Advanced Enzyme Technologies Ltd (AETL) IPO at a glance

Issue Highlights

Issue Period	20/7/16-22/7/16
Price Band (Rs.)	880-896
Issue Size(shares) #	45,92,406
Issue Size (Rs. crore)	412
Issue Type	100% Book Built
Face Value (Rs.)	10
Listing	BSE,NSE
Industry	Enzyme Industry
Registrar	Link Intime India
Minimum Bid Quantity	16
Maximum Retail Subscription	Rs. 1,86,368 (13 lots)
BRLM	ICICI Sec, Axis Capital

# derived figure

Issue Details

Offer for Sale: 40,34,370 shares

 Fresh Issue: Rs. 50 crore

Equity Shares Outstanding Prior to the Issue: 2,17,65,600

 Equity Shares Outstanding After The Issue: 2,23,23,636

Objects of the Issue

(1)    Investment in its wholly owned subsidiary AE USA for loan its loan repayment/pre-payment	Rs. 50 crore
(2)    General corporate purposes	NA

Industry Profile

Simply put, enzyme is a protein molecule which is produced by all living organisms and it acts as a specialized catalyst which accelerates the bio-chemical reactions. These enzymes are harvested from living organisms  like plants, animals, bacteria and fungi.

Usage of enzymes: Enzymes are classifies into two segments, namely Industrial and Specialty. Industrial enzymes are used in food & beverages, detergents, bio-fuel production, animal food and textiles, leather, pulp & paper, starch processing, etc whereas specialty enzymes are used in pharmaceutical, research & bio-technology, diagnostics and bio-catalysts.

The global enzyme market is worth (year 2012 figure) $ 5 billion of which industrial enzymes constitute 70 % of the world demand whereas specialty enzymes constitute 30 % of the same.

The annual growth of enzyme-demand is expected  to stay in the 5%-6% range. Presently, USA is the largest consumer of the enzymes in the world accounting for the 37 % of the global demand.

Company Profile

Incorporated in 1989, AETL is the largest Indian enzyme company, engaged in the R&D, manufacturing and marketing of 400+ proprietary products developed from 60 indigenous enzymes. The company is ranked in the top 15 global companies in terms of enzyme sales. AETL primarily operates into 2 verticals- Healthcare & Nutrition (Human and animal) and Bio-processing (food & non-food). With its 6 manufacturing unit, fermentation capacity of AETL is 360 cubic meters. In the domestic market it is the second company in enzyme sales next only to Denmark based Novozymes-world’s largest enzyme company.

Risks & Threats

1.       Significant dependence on North American subsidiaries

2.       Pithampur SEZ tax benefits shall be ceasing from FY 2020

3.       The growth CAGR of enzyme market is low at around 6 %

4.       As 60 % of the revenue comes from abroad, strong rupee regime is not favorable for the company

     

Financial Profile #

Parameter	FY 16 annualized
PEG (Profit, trailing 4 years)	1.37
Net Profit Margin (%)	25.3
Return on Capital Employed (%)	36.8
Return on Equity (%)	29.2
Total Liability to Net worth	.8
Price to Book Value	8.3
Operating Cash to Net Profit	.9
TIE (Times Interest Earned)	11.9
AR collection Period (Days)	59.6
EV/EBITDA	17.8
M-Cap to Sales	7.2
Current Ratio	.9
Profit CAGR (%)	20.8

# using annualized data at the upper end of the price-band

Comparison with the Peers #

Though There is no indigenous comparable peer but Biocon, as it offers some competition.

Just for the sake of comparison-

Parameters	PEG	NPM (%)	ROCE(%)	ROE(%)	EV/EBITDA
AETL	1.37	25	36.8	29.2	14.46
Biocon	.56	34.8	22.5	24.6	17.8

#moneycontrol data