Aarti Industries - Q3FY21 First Cut - ICICI Direct

(CMP - Rs. 1142, MCap - Rs. 19897 crore)

Aarti Industries Q3FY21 results were a mixed bag. While revenues were below I-direct estimates amid lower than expected growth in specialty chemical segment, EBITDA margins and net profit were higher owing to better gross margins and lower interest cost.

Q3FY21 earnings summary

- Revenues grew 9.5% YoY to Rs. 1186.8 crore (I-direct estimate: Rs. 1250.4 crore) mainly due to 31.8% growth in Pharma segment to Rs. 232.2 crore (I-direct estimate: Rs. 211.4 crore). Speciality chemical revenues grew 3.5% YoY to Rs. 1078.8 crore lower than I-direct estimates of Rs. 1162.7 crore

- EBITDA margins improved 55/233 bps YoY/QoQ to 24% (I-direct estimate: 22.1%), improvement in gross margins by 303/339 bps YoY/QoQ was partially offset by increase in other expenditure. EBITDA grew 12.1% YoY to Rs. 285 crore (I-direct estimate: Rs. 276.1 crore)

- Net profit grew 18.2% YoY to 165.3 crore (I-direct estimate: Rs. 150.9 crore). Delta vis-à-vis EBITDA was mainly due to lower interest cost

Leveraging core knowledge of benzene-based derivatives, the company is continuously expanding product basket towards value added products up the value chain. In pharma, strong growth expected from developed markets backed by integrated model and new launches. Margins are also expected to improve due to incremental addition of high-value products. We like the company's leadership position and strong visibility on order book.

We will come out with an update post discussion with management.

Shares of AARTI INDUSTRIES LTD. was last trading in BSE at Rs.1141.95 as compared to the previous close of Rs. 1128.25. The total number of shares traded during the day was 8910 in over 900 trades.

The stock hit an intraday high of Rs. 1162.6 and intraday low of 1126.55. The net turnover during the day was Rs. 10214081.

Source : Equity Bulls

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