Buy Aarti Industries, target price Rs 1,000: Phillip Capital

Phillip Capital (India) has buy call on Aarti Industries with a target price of Rs 1000.0. The current market price of Aarti Industries is Rs 819.2.

Aarti Industries, incorporated in the year 1984, is a Mid Cap company (having a market cap of Rs 29127.20 crore) operating in Pharmaceuticals sector.

Aarti Industries key Products/Revenue Segments include Speciality Chemicals and Pharmaceuticals for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-06-2022, the company has reported a Consolidated Total Income of Rs 1972.40 crore, up 12.34 % from last quarter Total Income of Rs 1755.81 crore and up 49.79 % from last year same quarter Total Income of Rs 1316.81 crore. Company has reported net profit after tax of Rs 189.07 crore in latest quarter.

Investment Rationale
"ARTO’s Q1 were ahead of our expectations driven by strong pricing. Going ahead, we expect it to sustain volume growth led by multi-year supply contracts and expansions but the margin could move in a narrow range due to elevated input/energy/logistic cost in the near future. Nonetheless, we estimate 23% EPS CAGR for FY22-24 and expect enhanced earnings momentum beyond FY24 led by more value-added new products. We maintain BUY with unchanged TP of Rs 1000 i.e 20x FY24 EV/EBITDA. We also believe the pharma demerger could unlock incremental value over the mid-term," Phillip Capital said.

Promoter/FII Holdings
Promoters held 44.19 per cent stake in the company as of 30-Jun-2022, while FIIs owned 11.82 per cent, DIIs 15.06 per cent.