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Speciality chemical manufacturer, Aether Industries will be launching its initial public offering (IPO) on Tuesday to raise about ₹808 crore. The IPO will be available for public subscription till May 26.
Ahead of the public offer, Aether garnered a little over ₹240 crore from anchor investors from about 25 investors. These were Goldman Sachs, Nomura, SBI Mutual Fund (MF), Aditya Birla Sun Life MF, Kotak MF, Axis MF, IDFC MF, and Tata MF among others.
A price band of ₹610 to ₹642 per equity share at a face value of ₹10 each has been fixed on the IPO. The bid lot is 23 Equity Shares and in multiples thereof.
The IPO includes a fresh issue of ₹627 crore and an offer for sale of up to 28.2 lakh shares by promoter Purnima Ashwin Desai.
Of the total IPO size - 50% of the portion will be allocated to qualified institutional buyers (QIBs), while 15% will be kept for non-institutional investors (NIIs), and the remaining 35% will be reserved for retail individual investors (RIIs).
The maximum subscription amount for retail investors is ₹2 lakh. While employees are allowed to subscribe at maximum ₹5 lakh. Maximum bidding for QIBs are 92,38,962 equity shares in multiple of 23 Equity Shares. While maximum bidding for non-institutional investors are 64,90,738 equity shares in multiple of 23 Equity Shares.
From the proceeds of the issue, Aether will utilise ₹163 crore for funding capital expenditure requirements for the proposed Greenfield project; also ₹137.9 crore will be utilised for prepayment of all or a portion of certain outstanding borrowings availed by the company; meanwhile, ₹165 crore will be used for funding working capital requirements; and general corporate purposes.
Book running lead managers are HDFC Bank and Kotak Mahindra Capital Company.
In its IPO note, Ventura said, "with the enhanced capacity, we are expecting AETHER’s revenue/ EBITDA/ PAT to grow at a CAGR of 38.7%/ 44.9%/ 51.7% to INR 1,200 cr/ ₹341 crore/ ₹248 crore respectively over FY21-24E, while EBITDA and PAT margins are expected to improve by 350bps (to 28.4%) and 487bps (to 20.7%) respectively over the same period."
Further, Ventura said, "At the IPO price of INR 642, AETHER is valued at 32.2X FY24 P/E. 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 a SUBSCRIBE rating with a price target of ₹797, which represents an upside of 24% over the IPO price in 18 months."
Incepted in 2013, Aether specialises in products based on an intricate marriage of complex chemistry and technology core competencies. It 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 somewhat 18 countries.
Post the IPO, Aether will be listed on BSE and NSE.
