Aether Industries IPO: Day 1 subscription begins; should you subscribe? Here is what Anil Singhvi, brokerage recommend

Aether Industries initial public offering (IPO) opened for public subscription on Tuesday, May 24, 2022. The three-day IPO of Speciality chemicals company will close on Thursday, May 26, 2022. The company has fixed a price band of Rs 610-642 for its Rs 808-crore IPO. Investors can bid for a minimum of 23 equity shares and in multiples of 23 thereof.

Meanwhile, the issue kicked off to a lukewarm response on Day 1 on Tuesday. The IPO was merely filled 11% of the reserved quota around 12 PM. Against 93,56,193 shares on offer, the bids were received for 10,26,053 shares around the same time. However, retail investors seemed a little more enthusiastic, subscribing the issue 22% against their allotted quota.  

Ahead of the IPO, Zee Business Managing Editor Anil Singhvi had listed positive and negative of the company and suggested what should investors do with this share-sale.  

What should investors do?  

Speaking of positives, Zee Business Managing Editor said the company is a market leader with strong growth outlook. It has impressive financials and is expected to go debt-free post listing, he said.

#AetherIndustriesIPO

आज से एथर इंडस्ट्रीज का IPO; प्राइस बैंड: ₹610-642/शेयर

कंपनी में क्या है खास?

इश्यू को सब्सक्राइब करें या छोड़ दें?

जानिए अनिल सिंघवी की राय...@AnilSinghvi_ | #IPOAlert #IPOtoInvest pic.twitter.com/8IW12Ng7oX

— Zee Business (@ZeeBusiness) May 24, 2022

However, the company has a small business history and the promoter also plans to sell 12% more stake in future, observed the market guru.  

"In terms of valuations, it is neither expensive nor attractive. It comes at just reasonable valuations. Investors seeking to subscribe to this issue should do with long-term perspective," he added.

Meanwhile, Marwadi Financial Services gave a subscribe (with Caution) rating to the IPO. 

Considering the TTM (Dec-21) EPS of Rs 8.50 on a post issue basis, the company is going to list at a P/E of 75.6x with a market cap of ₹79,918 Mn, whereas its peers namely Clean Science & Technology Ltd and Fine Organic Ltd. are trading at PE of 82.7x and 80.2x. 

"We assign the “Subscribe (With Caution)” rating to this IPO as the company is the sole manufacturer of chemicals namely 4MEP, MMBC, T2E, OTBN, and others, in India. However, the company has low and declining Operating Cash Flow to EBITDA ratio which keeps us cautious from a long-term perspective," it said. 

Aether Industries garnered Rs 240.326 crore from anchor investors 

Earlier, Surat-based speciality chemical said it raised Rs 240.326 crore from anchor investors ahead of its initial share sale on Tuesday.  

The company had allocated 37,42,495 shares at Rs. 642 per share to anchor investors on Monday.

SBI Mutual Fund, Ashoka India Opportunities Fund (White Oak), The Nomura Trust, Goldman Sachs Funds are among the 7 DIIs and 6 FPIs investors that participated in the anchor book.

Meanwhile, the company aims to use proceeds from the fresh issuance to fund capital expenditure requirements for the proposed new project in Surat, Gujarat, fund working capital requirements and for payment of debt.

Half of the issue size has been reserved for qualified institutional investors, 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors.

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.