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        Incorporated in 2013, Aether Industries Limited is a manufacturer of speciality chemicals. The company is the sole manufacturer in India of chemicals such as 4-(2-Methoxyethyl) Phenol (4MEP), 3-Methoxy-2-Methylbenzoyl Chloride (MMBC), Thiophene-2-Ethanol (T2E), Ortho Tolyl Benzo Nitrile (OTBN), N-Octyl-D-Glucamine, Delta-Valerolactone and Bifenthrin Alcohol. The company has three business models: Large scale manufacturing of intermediates and speciality chemicals, CRAMS (contract research and manufacturing services) and Contract manufacturing.

The company proposes to utilise the Net Proceeds from the Fresh Issue towards funding the following objects:

1. Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the Company.

2. Funding capital expenditure requirements for the manufacturing facility (Proposed Greenfield Project).

3. Funding working capital requirements of the Company.

4. General corporate purposes.

• Differentiated portfolio of market-leading products.

• Focus on R&D to leverage the core competencies of chemistry and technology.

• Long-standing relationships with a diversified customer base.

• Synergistic Business Models focused on Large Scale Manufacturing, CRAMS and Contract Manufacturing.

• Focus on Quality, Environment, Health and Safety (QEHS).

• Strong and consistent financial performance.

• Experienced Promoters and Senior Management with extensive domain knowledge.

• Company’s business is dependent on manufacturing facilities and they are subjected to certain risk in manufacturing process, any slowdown or shutdown in the same may have adverse effect on the business.

• Company is subjected to certain risks consequent to its operations involving the manufacture, usage and storage of various hazardous substances.

• Company’s reliance on certain industries for a significant portion of its sales could have an adverse effect its business.

• Exchange rate fluctuation may adversely effect results of operations as its sales from export and portion of its expenditure is denominated in foreign currencies.

• Company is dependent on  R&D activities for its future success. If they successfully develop new products or continue its product portfolio expansion in a timely and cost-effective manner, company’s business, financial condition, cash flows and result of operations may be adversely affected.

• Company do not have long term agreement with suppliers for raw material and increase in price or shortfall in the availability or quality may have impact on the business.

• Company’s all of  manufacturing facilities is located in Gujarat exposing it to regulatory and other geography specific risks such as labour unrests, terrorist attacks, other acts of violence and occurrence of natural and man-made disasters.

• Restrictions on import of raw materials and an increase in shipment cost may adversely impact company’s business, financial condition and results of operation.

           AETHER is the sole manufacturer in India of critical chemicals, such as – 4MEP, MMBC, T2E, OTBN, NODG, DVL and Bifenthrin Alcohol, and the largest manufacturer in the world by volume for 4MEP, T2E, NODG and HEEP. In the past 4 years, AETHER replaced the entire imports of these products from China and also started exporting them to 17 countries. Exports contributed 56% of FY21 revenue.

         On valuation front we take weighted average EPS of last 3 years of  5.51 and upper price band of ₹642 , P/E ration comes out to 116x and if we take EPS FY‘21 of 7.36 and upper price band of ₹ 642 , P/E ratio comes out to 87 x which is in line with the industry PE. Considering the growth opportunities for speciality chemicals in pharma, agrochemicals & FMCG space, and improving prospects for contractual manufacturing & CRAMS under Make-in-India initiatives we recommend our clients to “ SUBSCRIBE” to the offer.

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