market valuation of 28,688.57 Crore, Aarti Industries Limited is a large-cap company dealing in chemical industry. Aarti Industries Limited (AIL) is a leading Indian manufacturer of pharmaceuticals and specialty chemicals with a global presence. The company produces chemicals that are used in the production of pharmaceuticals, agrochemicals, polymers, additives, surfactants, pigments and dyes. In addition, the firm produces APIs, intermediates and xanthine derivatives for the pharmaceutical and food/beverage industries. Apart from the US, several EU countries and Japan, the corporation controls and exports its products throughout the world. Aarti Industries Limited shares are an example of how long term investment in the stock market can enable you to become a millionaire, as the stock has grown from an initial investment of Rs. 1 lakh to Rs. 7.32 crore over a period of 23 years.
Aarti Industries Share Price History
Shares of Aarti Industries are trading at market rate at the time of writing this copy 790.95 with an upside gap of 0.55%. share price has increased 1.08 to the current price level on 1 January 1999 which logged a multibagger return and an all-time high of 73,122.22%. This indicates that if you had invested 23 years ago, if there was 1 lakh in the shares of Aarti Industries, it would have happened now. 7.32 crore approx.
Over the past 5 years, the share price has grown by 211.56 up to the current price level as of 1st September 2017 which logs a multibagger return of 273.79% and a CAGR of around 30.22%. In the last 1 year, the stock has fallen 13.18% and on YTD basis, the stock has fallen 22.27% so far in 2022. On NSE, the stock had touched a 52-week high. 52-week low of 1,168.00 and at (Oct 19-Oct-2021) 668.85 (20-Jun-2022) which means that at current market price the stock is trading 32.30% below 52-week high and 18.22% above 52-week low.
Q1FY23 Result of Aarti Industries
With a year-on-year growth of 45%, the firm earned a consolidated revenue of 2,173 crore in Q1FY23 as against 1,503 crore in Q1FY22. On a consolidated basis, the firm recorded an EBITDA of 369 crores in Q1FY23 as compared to 314 crore in Q1FY22, an increase of 18% YoY. The company’s total income grew from 42.2% in Q1FY22 to 46.2% in Q1FY23. The company’s EBITDA margin declined to 17.0% in Q1FY23 from 20.9% in Q1FY22. On a consolidated basis, the company’s EBIT climbed 15.3% year-on-year in Q1FY23 283 crores from 245 crore in Q1FY22. The company’s EBIT margin declined to 13.0% in Q1 FY23 from 16.3% in Q1 FY22. On consolidated basis, the firm has recorded profit after tax (PAT) of As opposed to 189 crores in Q1FY23 165 crore in Q1FY22, representing a year-on-year growth of 14.7%. The company’s PAT margin declined to 8.7% in Q1FY23 from 11.0% in Q1FY22, and on a consolidated basis, EPS YoY increased by 10.4% to Rs. 5.22 from Rs. 4.73 in the year-ago quarter.
Commenting on the Q1 FY23 performance, Mr. Rajendra Gogri – Chairman and MD of Aarti Industries Ltd. said, “I am happy to share that we have started the new financial year on an encouraging note with a healthy topline growth of 45% YoY and EBITDA improved to 18% YoY in Q1 of FY23. This strong performance comes on the back of challenging operating environment, driven by continued inflationary pressures in key raw materials and other utilities, logistical disruptions and global warming. Combined with uncertainties. Global inflationary trend and recessionary fears have resulted in marginal demand for some end user segments. Given this backdrop, our performance has been resilient, and I am determined to deliver stellar performance in tough environments. I would like to congratulate our workforce for demonstrating agility through and overcoming these pressures. We are committed to driving businesses through challenging conditions and delivering strong performances.”
Mr. Rajendra Gogri further added that “Based on strong business visibility, we had charted our growth plans and deployment of CAPEX is underway to meet our long-term goals. We are looking to innovate from this financial year in a phase-wise manner. In addition, we are expanding our product portfolio, introducing new high-capacity and complex chemical value-chains, and cementing our leadership position in selected chemistry. We are strengthening our R&D capabilities to strengthen our planned investments of ~Rs 3,000 crores over two years on track, which will define our growth strategy.”
“Overall, we are well positioned to capture incremental market share based on our superior execution capabilities in addition to the planned scale-up for key products and the niche chemical value-chain. We strongly believe in the growth potential of the Indian chemical and pharma industry and will strive to make significant inroads to deliver sustained profitability,” said Mr. Rajendra Gogri.
Should you buy Aarti Industries shares?
Research analysts at broking firm Sharekhan said in a note that “Strong growth guidance of 2x/4x growth in earnings from FY2021 to FY2024E/FY2027E, confidence in terms of sustained long-term, high growth potential for Aarti Industries”. Thus, we expect a strong Revenue/EBITDA/PAT CAGR of 22%/25%/26% over FY2022-FY2024E, led by higher capex intensity over the next few years. We believe It is reported that Aarti Industries benefits immensely from a strong growth outlook for the Indian specialty chemical sector supported by the China Plus One strategy of global companies, import substitution in domestic markets (~$1 billion identified opportunities) and growing domestic demand for the specialty. Further, favorable dynamics for the Indian specialty chemicals sector is likely to support premium valuations. Hence, we maintain Buy rating on the stock with an unchanged price target (PT) of Rs.1,000. At CMP, The stock is 38x its FY2023E EPS and 26x its FY2024E EPS. Trades at 7x.”
Research analysts at broking firm HDFC Securities said, “We maintain our buy recommendation on Aarti Industries (AIL) with a target price of Rs 1,085 per share. AIL’s continued focus on capex and R&D will enable it to remain competitive and expand its customer base. The toluene segment in India is mainly untapped and is met through imports; Entering this segment will benefit AIL in the long run. Q1 EBITDA/APAT was 6/3% higher than our estimates, due to a 26% increase in sales, lower-than-expected depreciation, offset by higher-than-expected raw material costs, higher-than-expected other expenses and higher-than-expected financials cost.”
Research analysts at broking firm Anand Rathi said, “The management maintained its guidance of an investment of Rs 30 billion over the next two years to add capacity to the chloro-toluene value chain, the Universal Multi-Purpose Plant (UMPP), a value-added project. Established new range. -Added and specialized products and custom manufacturing. This guided us to maintain our Q1 revenue rate in the coming quarters. We expect Revenue/EBITDA/PAT 21%/26 in FY22-24 %/30% CAGR. We maintain our buy rating at a lower TP of Rs 960, valuing the company at 30x FY24e and 19x FY24e EV/EBITDA.”
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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