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Aether Industries Shares Jumped 5% After Signing 3 LoI

08 June 20233 mins read by Angel One
The trading volume surged in the first half-hour of the trading session, with approximately 1.97 lakh shares exchanging hands. This substantial increase in trading volume compared to previous session
Aether Industries Shares Jumped 5% After Signing 3 LoI
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In the fast-paced world of stock trading, where fortunes can change in the blink of an eye, one company is capturing the attention of investors and market enthusiasts alike. Aether Industries Ltd, a leading speciality/fine chemical manufacturer and provider of Contract Research and Manufacturing Services in India, is experiencing a meteoric rise in its stock price.

On this particular Thursday, as the sun began to rise on the Indian stock market, the benchmark indices, Nifty and Sensex, were treading cautiously, showing only marginal gains of 0.05% and 0.04% respectively. However, amidst this cautious sentiment, something extraordinary was happening with Aether Industries Ltd.

In the early hours of trading, Aether’s stock price soared over 5% on the National Stock Exchange (NSE). The excitement surrounding this surge was palpable as the stock reached an intra-day high of Rs 1022.

But what was driving this remarkable upswing in the company’s fortunes? 

The answer lies in a significant development that has sent shockwaves through the market. Aether Industries Ltd has just inked a Letter of Intent (LoI) with one of the top three global Oil Field Services companies based in the United States. This LoI signifies the finalization of a strategic supplier and contract manufacturing partnership between the two entities.

The implications of this partnership are far-reaching and hold immense potential for Aether Industries Ltd. Within the next three months, the company will execute a Strategic Supply Agreement (SSA) with its newfound partner. The LoI explicitly states that Aether will undertake the contract manufacturing of four strategic products for this customer. These products, specified with individual volumes, amount to a staggering 1,325 metric tons per month i.e. an impressive 16 KTA or 16,000 metric tons per year.

What makes this partnership even more remarkable is the global scale of operations involved. The products manufactured by Aether will be supplied to the customer’s energy and oil and gas locations worldwide, including a significant supply within India itself. This not only highlights Aether’s growing influence in the global market but also cements its position as a preferred provider of specialized chemical solutions.

As news of this strategic alliance spreads like wildfire, investors and traders are scrambling to capitalize on the surging stock price of Aether Industries Ltd. The trading volume surged in the first half-hour of the trading session, with approximately 1.97 lakh shares exchanging hands. This substantial increase in trading volume compared to previous sessions serves as a testament to the market’s confidence in Aether’s newfound partnership.

In FY23, the company clocked a top line growth of double digits (10% YoY) to Rs 651 crore. EBITDA also advanced by 11% YoY to Rs 186 crore and net profit jumped 20% YoY to Rs 130 crore. In FY23, 52% of the total top line came from large-scale manufacturing, 13% from contract research and manufacturing service, and 34% from contract/exclusive manufacturing.

Aether is planning a capex of Rs 750 crore over FY24 and FY25 for site expansion and R&D. Capex to be deployed in two financial years for site 3+, site 4 and site 5. Targeting minimum asset turn of 2x. Site 3++ to reach optimum utilization level in 18 months. A good stock to keep on your radar for the long term in this space.

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