Aether Industries Limited

Basic Materials — Specialty Chemicals · NSE

₹1,528.80−₹66.80 (−4.19%)

DalalBaazaar Score

65 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by negative free cash flow, small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:48 pm

Understanding the Business

Company site ↗

The 60-second version of Aether Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Aether Industries Limited produces and sells advanced intermediates and specialty chemicals in India and internationally. It provides large-scale manufacturing, contract research and manufacturing services, as well as contract/exclusive manufacturing services.

IndustrySpecialty Chemicals

SectorBasic Materials

Employees817

Annual revenue₹1,132 Cr

How does it make money?

Turns over ₹1,132 Cr a year. Of every ₹100 of sales, about ₹19 reaches shareholders as profit, with ₹32 left at the operating level before interest, tax and depreciation. Each of its 817 employees supports ₹1.39 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.39 Cr

Who are its competitors?

The closest listed comparisons in its industry are ASIAN PAINTS LIMITED, PIDILITE INDUSTRIES LTD, SRF LTD, UPL LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 12.1% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE22.3%

What is the outlook?

7 analysts covering the stock expect revenue to grow about 33.6% and earnings to grow about 37.6% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+33.6%

Est. earnings growth+37.6%

Analysts7

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +74% while net margin moved -3% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+74%

Margin effect-3%

DalalBaazaar Score

65/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 86.1x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 92.5x
✗ P/B of 8.26x is a steep premium to book

Quality vs. Valuation

Company Quality

73/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

32/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

86.1x

3Y Median

92.5x

40 monthly readings · mean 100.0x · range 61.6x–147.6x

Sector Median

40.4x

median of 4 sector peers

🟡Currently trading close to its 3y median of 92.5x — the market is paying about what it usually pays for this company.

⚠️Against its sector it trades 113% above the peer median of 40.4x.

vs. its own history

Fair

92.5x median over 40 months · -7%

vs. sector peers

Expensive

40.4x median of 4 peers · +113%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

57.9x

PEG

4.54

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.19x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 2814% over 3 years, from ₹16 Cr to ₹458 Cr.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🟡Inventory building faster than salesFinancial
Inventory up 116% against revenue up 74% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

A premium to the sector to defend
It trades 113% above the peer median. That premium needs a reason that persists, or it closes.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 15% a year✓ 20.2% CAGR
Latest reported year was 27.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 30%✓ 31.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹481 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 9%✓ 12.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 4 neutral · 3 weak

Market Cap

₹20,291 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

86.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

8.26x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹17.76

Profitable

Profitable on a per-share basis

ROE

8.9%

Moderate

Moderate capital efficiency

ROCE

12.1%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.19x

Low

Conservative leverage

Revenue Growth (YoY)

27.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

34.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹481 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

51.4x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

24.9%

Good

Healthy core-business profitability

Net Margin

19.1%

Good

Strong bottom-line conversion

Current Ratio

1.78

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.12

Defensive

Steadier than the market

52W Range Position

74%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1694.3 / 1657.6

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

30.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹651 Cr	₹598 Cr	₹839 Cr	₹1,132 Cr	+20.2%
EBITDA	₹202 Cr	₹171 Cr	₹282 Cr	₹358 Cr	+21.0%
EBITDA Margin	31.0%	28.6%	33.6%	31.6%	—
PAT (Net Profit)	₹130 Cr	₹82 Cr	₹158 Cr	₹219 Cr	+18.9%
EPS	₹10.47	₹6.31	₹11.94	₹16.54	+16.5%
ROE	10.5%	4.0%	7.1%	8.9%	—
ROCE	13.9%	5.6%	9.8%	12.1%	—
Total Debt	₹16 Cr	₹183 Cr	₹200 Cr	₹458 Cr	+207.7%
Free Cash Flow	-₹408 Cr	-₹444 Cr	-₹352 Cr	-₹481 Cr	—

🟢 Revenue has grown at 20.2% a year over 3 years.

🟢 EBITDA has grown at 21.0% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 31.6% over 3 years.

🟢 PAT (Net Profit) has grown at 18.9% a year over 3 years.

🟢 EPS has grown at 16.5% a year over 3 years.

🔴 ROE has fallen from 10.5% to 8.9% over 3 years (-1.5 pts).

🔴 ROCE has fallen from 13.9% to 12.1% over 3 years (-1.8 pts).

🔴 Total Debt has grown at 207.7% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,201 Cr

Total Liabilities

₹746 Cr

Cash & Equivalents

₹6 Cr

Operating Cash Flow

₹142 Cr

Capex

-₹623 Cr

Shareholding (proxy)

Institutional Holding

11.8%

Insider Holding

76.6%

Analyst Consensus

Recommendations

4 Buy · 1 Hold · 2 Sell

Target Price (Mean)

₹1,565.29

+2.4% vs CMP

Target Range

₹1,060 – ₹1,900

Peer Comparison

Company	P/E	ROE
ASIAN PAINTS LIMITED	46.9x	22.3%
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

3 mixed3 general

Aether Industries (NSEI:AETHER) Stock Forecast & Analyst Predictions

Simply Wall Street, 14 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Aether Industries Share Price Falls 2.66%: Key Analysis

Univest, 16 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

AETHER Forecast — Price Target — Prediction for 2027

TradingView, 26 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Aether Industries rallies 9%; stock up 109% thus far in CY2026

Business Standard, 25 Sept

Up 137% in 1 year, ace investor Sunil Singhania raises stake in this specialty chemicals stock - Should you buy too?

Livemint, 13 Oct

Stock Stories: The Chemical Alchemist – Why Aether Industries is Scaling New Heights

MarketSmith India, 25 Mar

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth

MiddlingProfitability · Risk

WeakValuation

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 2 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑