According to domestic brokerage and research firm HDFC Securities, Aarti Industries Limited (AIL)’s continued focus on capex and R&D will enable it to remain competitive and expand its client base. The toluene segment in India is mainly untapped and is met through imports and Aarti Industries will benefit in the long run by entering this segment.
“Aarti Industries’ Q1 EBITDA/APAT was 6/3% higher than our estimates, with sales growth up 26%, lower-than-expected depreciation, offset by higher-than-expected raw material costs, higher-than-expected other expenses and higher-than-expected finance cost,” highlighted the brokerage’s note.
The brokerage house has maintained its buy recommendation on the shares of Aarti Industries with a target price of Rs. 1,085 per share, indicating a potential increase of over 32% from current stock levels.
Aarti Industries Limited (AIL) is a leading Indian manufacturer of specialty chemicals and pharmaceuticals with a global footprint. It manufactures chemicals used in the downstream manufacturing of pharmaceuticals, agrochemicals, polymers, additives, surfactants, pigments and dyes. specialty chemical stock So far in 2022 (YTD) is down by around 20%, while it has declined by over 12% over a period of one year.
The company’s revenue increased 50% from the year-ago quarter, thanks to higher volume off-take for key products as well as favorable realization gains. This was supported by incremental volume coming from new capabilities added in recent times.
Both the first and second long-term contracts have seen an uptick during the quarter, and are expected to improve further in the coming quarters. EBITDA grew 18% year-on-year (YoY). Due to higher input and utility costs combined with logistical challenges and market impact on the ECB due to heavy depreciation in currency rates during the quarter, EBITDA margin fell 510 bps to 19% in Q1 from the year-ago quarter. HDFC Securities added.
“We increase our FY23 EPS estimate by 1.5% to INR 23.3/sh, and reduce our FY24 EPS estimate by 3.2% to INR 29.8/sh, on account of changes in Q1 results and raw material sentiment, It said.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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