Aarti Industries hits all-time high; stock rallies 13% in four days

Shares of Aarti Industries rallied 9 per cent to hit an all-time high of Rs 1,399 in intra-day trade on the BSE on Wednesday in an otherwise weak market amid heavy volumes. The stock of the specialty chemicals company was trading higher for the fourth straight day, gaining 13 per cent during the period. It surpassed its previous high of Rs 1,363.50, recorded on January 5, 2021.

At 01:06 pm, Aarti Industries was trading 7 per cent higher at Rs 1,376, as compared to 1.3 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped over eight-fold with a combined 2.05 million equity shares changing hands on the NSE and BSE.

Aarti Industries is a leading speciality chemicals company in Benzene-based derivatives with integrated operations and high-level of cost optimization. The company’s plants located in western India with proximity to ports: 13 for speciality chemicals; 5 for pharma (2 USFDA and 3 WHO/GMP). The company has a diversified product portfolio with end users in pharma, agrochemicals, specialty polymers, paints & pigments.

In the October-December quarter (Q3FY21), the company’s revenue grew by 10 per cent year on year (YoY), led by strong off-take from pharma segment, which grew by around 32 per cent YoY. Earnings before interest, taxes, depreciation, and amortization (Ebitda) margins improved by 50 basis points YoY to 24 per cent due to lower cost and profit after tax grew by 18 per cent YoY.

The management said the company is well positioned to meet guidance of delivering profits in line with last year despite the exceptional disruption seen in FY21. Underlying the reported numbers is a return of demand from regular markets and long-standing relationships, which is reflected in margin improvement and gradually resuming normalcy during the quarter.

Management has also indicated the capital expenditure momentum will continue in the near to medium term including project for long term contracts, NCB & Pharma expansion. The new downstream products are of import substitution opportunities worth Rs 1,000 crore.

Analysts at Geojit Financial Services expect the company's specialty chemical margins to improve going ahead, led by better improved off-take from its discretionary portfolio. "We remain constructive on Aaarti Industries’ as execution of multiyear contracts, revival in volumes from Specialty chemicals and improved outlook on account issues in China, will benefit the company in the medium term," the brokerage firm said in Q3FY21 results update.