Aether Industries Files for Rs.1,000 Crore IPO

The specialty chemicals company, Aether Industries, has filed the draft red herring prospectus (DRHP) with SEBI for its proposed Rs.1,000 crore IPO. According to the DRHP, the Aether Industries IPO will comprise of a fresh issue of Rs.757 crore while the balance Rs.243 crore will comprise of 25.7 lakhs shares offered by the promoter, Purnima Ashwin Desai.

The regulator takes anywhere between 2-3 months to give its view on the DRHP and when it provides its observations to the issuer, it is considered tantamount to SEBI approval. However, post the approval, the company has to finalize its marketing plan, issue process and other formalities and the IPO takes a little over a month after that.

The fresh issue component of Rs.757 crore will be utilized for 3 identified purposes. Rs.190 crore out of the issue proceeds will be used for funding capex for its proposed greenfield project. The company will use Rs.212 core to repay its total outstanding debt of Rs.224 crore. Another Rs.165 crore will be utilized by the company for working capital purposes.

Aether manufactures advanced intermediates and specialty chemicals at its 2 sites in Surat in the state of Gujarat. These specialty chemicals involve complex and differentiated chemistry and technology. As part of its manufacturing facility, Aether also has an R&D unit, analytical sciences laboratory, a CRAMS facility and a hydrogenation facility.

For the first half of FY22 ending September 2021, Aether reported net profits of Rs.57.51 crore on top line sales of Rs.296 crore, implying net profit margins of 19.43%. The company has robust EBITDA margins of 30.8% and basically caters to sectors like advanced chemicals, pharmaceuticals and the oil & gas sector.

The company started out as a R&D unit in 2013 and the full-fledged manufacturing operations started only around 2017. The chunk of the IPO proceeds will be used for capex and debt repayment; both of which are normally regarded as value accretive to the business. The issue will be lead managed by HDFC Bank and Kotak Mahindra Capital.

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