Shares of Aether Industries soared 10 per cent to Rs 1,023.15 on the BSE in Thursday’s intra-day trade after the company said it executed Letter of Intent (LoI) with US-based leading global Oil Field Services Company for strategic supplier and contract manufacturing partnership. The stock was trading close to its 52-week high of Rs 1,050, touched on September 19, 2022.
At 12:46 PM; the stock was trading 6 per cent higher at Rs 986, as compared to 0.12 per cent decline in the S&P BSE Sensex.
Aether Industries is one of India’s leading speciality / fine chemical manufacturer and preferred provider of Contract Research and Manufacturing Services.
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.
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The LoI specifies 4 strategic products of the new customer that will be contract manufactured by Aether as the first set of products in this new partnership. The individual volumes of these 4 products are also specified in the LoI, and totals to 1,325 MT per month (i.e. ~ 16 KTA or 16,000 MT per year). These products will be supplied to the global energy and oil and gas locations of the customer, including a significant supply within India, the company said in press release.
The volume and revenue potential of this new partnership will be significant for Aether. Just the first set of 4 products mentioned in the LoI have a mature supply potential of > 1,000 MT per month and will correspond to top line revenues for Aether in excess of USD $ 36 MM or Rs 300 crore per year. This initial revenue potential is anticipated to be achieved by Aether within 1 year of the SSA execution, the management said.
Analysts at HDFC Securities have BUY rating on Aether Industries, with a target price of Rs 1,180, on the back of capacity expansion-led growth, advanced R&D capabilities, technocratic management, market leading position in most of its products, strong product pipeline, and marquee customer base.