Aarti Industries Ltd. share price target

Aggressive expansion to support long term growth Aarti has spent | 3000+ crore in capex in FY17-20, on three multiyear projects. Of this, one was recently cancelled (expects to receive | 900-975 crore as compensation) while the remaining two projects have multiyear peak annual potential of | 590 crore (exhibit 3). Apart from this, it has spent on new R&D; unit, expansion of hydrogenation, NCB, de-bottlenecking in various specialty chemicals, and pharma. Going ahead, Aarti is likely to spend at least | 1000-1200 crore per annum in the next four to six years to...

Next leg of Aarti's growth will ride on long-term contracts worth Rs110bn, which has been delayed and will start from Q1FY22E. We tweak our FY21 estimates to factor delay in commissioning of long term contract and make other changes. AIL's near term growth trajectory will face...

Aarti Industries Ltd reported ~19% YoY and ~25% QoQ increase in topline to `11,726mn on account of 24% YoY and 32% QoQ increase in specialty chemicals segment and ~21% YoY and 14% QoQ increase in pharmaceuticals. EBITDA for the quarter stood at `2543mn showcasing growth of ~0.5% YoY and 39% QoQ. However, EBITDA margins dropped to 21.7% in Q2FY21 compared to...

The company is a preferred partner for customers from multiple industries for benzene-chain based solutions due to strong chemistry prowess, backward integration, larger products basket that is backed by continuous innovation and leadership position in its key products. It is the only domestic player to have products until the sixth level derivative of benzene chemistry. It also expects to leverage on its existing clientele to promote its toluene and other derivatives. Most contracts are long term cost+ contracts that offer better control on the overall cost structure. Recently, it signed three...

For Q2FY21, Aarti Industries (AIL) sales were ahead of our Revenue/EBITDA/PAT estimates. Consol Income from Operations stood at Rs. 1,173cr (Rs. 1,108cr our estimate) higher by 9% YoY driven by strong 24% YoY growth in Specialty Chemical and 22% growth in Pharma sales.

EBITDA margins declined by 190bps YoY due to weak product mix and higher cost. Consequently, PAT was down by 5% YoY. Revival in discretionary portfolio, ~40% of specialty chemicals...

for margin improvement. However, we believe current valuations already discount most of the remained flattish to Rs2.54bn in Q2FY21 (vs our estimate of Rs2.24bn in Q2FY21). Lower positives of the better product mix, growth at export front and margin improvement and hence other income has led PBT to report a de-growth of 3.1% YoY to Rs1.77bn in Q2FY21. PAT offer limited upside from here. We assign accumulate rating with target price of Rs. 474...

Aarti Industries reported consolidated sales growth of 18.7% YoY to Rs 11.7bn (D.est: Rs 9.88bn), which were ahead of our estimates as the company was able to recoup volumes in the domestic market (which are expected to reach pre-covid levels in 3QFY21). EBITDA was flat at Rs 2.54bn, with an EBITDA margin of 21.7% (down 403 bps YoY). Margins remained under pressure as bulk of the discretionary application sales witnessed realisation pressure coupled with lower sales coming from regulated markets (wherein margins...

Strangled by pandemic induced lockdown which all but decimated supply networks and brought factory production to a grinding halt in April and some part of May, Aarti report 50% drop in its speciality chemicals production in April, thus precipitating some 11% decline in its gross speciality chemicals revenues (consolidated) in Q1 (yoy). Whence speciality chemicals EBIT plunged by a distressing 39.2% not least due to lower sales and higher expenses on account of commissioning of first phase of Dahej SEZ and R&D; Centre at Navi Mumbai in Q4, thus little protected by...