Aarti Industries rallies 7%, hits record high on bonus issue plan

The meeting of the company's board of directors is scheduled to be held on Tuesday, May 11, 2021 to consider, recommendation of issue of bonus shares

Shares of Aarti Industries hit a new high of Rs 1,750 after rallying 7 per cent on the BSE in intra-day trade on Wednesday after the company announced a bonus issue plan. The stock surpassed its previous high of Rs 1,687.40 on Tuesday.

The meeting of the board of directors of the Company is scheduled to be held on Tuesday, May 11, 2021 to consider, recommendation of issue of bonus shares. Earlier, in 2019, Aarti Industries had issued bonus shares in the ratio of 1:1 i.e. one bonus share for every one share held in the company on record date.

The company further said, the board will also consider, approve and take on record audited financial results for the quarter and year ended March 31, 2021. The board will consider and recommend final dividend, if any, for the year ended March 31, 2021, the company said.

Aarti Industries (AIL) is one of the leading speciality chemical companies in the world.  It is one of the largest producers of Benzene-based basic and intermediate chemicals in India and manufactures 125 products with chemistry of benzene, aniline, sulphuric acid, toluene and methanol. AIL is one of the leading global suppliers of dyes, pigments, agrochemicals, pharmaceuticals and rubber chemicals. Benzene accounts for around 60 per cent of the company’s revenues, while aniline and sulphuric acid compounds contribute around 12 per cent to revenues.

AIL has two business segments, specialty chemicals – largest manufacturer of specialized pigment & paint Intermediates in India and leading player globally. Also, manufactures intermediate for agrochemicals. This segment accounts for around 85 per cent of total revenues and enjoys 20-22 per cent margins. Pharmaceuticals business has backward integrated facilities for most APIs, intermediates and formulations. This segment contributes around 15 per cent to revenues.

Analysts at Edelweiss Broking expects the significant capex on value-added products along with focus on expanding into new chemistries is likely to drive AIL’s earnings over the next two-three years. Management remains confident of embarking on strong growth trajectory from FY22 given improvement in demand across specialty chemicals and pharma space. Over FY20-23, the company expects to deliver 15 per cent CAGR in overall profitability driven by heavy capex and new product contribution, the brokerage firm said in a note.

At 10:29 am, the stock was trading 2 per cent higher at Rs 1,668 on the BSE, against 0.45 per cent rise in the S&P BSE Sensex. A combined 765,000 equity shares have changed hands on the counter on the NSE and BSE, so far.