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Specialty chemicals company Aether Industries' initial public offering (IPO) will open for public subscription today and conclude on May 26. The firm has fixed a price band of 610-642 per share for its issue. Ahead of IPO, Aether Industries garnered 240 cr from anchor investors.

As of 01:50 pm on day 1, Aether Industries IPO has been subscribed 0.25 times with retail investors' category booked 0.29, NIIs 0.03x and QIBs 0.36x, BSE data showed.

The company has cut the size of the fresh issue of equity shares to 627 crore from 757 crore planned earlier following the pre-IPO placement. Apart from fresh issue, there will be an offer-for-sale (OFS) of up to 28.2 lakh equity shares by the promoter.

Aether Industries shares are commanding a premium (GMP) of 4 in the grey market today, as per market observers. The shares of the company are expected to list on stock exchanges BSE and NSE on June 3, 2022.

“At higher price band of Rs. 642, Aether is demanding an EV/Sales multiple of 13.1x, which is in-line to peer average of 15.2x. Considering its dominant position in the select specialty chemicals and growth prospects from the end use applications, we feel the company has buoyant outlook. However, a stretched valuation is a concern. Thus we assign a “Subscribe with Caution" rating for the issue," said brokerage Choice Broking in a note.

Proceeds from the fresh issuance will be used to fund capital expenditure requirements for the proposed new project in Surat, Gujarat, fund working capital requirements and for payment of debt.

“As per the reported time in RHP, the company has posted sustained growth in both top and bottom line. The company had space to keep its price little lower but it chose otherwise. So, on valuation front, there is very little space left for the investors. Those who have medium to long term time horizon can subscribe the public issue once it opens," said Aether Industries IPO, Avinash Gorakshkar, Head of Research at Profitmart Securities.

Aether Industries is a speciality chemicals manufacturer in India focused on producing advanced intermediates and speciality chemicals involving complex and differentiated chemistry and technology core competencies. As of March 31, 2022, the company's product portfolio comprises over 25 products. The company's operating revenue grew to 450 crore in FY21, from 302 crore in FY20 while, net profit climbed to 71 crore in FY21.

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