The agency has also affirmed the company’s short-term rating at '[ICRA] A1’.

ICRA stated that the reaffirmation of the ratings of Aether Industries (AIL) favourably factors in its track record in the speciality chemicals business, the experience of its promoters, its strong R&D capabilities, a well-spread out product mix and a diversified customer base comprising reputed companies in the domestic and export markets.

The ratings also factor in the consistent revenue growth posted by the company along with a healthy margin profile, with the operating marginremaining in the range of 22-29% over the last few years owing to its well-differentiated product portfolio.

ICRA also notes that AIL is a market leader in some of the products it deals in. Moreover, the company has raised sizeable equity in the last two years to fund its growth and capex requirements.

This equity raise has also enabled the company to retire its debt, translating into strong capital structure and debt protection metrics.However, over the last few months, the working capital requirements are being met by availing working capital borrowings.

The company is also planning another QIP that will help it fund its future capex requirements as well as meet the regulatory requirements regarding promoter shareholding.

The company plans to add new products and expand the capacities of the existing product base, which is likely to provide a thrust to the operating income as well as profit generation and keep the credit profile comfortable. ICRA also notes the new tie-ups announced by the company with reputed counterparties for a few products, which will ensure a healthy top line growth, going forward.

While the company’s performance is susceptible to volatility in raw material prices and foreign exchange rates, its ability to pass on the input cost fluctuations to some extent mitigates the risk. The company also remains exposed to foreign currency exchange fluctuations as well as changes in the regulatory environment.

Moreover, the ratings remain constrained by the elevated working capital intensity of operations because of the high inventory and receivable levels, which in a high-growth scenario, results in a blockage of sizeable capital for the company. While the working capital intensity has moderated in the current fiscal, it remains to be seen whether this trend can be sustained.

Aether Industries is a specialty chemical manufacturer in India focused on producing advanced intermediates and specialty chemicals involving complex and differentiated chemistry and technological core competencies.

The scrip was up 0.04% to currently trade at Rs 826.35 on the BSE.