Please refer to important disclosures at the end of this report
1
Aether Industries Limited (AIL) was incorporated on January 23, 2013.
It is
engaged in the business of Specialty Chemicals and Intermediates. The
products of the Company find application in
various sectors like
Pharmaceuticals, Agrochemicals, Specialty, Electronic Chemicals, Material
Sciences, High Performance Photography etc.
Aether’s business models
include Large Scale Manufacturing of Specialty Chemicals, Contract
Manufacturing and Contract Research and Manufacturing Services (CRAMS).
It is a leading CRAMS provider, built upon technology intensive and state-of-
art R&D and pilot plant facilities. All its R&D, pilot, CRAMS, and large-scale
manufacturing facilities can switch between
batch and continuous process
technology. It has a production capacity of 6,096MT as of 31
st
March 2021.
Positives: (a) Differentiated portfolio of market-leading products (b)
Focus on
R&D to leverage the core competencies of chemistry and technology (c)
Strong
and long-standing relationships with diversified customer base (d)
Synergistic
Business Models focused on Large Scale Manufacturing, CRAMS and Contract
Manufacturing (e)
Experienced Promoters and Senior Management with
extensive domain knowledge.
Investment concerns: (a) Business is
dependent on manufacturing facilities and
any shutdowns or slowdowns in manufacturing operations can have adverse
effect on company (b) Currently, AIL
derives majority of its revenue from top 20
customers (~73%) without having any long-term contracts with all of them
(c)
Non-Compliance and changes in regulations can adversely affect AIL’s business.
Outlook & Valuation: In terms of valuations, the post-
issue TTM P/E works out
to 75
.6x (at the upper end of the issue price band), which is reasonable
considering AIL’s historical top-line & bottom-line CAGR of ~50% and ~75
%
respectively over FY19-21. Further, AIL has diversified customer base, strong
financial track record and higher
ROE. Considering all the positive factors, we
believe this valuation is at reasonable levels.
Thus, we recommend a subscribe
rating on the issue.
Key Financials
Y/E March (` cr)
FY2019 FY2020
FY2021
9MFY21
9MFY22
Net Sales
201
302
450
334
443
% chg
50.0
49.0
-
32.5
Net Profit
23
40
71
48
83
% chg
71.2
78.0
-
71.8
OPM (%)
23.6
23.8
24.9
22.9
28.5
EPS (`)
2.1
3.5
6.3
4.3
7.4
P/E (x)
310.0
181.1
101.7
-
-
P/BV (x)
187.7
92.4
41.5
-
-
RoE (%)
60.5
51.0
40.8
-
-
RoCE (%)
24.9
25.5
26.2
-
-
EV/Sales (x)
36.6
24.5
16.5
-
-
EV/EBITDA (x)
154.9
103.2
66.1
-
-
Angel Research; Note: Valuation ratios based on post-issue shares and at `642 per share.
Subscribe
Issue Open: May 24, 2022
Issue Close: May 26, 2022
Fresh Issue:
`627cr
QIBs 50%
Non-Institutional 15%
Retail 35%
Promoters 87.1%
Public 12.9%
Post Issue Shareholding Pattern
Post Eq. Paid up Capital:
`122.5
cr
Issue size (amount):
`808cr
Price Band:
`
610-642
Lot Size: 23 shares
Post-issue mkt.cap:
`
7,625*– 7,992cr**
Promoter holding Pre-Issue: 97.0%
Promoter holding Post-Issue: 87.1%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Offer for sale:
`181cr
Face Value:
`10
Present Eq. Paid up Capital:
`112.69cr
Amarjeet S Maurya
Amarjeet.maurya@angelbroking.com
+022 4000 3600, Extn: 6810
Aether Industries Limited IPO
IPO Note |
Chemicals
May 23
, 2022
Aether Industries| IPO Note
May
2
3
, 2022
2
Company background
Incorporated on January 23, 2013, as a Public Limited Company. It is engaged
in the business of Specialty Chemicals and Intermediates. The products of the
Company find application in various sectors like Pharmaceuticals,
Agrochemicals, Specialty, Electronic Chemicals, Material Sciences, High
Performance Photography etc. Aether’s business models include Large Scale
Manufacturing of Specialty Chemicals, Contract Manufacturing and Contract
Research and Manufacturing Services (CRAMS).
It is a leading CRAMS provider, built upon technology intensive and state-of-art
R&D and pilot plant facilities. All its R&D, pilot, CRAMS, and large-scale
manufacturing facilities can switch between batch and continuous process
technology. It has a production capacity of 6,096MT as of 31st March 2021.
Aether is one of the fastest growing specialty chemical companies in India,
growing at a CAGR of nearly 49.5% between Fiscal 2019 and Fiscal 2021.
As of March 31, 2022, Aether’s product portfolio comprised over 25 products.
In CY2020, they were the sole manufacturer in India of 4MEP, MMBC, T2E,
OTBN, NODG, DVL and Bifenthrin Alcohol.
Issue details
AI
L is raising ₹181cr through OFS and ₹627cr through Fresh Issue
in the price
band of ₹610-₹642 per share.
Exhibit 1: Pre and post IPO shareholding pattern
No of shares (Pre-issue) % (Post-issue) %
Promoter 11,12,36,127 97.0% 10,84,16,127 87.1%
Public 34,80,191 3.0% 1,60,66,546 12.9%
Total 11,47,16,318 100.0% 12,44,82,673 100.0%
Source: Source: RHP, Note: Calculated on upper price band
Objectives of the Offer
Prepayment or repayment of all or a portion of certain outstanding
borrowings availed by the Company (~₹138cr).
Funding capital expenditure requirements for the manufacturing facility -
Proposed Greenfield Project (~₹163cr).
Funding working capital requirements of the Company (~₹165cr).
General corporate purposes.
Aether Industries| IPO Note
May
2
3
, 2022
3
Profit & Loss Statement
Y/E March (` cr) FY2019 FY2020 FY2021 9MFY21 9MFY22
Net Sales
201
302
450
334
443
% chg
50.0
49.0
32.5
Total Expenditure
154
230
338
258
317
Raw Material
110
156
231
178
215
Personnel
11
13
22
16
21
Other Expenses
33
61
85
64
80
EBITDA
48
72
112
77
126
% chg
51.0
56.3
64.6
(% of Net Sales)
23.6
23.8
24.9
22.9
28.5
Depreciation& Amortization
6
8
11
8
11
EBIT
41
64
101
68
115
% chg
55.5
58.3
68.1
(% of Net Sales)
20.4
21.2
22.5
20.4
25.9
Interest & other Charges
11
9
11
8
10
Other Income
2
2
4
3
7
(% of PBT)
6.4
3.5
4.2
5.1
6.1
PBT
33
57
94
63
111
% chg
73.4
66.0
75.4
Tax
9
17
23
15
28
(% of PBT)
28.4
29.3
24.2
24.0
25.5
PAT
23
40
71
48
83
% chg
71.2
78.0
71.8
Basic EPS (Rs)
2.1
3.5
6.3
4.3
7.4
Source: Company, Angel Research
Aether Industries| IPO Note
May
2
3
, 2022
4
Balance Sheet
Y/E March (` cr) FY2019 FY2020
FY2021
SOURCES OF FUNDS
Equity Share Capital
9
9
10
Reserves& Surplus
30
70
164
Shareholders’ Funds
39
78
174
Total Loans
126
172
211
Other Liabilities - -
-
Total Liabilities
165
251
386
APPLICATION OF FUNDS
Net Block
106
129
216
Capital Work-in-Progress
1
17
0
Investments
0
0
22
Current Assets
96
148
211
Inventories
40
72
85
Sundry Debtors
48
63
108
Cash
1
4
6
Loans & Advances
1
1
1
Other Assets
6
9
12
Current liabilities
38
42
57
Net Current Assets
58
106
154
Deferred Tax Liabilities
3
8
10
Other Assets
3
6
3
Total Assets
165
251
386
Source: Company, Angel Research
Aether Industries| IPO Note
May
2
3
, 2022
5
Cash Flow Statement
Y/E March (` cr)
FY2019
FY2020 FY2021
Profit before tax
33
57 94
Depreciation
6
8 11
Change in Working Capital -
20
-43 -73
Interest / Dividend (Net)
10
9 11
Direct taxes paid -
6
-13 -20
Others
0
0 0
Cash Flow from Operations
23
18 23
(Inc.)/ Dec. in Fixed Assets -
12
-48 -77
(Inc.)/ Dec. in Investments
0
0 0
Interest Received
0
0 0
Cash Flow from Investing -
13
-48 -77
Issue of Equity
0
0 0
Inc./(Dec.) in loans
1
42 67
Dividend Paid (Incl. Tax)
0
0 0
Interest / Dividend (Net) -
11
-9 -11
Cash Flow from Financing -
10
33 55
Inc./(Dec.) in Cash
0
2 2
Opening Cash balances
1
1 4
Closing Cash balances
1
4 6
Source: Company, Angel Research
Aether Industries| IPO Note
May
2
3
, 2022
6
Key Ratios
Y/E March FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
310.0
181.1
101.7
P/CEPS
243.3
151.3
88.1
P/BV
187.7
92.4
41.5
EV/Sales
36.6
24.5
16.5
EV/EBITDA
154.9
103.2
66.1
EV / Total Assets
44.6
29.5
19.2
Per Share Data (Rs)
EPS (Basic) 2.07
3.55
6.31
EPS (fully diluted)
2.1
3.5
6.3
Cash EPS
2.6
4.2
7.3
Book Value
3.4
6.9
15.5
Returns (%)
ROCE
24.9
25.5
26.2
Angel ROIC (Pre-tax)
25.1
25.9
28.3
ROE
60.5
51.0
40.8
Turnover ratios (x)
Asset Turnover (Net Block)
1.9
2.3
2.1
Inventory / Sales (days)
72
87
69
Receivables (days)
87
76
88
Payables (days)
41
46
39
Working capital cycle (ex-cash) (days)
118
117
118
Source: Company, Angel Research
Aether Industries| IPO Note
May
2
3
, 2022
7
Research Team Tel: 022 - 40003600 E-mail: research@angelbroking.com Website: www.angelone.in
DISCLAIMER
Angel One Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay Stock
Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and Portfolio Manager
and investment advisor with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel One Limited is a registered entity with
SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164. Angel or its associates
has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision.
Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such
investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in
this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an
investment.
Angel or its associates or research analyst or his relative may have actual/beneficial ownership of 1% or more in the securities of the subject
company at the end of the month immediately preceding the date of publication of the research report. Neither Angel or its associates nor
Research Analysts or his relative has any material conflict of interest at the time of publication of research report.
Angel or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve
months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking
or merchant banking, brokerage services or other advisory service in a merger or specific transaction in the normal course of business. Angel
or its associates did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection
with the research report. Neither Angel nor its research analyst entity has been engaged in market making activity for the subject company.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading
volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals.
Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources
believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for
general guidance only. Angel One Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage
that may arise to any person from any inadvertent error in the information contained in this report. Angel One Limited has not independently
verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express
or implied, to the accuracy, contents or data contained within this document. While Angel One Limited endeavors to update on a reasonable
basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed
or passed on, directly or indirectly.
Neither Angel One Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection
with the use of this information. Angel or its associates or Research Analyst or his relative might have financial interest in the subject company.
Research analyst has not served as an officer, director or employee of the subject company.
