The initial public offer (IPO) of speciality chemical manufacturer Aether Industries opened today. The issue size of the IPO is Rs 808 crore. The IPO consists of a fresh issue of Rs 627 crore, and an offer for sale of Rs 181 crore. The company raised over Rs 240.32 crore from anchor investors on May 23. The firm informed the bourses that it has allocated 37,42,495 shares at Rs 642 per share to anchor investors.
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 share allotment.
Anchor investors are institutional investors who subscribe to an IPO before the issue opens to public. Usually, anchor investors invest in an issue a day before the opening of the IPO. They are required to bid for the shares within the price band for the IPO. Each anchor investor is required to invest a minimum of Rs 10 crore during the issue.
The share sale will close on May 26. The company is offering its shares in a price band of Rs 610 to Rs 642 per share.
The lot size of the IPO is 23 shares for which one will have to spend Rs 14,766. A retail individual investor can submit bids for up to 13 lots or 299 shares by spending Rs 1,91,958.
HDFC Bank Limited and Kotak Mahindra Capital Company Limited are the book running lead managers for the issue. The allotment of shares will be done on May 31 and they are likely to be listed on BSE and NSE on June 3.
Link Intime India Private Ltd is the registrar for the IPO.
The company plans to utilise proceeds of the public issue toward prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company, funding capital expenditure requirements for the manufacturing facility (Proposed Greenfield Project), funding working capital requirements and general corporate purposes.
The company allocated 35 per cent of the issue for retail individual investors (RII). Around 50 per cent of the total offer has been reserved for qualified institutional buyers (QIB). The company has set aside 15 per cent for non-institutional investors (NII).
Angel Broking has given a subscribe call to the IPO.
"In terms of valuations, the post-issue trailing twelve months multiple P/E works out to 75.6 times (at the upper end of the issue price band), which is reasonable considering Aether Industries' historical top-line and bottom-line CAGR of 50% and 75% respectively over FY19-21. Further, Aether Industries has diversified customer base, strong financial track record and higher retrun on equity. Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a subscribe rating on the issue," the brokerage said.
Choice Broking has assigned a 'Subscribe with Caution' call to the IPO.
"At higher price band of Rs 642, Aether is demanding an EV/Sales multiple of 13.1 times, which is in-line to peer average of 15.2 times. 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," the brokerage said.
Marwadi Financial Services has given a 'subscribe with caution' call to the IPO.
"Considering the TTM (Dec-21) earnings per share 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 Rs 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," the brokerage said.
Anand Rathi Financial Services is positive on the IPO in the long term.
"At the upper end of the IPO price band, Aether Industries is valued at 72.3 times on annualised basis of FY22 earnings which looks fairly valued 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 'SUBSCRIBE-For Long term' rating to this IPO," said the brokerage.
Aether Industries Limited (AIL) is a speciality chemical manufacturer in India focused on producing advanced intermediates and speciality chemicals involving complex and differentiated chemistry and technology core competencies.
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