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HDFC Securities Institutional Equities
Aether Industries Ltd.’s business model is going through changes in its business mix and customer mix while maintaining its identity as a technology oriented, research-focused organization. The Contract or Exclusive Manufacturing business vertical will lift the revenue boats of the company in the coming years.
The share of CEM and CRAMS together is expected to increase to 48% in FY29 from 34% in FY24. Leveraging its competencies in chemistries and technology, Aether is looking to tap application driven research and application-driven business opportunities in material science and the oil and gas industries.
This will uplift the share of the oil and gas and material science industries in revenue and allow the company to widen its customer base into sustainable and eco-friendly end-user industries.
While this transformation is crystallizing, Aether continues to invest in Research and Development infrastructure and manpower to support the Large Scale Manufacturing and CEM businesses by continuing the supply of new molecules.
We expect revenue/Ebitda/profit after tax compound annual growth rate CAGR of ~30/39/38% over FY24- 29E while return on equity is expected to improve from 6% in FY24 to 11% in FY29.
Aether has commissioned Site 4 to execute a strategic supply agreement with Baker Hughes. The company has received a revocation of the closure order from the Gujarat Pollution Control Board for 75% of Site 2, and for the remaining site, the revocation order is expected by December-24. The expansion project at Sites 3+ and 3++ is on track to be commissioned by the end of FY25. Phase I of the greenfield project at Panoli (Site 5) is on track to be commissioned by December-25. These developments will drive revenue growth for the company.
We maintain a Buy rating with a target price of Rs 1,142.
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. Read more on Research Reports by NDTV Profit.Stocks to Buy: Revenue from Baker Hughes (a global leader in energy technology, has selected Aether to manufacture and supply six chemicals for its customers worldwide) to reach ~Rs 2 billion in FY26. Read MoreResearch Reports
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