Aether Industries stock rallies 7% after Q2 profit zooms 39%

So far this year, the stock of this specialty chemical manufacturer has climbed 7 percent as against 5 percent rise in the benchmark Sensex

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Shares of Aether Industries soared 7 percent to the day’s high of Rs 933 on November 1 after the company’s profit surged 39 percent on-year to Rs 37 crore in the quarter ended in September (Q2FY24). The S&P BSE Sensex was flat at 63,810 as of 9:50am.

So far this year, the stock of this specialty chemical manufacturer has climbed 7 percent as against a 5 percent rise in the benchmark Sensex. Earlier, the scrip hit a 52-week high of Rs 1,210 on June 22, 2023.

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The company’s revenue surged 22 percent on-year in Q2FY24 on higher volumes, whereas earnings before interest, tax, depreciation, and amortisation (EBITDA) jumped 41 percent to Rs 61 crore.

Analysts at JM Financial shared a ‘buy’ call on the counter, upgrading the target price to Rs 1,130 per share (versus Rs 1,110 apiece earlier).

“We believe Aether’s chemistry-driven approach enables it to quickly develop new products or interchange existing products, giving it a distinct advantage. Moreover, its presence in not-so-easy-to-replicate chemistries acts a key entry barrier,” the brokerage firm said in a post-result review note.

Overall, the speciality chemical industry was reeling under pressure from the past two quarters due to sluggish demand in overseas market and lowering chemical prices by China.

However, analysts believe that the worst seems to be behind, especially for Aether Industries.

“The demand for agrochemical intermediates from Aether’s product portfolio is likely to improve. Agrochemical orders that were manufactured in the first 2 quarters are being delivered in second half of the year. Aether, which had stocked up on finished goods inventory, will see inventories coming down across the rest of the year. This demand recovery is unlike other players who continue to face headwinds in the agrochemicals sector,” brokerage firm JM Financial added.

Also read: Short Call: Specialty chemicals story, Buffett’s oil bet, warning signs from US

The Gujarat-based company primarily focuses on producing advanced intermediates and speciality chemicals that involves complex and differentiated chemistry and technology core competencies.

The company’s products find application in pharmaceutical, agrochemical, material science, coating, high performance photography, additive, and oil and gas segments of the chemical industry.

Some marquee customer base includes Divi’s Lab, Dr Reddy’s, Lupin, IPCA, Atul, Laurus Labs, Aarti Drugs, Granules, Granules, Cadila Pharma, UPL, Aramco, among others.

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