Synopsis:
Aether Industries reported steady revenue in Q1FY26 with improved YoY profitability. Key highlights included a major manufacturing deal, expansion updates, and a rising share of high-value contracts. The stock rose 4.5% post-results.
Shares of a specialty chemicals company edged higher after announcing its Q1FY26 results. While revenue remained stable sequentially, profitability showed mixed trends. Operating margins held firm, and the company continued to expand its customer base and manufacturing footprint, signaling long-term growth potential.
The company in focus is Aether Industries Ltd, which has a market cap of Rs. 10,681.47 crore. The stock opened at Rs. 825 and touched an intraday high of Rs. 844, compared to its previous close of Rs. 808. This marks a gain of 4.5 percent from the previous session as investors reacted to the earnings and operational updates.
What’s the news?
Quarter-on-Quarter Performance, On a sequential basis, Aether Industries reported a 6.7 percent increase in revenue from operations, rising from Rs. 240 crore in Q4FY25 to Rs. 256 crore in Q1FY26.
Operating profit grew marginally by 1.3 percent from Rs. 80 crore to Rs. 81 crore, while profit before tax declined by 3.1 percent to Rs. 62 crore from Rs. 64 crore. Net profit also fell 6 percent, coming in at Rs. 47 crore compared to Rs. 50 crore in the previous quarter.
Year-on-Year Performance, Compared to the same quarter last year, revenue from operations jumped 42.2 percent from Rs. 180 crore in Q1FY25 to Rs. 256 crore in Q1FY26. Operating profit surged 88.4 percent from Rs. 43 crore to Rs. 81 crore. Profit before tax increased by 59 percent to Rs. 62 crore from Rs. 39 crore, while net profit advanced 56.7 percent from Rs. 30 crore to Rs. 47 crore.
Operational Highlights
During the quarter, the company onboarded six new customers across all business models. Aether executed a long-term exclusive manufacturing agreement with Milliken Chemical and Textile (India) Co. Pvt. Ltd., a subsidiary of US-based Milliken & Company.
Under this contract, Aether becomes the sole manufacturing partner for a key product, with the initial term spanning 10 years. The project will be handled at the newly developed Site 3++, with the product launch expected by Q4FY26.
Separately, commissioning of two production blocks under Site 5’s Phase 1 expansion is expected by the end of Q3FY26. The company maintained its R&D-led approach, spending Rs. 16.88 crore or 6.54 percent of its quarterly revenue on research and development.
Business Mix
Aether’s business model showed a shift towards higher-value contracts. Revenue from Contract/Exclusive Manufacturing increased to 37 percent in Q1FY26, up from 18 percent in Q1FY25.
CRAMS (Contract Research and Manufacturing Services) contributed 10 percent, compared to 14 percent last year. Large-Scale Manufacturing accounted for 52 percent of total revenue, lower than 66 percent in the same period last year.
From a segment perspective, Pharma contributed 35.1 percent to revenue in Q1FY26, followed by Oil and Gas at 19.2 percent, and Material Science at 16.9 percent. Agrochemicals made up 11.1 percent, while High-Performance Photography, Coatings, and Renewables accounted for smaller shares.
Brokerage View
In a sector update released in June, Kotak Institutional Equities had earlier retained a ‘neutral’ outlook on the specialty chemicals space. It also revised its target price for Aether Industries, lowering it from Rs. 910 to Rs. 890, which holds an upside potential of 13 percent.
Kotak Institutional Equities remains cautious on Aether Industries despite the company’s recent contract wins and long-term growth prospects. It highlighted that the newly signed project with Milliken will fully utilize Aether’s Site-3+ facility, with revenue potential estimated at Rs. 200 crore by FY2029 once capacities are fully scaled. This, according to Kotak, could meaningfully enhance the company’s top line over the medium term.
However, Kotak raised concerns over Aether’s rich valuations. The stock is currently trading at 46x and 36x estimated earnings for FY2026 and FY2027, respectively, which the brokerage does not find compelling even after recent market corrections.
It emphasized that while Aether is well-positioned for structural growth, consistent earnings delivery and execution against high market expectations are essential to warrant a more constructive view.
Incorporated in 2013, Aether Industries Limited is a specialty chemicals manufacturer with a focus on complex and differentiated chemistry. It is the sole Indian producer of several high-value chemicals, including 4-(2-Methoxyethyl) Phenol (4MEP), 3-Methoxy-2-Methylbenzoyl Chloride (MMBC), and Bifenthrin Alcohol. The company serves global customers across multiple end-use sectors through a combination of contract manufacturing, CRAMS, and large-scale production.
Written By Manan Gangwar
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