The brokerage house says that the valuation of Aether Industries’ IPO is looking better. The track record of the company has also been good.
Aether Industries IPO Subscription/GMP: The IPO of Aether Industries, a specialty chemical maker, has received a sluggish response from investors. Today, on the last day of the issue, till 12 noon on May 26, it has been subscribed only 0.69 times overall. The response from retail investors to QIBs has been cool. Talking about the gray market, the stock is trading at a nominal premium. A weak subscription at the moment does not guarantee that the stock will underperform going forward. In such a situation, should you invest money in it on the last day of subscription today?
How is the response of investors so far?
50% of the issue size of Aether Industries is reserved for qualified institutional investors. This part is filled 0.93 times so far. 35 per cent is reserved for the retained investors and this part has been filled 0.76 times so far. While the remaining 15 per cent is reserved for non-institutional investors and till now it is 0.20 times filled. The reserve share for employees has been filled 0.93 times so far. Overall this issue is subscribed 0.69 times.
GMP: How are the signals from the gray market
Talking about the gray market, the share of Aether Industries is trading with a nominal premium of Rs.10. That is, its listing can be flat in terms of the upper price band Rs 642. However, in the gray market, only the share of Aether Industries is on the rise from the issue price.
subscribe or not
Brokerage house Angel One has advised to subscribe in the issue. The brokerage house says that the valuation of Aether Industries’ IPO is looking better. The track record of the company has also been good. The top line and bottom line CAGR of the company during FY19-21 is 50 per cent and 75 per cent. The customer base of the company is well diversified. Strong financial track record and high return on equity making it a favourite.
Ventura Securities has also advised to subscribe at the upper price band. The brokerage house says that the upper price band of the IPO is priced at Rs 642 at Aether Industries 32.2X FY24 P/E. There are huge growth opportunities for specialty chemicals in the pharma industry, which will benefit the company. Apart from this, the demand for the company’s products is also in the agri and FMCG space. It will also get the benefit of the government’s Make in India initiative. Ventura Securities has set a share target of Rs 797 for 18 months.
About the IPO
Aether Industries has fixed the price band for the IPO at Rs 610-642 per share. The size of the IPO is Rs 808 crore. Funds from this will be used to meet the capital expenditure requirements, repayment of debt and working capital requirements of the proposed greenfield project in Surat, Gujarat. The lot size is 23 equity shares. According to the upper price band of Rs 642, investors will have to invest at least Rs 14,766. HDFC Bank and Kotak Mahindra Capital Company are the Book Running Lead Managers of the issue.
about the company
Aether Industries manufactures specialty chemicals. It is the only company in the country to manufacture certain chemicals such as 4MEP, MMBC, OTBN, N-octyl-D-glucamine, Delta-valerectone and Bifenthrin alcohol. As of September 2021, the company has 22 products in its portfolio, which are sold to 30 companies in more than 17 countries and more than 100 domestic companies.
Company’s financials
Talking about the company’s financials, its net profit (Profit After Tax) has increased continuously. The company had a net profit of Rs 23.33 crore in FY 2019, Rs 39.96 crore in FY 2020, Rs 71.12 crore in FY 2021 and Rs 82.91 crore in FY 2022 (till December 2021).
(Disclaimer: IPO investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so consult an expert before investing.)
