Aarti Industries’ profit increased by 2% year on year to Rs 149 crore for the quarter ending March 2023, while revenue increased by 15% to Rs 1,656 crore.
On May 10, Aarti Industries’ shares tumbled more than 8%, a day after the speciality chemical company’s Q4 earnings call, in which management emphasised a negative demand outlook in key regions and the discretionary category.
“Product offtake associated with the textile industry, such as dyes and pigments, remains subdued,” management stated.
The corporation also supplied certain discretionary products to ‘non-regular markets,’ such as China, resulting in lower than normal margins. Demand in the’regular market,’ such as North America and Europe, remained poor.
Aarti Industries’ profit increased by 2% year on year to Rs 149 crore for the quarter ending March 2023, while revenue increased by 15% to Rs 1,656 crore. However, revenue remained flat over time.
EBITDA margin fell to 15.2 percent from 17.3 percent QoQ and 18.2 percent year on year. The company’s net debt climbed to Rs 2700 crore from Rs 25o crore in September 2022.
Nuvama Institutional Equities is likewise rated Buy, with a target price of Rs 776. In a recent study, it stated, “Considering the revival in earnings and return ratios, we argue Aarti Industries offers a favourable risk-reward at 30x FY25E earnings per share.”
Meanwhile, Kotak Institutional Equities has a Neutral rating with a target price of Rs 557. It sees the comeback of Chinese competition in certain categories, such as agrochemicals, as an additional challenge.