Aether Industries, a specialty chemical manufacturer, has recently executed a Letter of Intent with Saudi Aramco Technologies Company, towards the manufacturing and commercialization of Converge polyols technology and product series.
Saudi Aramco Technologies and Aether had previously developed and validated this manufacturing process on a pre-commercial scale.
The Converge platform represents a novel and cutting-edge technology for the manufacture of more sustainable polyols containing up to 40% by weight carbon dioxide (CO2). These are a differentiated series of polyols that improve performance in coating, adhesive, sealant, and elastomer (CASE) applications while reducing the carbon footprint as compared to industry standard polyols.
The brokerage firm HDFC Securities believes that this engagement will lead to Aether building up the required infrastructure, engagements with its customers, getting approvals, and commercial production of the product in the subsequent years.
One of Aether’s main focus areas is to convert R&D (CRAMS) opportunities provided by its clients into large-scale/contract manufacturing projects.
The company does so by offering value engineering, developing innovative processes, and undertaking its core competency chemistries in the company’s contract manufacturing and exclusive manufacturing operations, HDFC Securities said.
This allows the company to enter into long-term contracts with its customers that provide assured product offtake and better margins, thereby helping improve Aether’s profitability. The signing of this letter of intent with Saudi Aramco is one more example of converting a CRAMS customer into a contract manufacturing opportunity, it added.
With the addition of this contract with Saudi Aramco, Aether will increase its wallet share with the company. The brokerage believes that Aether has the capabilities and expertise to retain its existing clients, increase their wallet share, and, at the same time, bag new customers.
With the tripling of its R&D infrastructure and capacity addition, Aether is well-positioned to get into many more such contracts, it said.
HDFC Securities has reiterated its 'buy' rating on Aether Industries with a target price of ₹1,121 apiece. The brokerage firm cites several factors for its bullish outlook, including the company's capacity expansion strategy, advanced R&D capabilities, technocratic management, strong market position in most of its products, an impressive product pipeline, and a high-profile customer base.
Aether Industries is the sole manufacturer in India for advanced intermediates such as 4MEP, MMBC, T2E, OTBN, NODG, and Bifenthrin Alcohol (Pharma Applications) and specialty chemicals such as DVL (a coating additive). One of the largest manufacturers in the world by volume for 4MEP, T2E, NODG, and HEEP.
The company shares, which made their debut on the stock exchanges in June 2022, have witnessed a spectacular run, as they are now trading 40% higher than their issue price.
02 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.
