Aarti Industries Ltd. share price target

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...

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...