square metre facility while Facility 2 encompasses roughly 10500 square metre.

Valuation and Outlook

Aether 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.

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