Buy Aarti Industries, target price Rs 800: Emkay Global Financial Services
Emkay Global Financial Services recommends buying Aarti Industries at a target price of Rs 800. Investment Rationale highlights EBITDA performance and guidance for FY25.
By ETMarkets.com | Updated:
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Emkay Global Financial Services has buy call on Aarti Industries with a target price of Rs 800. The current market price of Aarti Industries is Rs 655.
Aarti Industries, incorporated in the year 1984, is a Mid Cap company (having a market cap of Rs 24258.77 crore) operating in Pharmaceuticals sector.
Aarti Industries key Products/Revenue Segments include Speciality Chemicals and Other Operating Revenue for the year ending 31-Mar-2023.
Financials
For the quarter ended 31-03-2024, the company has reported a Consolidated Total Income of Rs 1773.00 crore, up 1.90 % from last quarter Total Income of Rs 1740.00 crore and up 7.07 % from last year same quarter Total Income of Rs 1656.00 crore. Company has reported net profit after tax of Rs 132.00 crore in latest quarter.
The company?s top management includes Mr.Chandrakant V Gogri, PadmashriGanapati D Yadav, Mrs.Priti Paras Savla, Mr.Vinay Gopal Nayak, Mr.Lalitkumar Shantaram Naik, Mrs.Natasha Kersi Treasurywala, Mr.Premchandra Amolak Sethi, Mr.K V S Shyamsunder Rammurthy, Prof.Aniruddha Pandit, Mr.Bhavesh R Vora, Mr.Narendra Jagannath Salvi, Mr.Rajendra V Gogri, Mr.Rashesh C Gogri, Mr.Parimal H Desai, Mr.Manoj M Chheda, Mr.Kirit R Mehta, Mr.Renil R Gogri, Mr.Ajay Kumar Gupta, Mrs.Hetal Gogri Gala, Mr.Shekhar Khanolkar. Company has Kirtane & Pandit LLP as its auditors. As on 31-03-2024, the company has a total of 36 crore shares outstanding.
Aarti's Q4 EBITDA at Rs 2.8 bn (+9% QoQ; +12% YoY) was in line with our estimates. Management maintained FY25 EBITDA guidance at Rs 14.5-17 bn and increased volume guidance to 20-30% from 20-25% on better demand visibility. This is the third quarter of sequential improvement in EBITDA, driven by higher volume growth (pricing remains stable) and operating leverage. Aarti is seeing better demand recovery in discretionary spends, whereas agro and pharma are still muted due to weak macros. Management has raised its guidance on capex to Rs 15-18 bn for FY25 (vs. Rs 12-15 bn to be spent on several growth projects, including chlorotoluene) and on debt to Rs34-38bn. We tweak our FY25/26 estimates by 1-3%, on higher-interest outlay on incremental debt. We retain BUY on Aarti, and nudge up our TP to Rs 800/sh (30x Mar-26E EPS).
Promoter/FII Holdings
Promoters held 43.43 per cent stake in the company as of 31-Mar-2024, while FIIs owned 10.93 per cent, DIIs 17.12 per cent.
Aarti Industries, incorporated in the year 1984, is a Mid Cap company (having a market cap of Rs 24258.77 crore) operating in Pharmaceuticals sector.
Aarti Industries key Products/Revenue Segments include Speciality Chemicals and Other Operating Revenue for the year ending 31-Mar-2023.
Financials
For the quarter ended 31-03-2024, the company has reported a Consolidated Total Income of Rs 1773.00 crore, up 1.90 % from last quarter Total Income of Rs 1740.00 crore and up 7.07 % from last year same quarter Total Income of Rs 1656.00 crore. Company has reported net profit after tax of Rs 132.00 crore in latest quarter.
The company?s top management includes Mr.Chandrakant V Gogri, PadmashriGanapati D Yadav, Mrs.Priti Paras Savla, Mr.Vinay Gopal Nayak, Mr.Lalitkumar Shantaram Naik, Mrs.Natasha Kersi Treasurywala, Mr.Premchandra Amolak Sethi, Mr.K V S Shyamsunder Rammurthy, Prof.Aniruddha Pandit, Mr.Bhavesh R Vora, Mr.Narendra Jagannath Salvi, Mr.Rajendra V Gogri, Mr.Rashesh C Gogri, Mr.Parimal H Desai, Mr.Manoj M Chheda, Mr.Kirit R Mehta, Mr.Renil R Gogri, Mr.Ajay Kumar Gupta, Mrs.Hetal Gogri Gala, Mr.Shekhar Khanolkar. Company has Kirtane & Pandit LLP as its auditors. As on 31-03-2024, the company has a total of 36 crore shares outstanding.
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Investment RationaleAarti's Q4 EBITDA at Rs 2.8 bn (+9% QoQ; +12% YoY) was in line with our estimates. Management maintained FY25 EBITDA guidance at Rs 14.5-17 bn and increased volume guidance to 20-30% from 20-25% on better demand visibility. This is the third quarter of sequential improvement in EBITDA, driven by higher volume growth (pricing remains stable) and operating leverage. Aarti is seeing better demand recovery in discretionary spends, whereas agro and pharma are still muted due to weak macros. Management has raised its guidance on capex to Rs 15-18 bn for FY25 (vs. Rs 12-15 bn to be spent on several growth projects, including chlorotoluene) and on debt to Rs34-38bn. We tweak our FY25/26 estimates by 1-3%, on higher-interest outlay on incremental debt. We retain BUY on Aarti, and nudge up our TP to Rs 800/sh (30x Mar-26E EPS).
Promoter/FII Holdings
Promoters held 43.43 per cent stake in the company as of 31-Mar-2024, while FIIs owned 10.93 per cent, DIIs 17.12 per cent.
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