Aarti Industries Ltd. share price target

As per management, Q1 performance was largely in line with expectations and the outlook shared previously. During the quarter, Specialty Chemicals production in April was at about 50%, which subsequently ramped up to 80% in the month of...

Incorporated in 1984, Aarti Industries Ltd is the leading producer of Benzene based basic and intermediate specialty chemicals in India, manufacturing ~120 products in chemistry of benzene, aniline, sulphuric acid, toulene etc. Company is preferred partner of choice for more than ~1000 customers globally and supplies benzene based intermediates and pharmaceuticals to manufacturers of dyes, pigments, agrochemicals, automobile etc. Company's business is diversified across 2 segments such as specialty chemicals and pharmaceuticals each contributing 84%...

EBITDA was down by 25.7% YoY to Rs 1.75bn, while PAT fell by 40.7% YoY to Rs 815 mn. ARTO reported gross margin expansion of 133bps YoY to 52.2%. Staff costs grew by 29.9% YoY to Rs 868mn, while other expenses were controlled substantially at Rs 2.09bn up only by 4.3% YoY. Interest costs saw a sharp decrease of 16.9% YoY to Rs 252mn...

macro-economic situation. Cancellation of high margin and higher profile agrochemicals contract is a major setback as it would have opened doors to other large contracts in the segment. AIL with a diversified product portfolio of 200 products remains well placed to capitalize on rising investment in domestic downstream industries along with production shift from China. We remain structurally positive on AIL's growth prospects but will wait for better...

sulted in softening of key input materials like Benzene, Toluene, Phenol, Xylene etc. Although price correction in derivative products has been lower, resulting in higher spreads. We believe most of the outlook will be key things to monitor. Overall our Chemical coverage would post Revenue/EBITDA/ PAT decline of 13.6%/15.8%/22.7% YoY respectively. We expect the EBITDA margin of our cover- We expect Aarti Industries to report revenue decline of 13.5% on YoY basis, mainly due to decline in...

Aarti Industries received an early termination notice from its customer for the 1st multiyear deal to supply high-value agro chemical intermediary to be used in a Herbicide. The contract was estimated to generate revenue of Rs. 4,000cr over 10 year period.

We recommend a SELL on AARTI INDUSTRIES with a Target Price of Rs 804, a downside of 7% from CMP of Rs. 865 and Stop Loss Rs. 895.

Near term weakness an opportunity...growth story intact AARTI Industries Ltd (ARTO) is a global leader in Benzene based derivative products. The company has a diversified product portfolio with end users in pharma, agrochemicals, specialty polymers, paints & pigments....

EBITDA de-grew by 12.7% to `2189mn on account of lower topline and EBITDA margins contracted by 163 bps to20.3% on account of higher other expenses and higher employee expenses as % to sales. Employee expenses and Other expenses % to sales stood at 7.3% & 20.7% respectively in Q4FY20 compared to 6.8% & 18.9% in Q4FY19. However, contribution from Chlorination and Nitration stands at 25% while...