Experts expect specialty chemicals manufacturer Aether Industries to list at a single-digit premium over the issue price on June 3 following a good response to the IPO from qualified institutional buyers (QIBs) and expected growth opportunities.
Market volatility, however, is expected to have some impact on the listing. The final issue price has been fixed at Rs 642 a share.
"Aether Industries could list at a marginal premium to the issue price as indicated by the grey market. The response to the IPO was mixed with good demand coming from QIB and tepid demand from the HNI & retail segment,” Saurabh Joshi Research Analyst at Marwadi Financial Services said.
The weak market sentiments could be attributed to the low response to the IPO and low grey market premium, he said.
The initial public offering was subscribed 6.26 times during May 24-26 as QIBs bought 17.57 times their allotted quota.
The portion set aside for non-institutional investors, or high net worth individuals, was subscribed 2.52 times, while the shares set aside for retail investors and employees were fully booked.
The niche specialty chemical manufacturer raised Rs 808 crore through the IPO that comprised a fresh issue of Rs 627 crore and an offer for sale of Rs 181 crore worth of shares by shareholders.
The fresh issue funds are to be used for repaying debts, greenfield project and working capital requirements.
Narendra Solanki, Head, Equity Research (Fundamental) at Anand Rathi Shares & Stock Brokers also expects Aether to open at a premium.
Incorporated seven years ago, Aether Industries has emerged as one of the fastest-growing specialty chemical companies in the country. Its revenue has grown at a CAGR of 49.5 percent between FY19 and FY21.
Considering the growth opportunities for speciality chemicals in pharma, agrochemicals & FMCG space, and improving prospects for contractual manufacturing and CRAMS under Make-in-India initiatives, Solanki had a “subscribe for long term" advice on the IPO.
Astha Jain, Senior Research Analyst, Hem Securities, expects Aether to list at a 3-5 percent premium.
Aether shares are trading at a premium of Rs 15-20, or 2-3 percent, over the issue price in the unlisted or grey market, analysts said.
On the financials front, the company’s profit rose 92 percent to Rs 71.12 crore in 2020-21 on revenue of Rs 450 crore that grew by 49 percent compared to previous year.
In FY20, profit increased 71 percent to Rs 40 crore and revenue rose 50 percent to Rs 302 crore compared to previous year.
Aether recorded a profit of Rs 82.91 crore in nine months period ended December 2021 on revenue of Rs 442.54 crore.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.