Advanced Enzyme IPO – Add this Biochemistry to Your Portfolio
The buoyant IPO market is witnessing incessant exuberance as seen from the over-subscription numbers and listing gains recorded by the likes of Quess Corp, Mahanagar, Ujjivan, Equitas & Thyrocare; and there is yet another one – Advanced Enzyme Technologies Ltd. (AETL)
The company’s name is in the realm of esoteric as the word “enzyme” may draw a blank look from most of us, while some of us could faintly recall having read about it back in school Science books. Enzymes are proteins produced by living organisms that accelerate their metabolic processes.
AETL is India’s largest company engaged in research and development, manufacturing and marketing of products developed from indigenous enzymes. The biochemistry of this company could be rewarding for the shareholders due to below mentioned reasons.
Investment Arguments
- Well-established Player with Integrated Operations –
The company ranks amongst the top 15 global companies in terms of enzyme sales, has 2nd highest market share in domestic market, next only to the world’s largest enzyme company, Novozymes, and boasts of more than 2 decades of fermentation experience in production of enzymes. The company has a diversified product portfolio of 400+ proprietary enzyme products catering to 700+ customers across 50 countries spanning across several industries.
AETL’s operations are integrated across the value chain – R&D, commercial-scale manufacturing, marketing of enzyme products and customized enzyme solutions. This integrated set-up brings in cost efficiencies and ensures quality control.
- Presence in Niche Business with High Entry Barriers –
The manufacturing of enzymes, enzyme products and solutions entails specialized knowledge of enzyme fermentation and end-user industries. Long gestation period from R&D to commercialization of enzyme product/ solution, technical and specialized nature of business, heavy reliance on R&D and dearth of experienced and qualified professionals in enzyme industry pose as formidable entry barriers. This has resulted in a concentrated industry consisting of few players with the likes of domestic players like Biocon& foreign MNCs like Novozymes, DSM Nutritional Products and Danisco.
- Experienced Promoters & Management Team –
AETL’s promoters Mr. ChandrakantRathi& Mr. Vasant Rathi have a cumulative experience of 70+ years in the enzyme industry which helps in assessing market opportunities, future potential of new products and market positioning. This is complemented with domain experts across various functions of the business combined with strong R&D team consisting of 55+ scientists, microbiologists, engineers, food technologists and biotechnologists.
GreenEdge Wealth Services’ View
At the higher price band of Rs. 896, the company is valued at 25x FY16 earnings, which is attractive when compared to Novozymes, the largest enzyme company in the world, trading at 35x FY16 earnings. AETL does not have a comparable listed Indian peer. We recommend our investors to subscribe to the IPO of Advanced Enzyme as fair valuations and presence in a niche business leave ample scope for listing gains.
Issue Details
| Issue Open Date | 20th July, 2016, Wed |
| Issue Close Date | 22nd July, 2016, Fri |
| Issue Price (Rs.) | 880 to 896 |
| Market Lot | 16 |
| Minimum Application Size for Retail (Rs.) | 14,336/- |