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.maur[email protected]elbroking.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: res[email protected]angelbroking.com Website: www.angelone.in
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