Aether Industries IPO Review: Aether Industries is looking to raise ₹ 808 crores during its IPO opening on 24th May and closing on 26th May 2022. The company has fixed the price band from ₹ 610 to ₹ 642 per equity share. In this article, we shall take a look at Aether Industries IPO review and analyse its strengths and weakness. Keep reading to find out!
Table of Contents
About Aether Industries Limited
Aether Industries Limited is a Surat-based chemical manufacturer in India. It manufactures advanced intermediates and speciality chemicals that involve complex and differentiated chemistry and technology core competencies.
It has three business models:
- Large scale manufacturing of intermediates and speciality chemicals,
- CRAMS (contract research and manufacturing services) and
- Contract manufacturing.
Aether Industries has two manufacturing sites at Sachin in Surat, Gujarat. The first one is a 3500 square metre facility. This facility includes R&D and Hydrogenation Facilities and Pilot Plant. The second facility is a 10,000 square metre facility with an installed capacity of 6,096 MT per year, as of 30th September 2021.
It has over 25 products in its product portfolio. Its clients include 34 global companies across 18 countries and 154 domestic companies. It is the largest manufacturer of 4MEP, T2E, NODG and HEEP products in the world by volume.
Competitors
Some of the major competitors of Aether Industries are Vinati Organics, Clean Science and Technology, PI Industries, Navin Flourine and Fine Organics.
Key Information on Aether Industries IPO
Aether Industries raised ₹130 crores from four marquee investors, including White Oak Capital in a pre-IPO round. Hence, it will raise ₹627 crores from the fresh issue, instead of Rs 757 crores that it had decided earlier.
Purnima Ashwin Desai, one its promoters will offload 28.2 lakh equity shares aggregating to ₹ 181.04 crores. Investors can bid for a minimum of 23 shares and then in its multiples thereafter.
Link Intime India Private Limited is the registrar for the issue. HDFC Bank Limited and Kotak Mahindra Capital Company Limited are the lead managers for the issue.
Aether Industries IPO Dates
| Event | Date |
|---|---|
| IPO Opening Date | 24th May 2022 |
| IPO Closing Date | 26th May 2022 |
| Basis of Allotment | 31st May 2022 |
| Initiation of Refunds | 1st June 2022 |
| Credit of Shares to Demat Account | 2nd June 2022 |
| Aether Industries IPO Listing Date | 3rd June 2022 |
Aether Industries IPO – Subscription Details
| Particulars | Details |
|---|---|
| Face Value | ₹ 10 per share |
| IPO Price | ₹ 610 to ₹ 642 |
| Lot Size | 23 shares |
| Issue Size | 808 crores |
| Fresh Issue | ₹ 627 crores |
| Offer for Sale | 28,20,000 shares of ₹10 (Aggregating to 181.04 crores) |
| Issue Type | Book Built Issue |
| Listing At | BSE, NSE |
| QIB Shares Offered | Not more than 50% of the Net Offer |
| Retail Shares Offered | Not less than 35% of the Net Offer |
| NII (HNI) Shares Offered | Not less than 15% of the Net Offer |
Purpose of the IPO
The company will use the net proceeds from the fresh issue towards:
- 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.
Financial Highlights
Aether Industries exports a majority of its products to countries across the globe. Its revenue from exports has increased at a CAGR of 58.56% from ₹1,000.90 million in Fiscal 2019 to ₹2,516.62 million in Fiscal 2021. (CAGR stands for compounded annual growth rate). Its revenue from exports stood at ₹2,804.23 million in the nine months ended 31st December 2021.
| Particulars (₹ in Crores) | FY19 | FY20 | FY21 | Q2 ended 30 September, 2021 |
|---|---|---|---|---|
| Revenue | 203.3 | 303.8 | 453.7 | 295.65 |
| PAT | 23.33 | 39.95 | 71.12 | 57.5 |
| EBITDA | 49.60 | 73.73 | 116.13 | 91.16 |
| EPS | 2.48 | 4.24 | 7.36 | 5.18 |
| ROE (%) | 60.54 | 51.04 | 40.79 | 24.83 |
| ROCE (%) | 25.16 | 26.07 | 28.5 | 17.8 |
| Particulars (₹ in Crores) | FY19 | FY20 | FY21 | Q2 ended 30 September, 2021 |
|---|---|---|---|---|
| Total Assets | 206.67 | 300.5 | 452.94 | 550.74 |
| Total Borrowings | 126.13 | 170.5 | 208.2 | 223.73 |
| Equity Share Capital | 8.5 | 8.5 | 11 | 11 |
| Debt to Equity ratio | 3.27 | 2.18 | 1.19 | 0.97 |
Strengths of Aether Industries
Some of the strong suits of the company are:
- Their in-house R&D capabilities in chemistry and technology.
- A diversified portfolio of market-leading products.
- They have maintained a long-standing relationship with their wide customer base.
- Its business models work in perfect synergy.
- Their business emphasizes sustainability along with quality, environment, health and safety.
- Strong and consistent financial performance.
- Experienced Promoters and Senior Management with extensive domain knowledge.
Weaknesses of Aether Industries
Some of the weaknesses that the company has are:
- Their business is highly dependent on their manufacturing facilities. Slowdowns, shutdowns, strikes, work stoppages, and increased wage demands interfere with their operations. Hence, they affect their business, financial condition and results of operations.
- The company’s operations involve the manufacture, usage and storage of various hazardous substances. Therefore, it is exposed to certain risks.
- It does not have long-term contracts with its major customers. Therefore, if one or more customers choose not to source their requirements from Aether Industries, then their business will be adversely affected. In addition, termination of existing long-term contracts might have a similar effect.
- Their insurance coverage may not adequately protect them against all losses. It may not be available for all the losses as per the insurance policy. Therefore, it might affect their business, financial condition and results of operations.
- Non-compliance with and changes in, safety, health, environmental and labour laws and other applicable regulations, may adversely affect their business.
- Grants of stock options under their employee stock option plans may result in a charge to their statement of profit loss.
- Their contingent liabilities could materially and adversely affect their business, results of operations and financial condition.
- The company may use a portion of the net proceeds for the repayment or pre-payment of loans taken from HDFC Bank Limited, which is one of the Book Running Lead Managers.
- Any downgrade of their debt ratings could adversely affect their business.
- The company’s reliance on certain industries for a significant portion of its sales could have an adverse effect on its business.
- Sales from exports and a portion of their expenditures are denominated in foreign currencies. Therefore, exchange rate fluctuations may adversely affect the results of operations.
- They are highly dependent on R&D activities for success. Therefore, if they do not develop new products or expand their product portfolio on a timely basis and in a cost-efficient manner, their business might suffer.
In Closing
In this article, we covered the Aether Industries IPO Review. It is a combination of a fresh issue as well as an offer for sale. The company will receive the amount from the fresh issue. It will utilize ₹ 163 crores for funding capital expenditure requirements for the proposed Greenfield project, also, ₹ 137.9 crores will be utilised for prepayment of all or a portion of certain outstanding borrowings availed by the company; meanwhile, ₹ 165 crores will be used for funding working capital requirements; and general corporate purposes.
The company will not receive the amount received from the offer for sale. The promoters or shareholders who are selling the shares will receive this amount. Let us know what you think about the Aether Industries IPO review in the comments below. Happy Investing!
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Hey, there! Thank you for stopping by 🙂 Simran is a master graduate in commerce from Bangalore University, an NSE-certified Fundamental Analyst and a NISM-certified Research Analyst. She finds interest in investing and personal finance. Outside of work, you can find her painting, reading and going on long walks.
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