Aether Industries Limited – Investor Presentation Summary

Key Operational Highlights

  • Sales growth of 23.96% year-on-year and 6.33% quarter-on-quarter in Q2 FY27
  • Contract Exclusive Manufacturing (CEM) grew approximately 50.03% year-on-year
  • Contract Research and Manufacturing Services (CRAMS) expanded by approximately 23.91% year-on-year
  • CEM and CRAMS together contribute 65.97% of total revenue
  • Large Scale Manufacturing (LSM) contributed 33.35% to sales with 1.23% year-on-year growth
  • Capacity utilization: Genesis plant at 77% (up from 75% in Q1), Ascend plant at 70% (up from 69%), Strata plant at 61% (up from 59%)
  • Currently engaged on more than 65 projects in CRAMS division
  • R&D operating framework transitioned from 24x6 to 24x7 model

Key drivers of operational performance: Healthy growth in CEM and CRAMS businesses, strategic re-purposing of production lines from LSM to CEM, robust project pipeline, enhanced operational flexibility through piping modifications at Strata site.

Segment-wise Performance

CRAMS Business Vertical:

  • Delivered solid growth supported by new R&D projects across multiple industry sectors
  • Oil & Gas and Material Science represent largest share of project portfolio
  • New R&D facility progressing on schedule, expected commissioning by Q2 FY28
  • Commenced work on silicon project with Dow Chemicals

CEM Business Vertical:

  • Revenue from Baker Hughes contract at Strata site: ₹720 million
  • Additional ₹150 million from commercial sale of new products from pilot plant
  • Milliken contract at Ascend site ramping up as expected
  • European customer contract in other half of Ascend site witnessing progressive ramp-up

LSM Business Vertical:

  • Year-on-year revenue growth of 1.23%, quarterly decline of 8.35%
  • LSM product prices increased 27.45% year-on-year and 3.39% quarter-on-quarter
  • Volume moderation due to strategic reallocation to CEM vertical

Explanation of significant changes in segment performance: Growth driven by deliberate portfolio shift toward higher-value CEM and CRAMS businesses, pricing strength in LSM portfolio, and ramp-up of major contracts.

Financial Highlights

  • EBITDA margin for 1H FY27: 31.64% (compared with 30.76% in 1H FY26) - 88 basis point improvement
  • Achieved despite challenging macroeconomic environment and nearly threefold increase in logistics costs
  • Raw material prices remained elevated

Drivers of financial performance: Favorable shift in revenue mix toward higher-value CRAMS and CEM business verticals, continued pricing strength in LSM portfolio, effective commercial and cost-management initiatives.

Geographical Revenue Split

Not Specified

Balance Sheet Snapshot

  • Outstanding borrowings as at 30 September 2026: ₹4,152 million working capital loans + ₹2,085 million term loans
  • Debtor days: 107 days (September 2026) vs 109 days (March 2026)
  • Inventory days: 172 days (September 2026) vs 151 days (March 2026)
  • Creditor days: 114 days (unchanged)
  • Net working capital: 165 days (September 2026) vs 162 days (March 2026)

Financial Health Insights: Strategic inventory buildup due to volatile geopolitical environment and increased shipping costs, expected to decrease in next six months as production ramps up.

Capex & Cash Flow Health

  • Total capital expenditure for FY27 expected: ₹3,000 million ~ ₹3,500 million
  • New R&D center: ₹1,000 million total capex, expected ready by Q2 FY2028
  • Magnum site: ₹833 million capex in Q1 FY2027
  • Capex allocation: ~₹600 million at Site Catalyst, remaining at Site Magnum

Investment Rationale: Focus on capacity expansion for semiconductor and agrochemical production, enhanced R&D capabilities with 120 fume hoods and 8 technical labs.

Strategic & R&D Initiatives

  • New R&D center construction progressing steadily
  • Two production blocks at Magnum site: one for semiconductor segment, one for CEM contract with global agrochemical major
  • Commercial production from Magnum site expected to commence in Q4 FY27
  • Commercial sales of semiconductor materials commenced from pilot plant in October 2026
  • Commercial-scale semiconductor supplies from Magnum site expected at start of Q4 FY27

Expected impact on growth: Strengthening presence in high-value, technology-driven growth verticals including semiconductors and agrochemicals.

Strategic Rationale: Expanding into high-growth markets, deepening strategic partnerships with global customers, enhancing innovation capabilities.

Industry Trends & Business Environment

  • Challenging and volatile macroeconomic environment
  • Healthy order book for next six months in Oil and Gas sector
  • Ongoing customer discussions on new product opportunities
  • Promising CRAMS pipeline expected to progress into commercial production

Impact on Company: Managed to achieve growth and margin expansion despite headwinds, strategic inventory buildup to mitigate supply chain risks.

Management Commentary & Growth Outlook

  • Expect to introduce additional products for Baker Hughes from Q3 FY27 onwards
  • Strata site capacity utilization expected to improve as newly introduced products contribute to revenue
  • Confident that CEM vertical will deliver accelerated growth over next couple of years
  • Robust pipeline of opportunities across multiple end-use sectors
  • LSM expected to remain key contributor supported by pharmaceutical product launch at Magnum site
  • Pharmaceutical product received highly encouraging response from customers
  • Progressive ramp-up in pharmaceutical production expected during Q3 and Q4 FY27
  • Meaningful recovery expected in Pharmaceutical and Agrochemical sectors over coming quarters
  • Material Science sector expected to emerge as second-largest revenue contributor

Risks and Opportunities: Volatile geopolitical environment, increased shipping costs, but strong pipeline of opportunities across business verticals.