Shares of Aether Industries, a specialty chemical manufacturer, gained nearly 10% to ₹1,022 apiece during Thursday's trade, marking the largest intra-day gain since listing.
At 1:30 p.m., the stock was trading at around ₹983.50 apiece, up by 5.80%, as against a 0.20% drop in the Nifty 50 index.
This strong spike came after the company on Wednesday said it signed a Letter of Intent (LoI) with one of the top 3 global Oil Field Services companies based in the USA towards the finalization of a strategic supplier and contract manufacturing partnership.
"The LoI paves the way for the execution of a Strategic Supply Agreement (SSA) between the two companies within 3 months of the LoI execution. The LoI specifies four strategic products of the new customer that will be contract manufactured by Aether as the first set of products in this new partnership," the company said in an exchange filing.
Commenting on the LoI, Dr. Aman Desai, promoter and director of Aether Industries, said, "The volume and revenue potential of this new partnership will be significant for Aether. Just the first set of four products mentioned in the LoI have a mature supply potential of more than 1,000 MT per month and will correspond to top-line revenues for Aether in excess of Rs. 300 crores per year."
Earlier in March, the company executed a Letter of Intent with Saudi Aramco Technologies Company, towards the manufacturing and commercialization of Converge polyols technology and product series.
In terms of financial performance, the company reported healthy numbers in Q4, with its net profit growing to ₹38 crore, an increase of 46% YoY. Its revenue from operations increased to ₹184 crore from ₹148 crore in the year-ago quarter.
The global brokerage firm JM Financial has recently initiated coverage on the stock with a "buy" call and a target price of ₹1,080 apiece. The brokerage believes that Aether’s robust R&D backbone enables it to keep innovating and consistently come up with new products.
This gives it a strong competitive advantage and helps it offer substitutes for products currently being imported in large quantities from China, it added.
Further, recent tie-ups with global majors have strengthened the company’s runway for long-term growth, it noted.
Aether Industries Limited (AIL) manufactures advanced intermediates that are used in end-user industries such as pharmaceuticals, agrochemicals, material science, coatings, high-performance photography, and oil and gas.
Its customers include more than 160 multinational, global, regional, and local companies. Key customers include Divi's Labs, Dr Reddy’s, UPL, Adama, Aramco Performance Materials, Polaroid, and Tosoh FineChem.
The company's shares got listed on June 03, 2022, at a price of ₹774 per share, which was a 20.06% premium over the issue price of ₹642. Taking the current trading price into consideration, the stock is trading 53.45% higher than its IPO price.
04 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
