Aarti Industries stock nosedives 9% after dismal Q2 earnings show

The fall was also triggered by a sharp spike in trading volumes in the counter as 78 lakh shares changed hands on the exchanges in just the first hour of trade.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Shares of Aarti Industries tanked over 9 percent on November 11 and dropped to a 52-week low of Rs 430, bogged down by the company's dismal earnings performance for the July-September quarter which marked a steep fall in its net profit along with sharp margin contraction.

At 09.54 am, shares of Aarti Industries were trading at Rs 440.10 on the NSE. The fall was also triggered by a sharp spike in trading volumes in the counter as 78 lakh shares changed hands on the exchanges in just the first hour of trade, sharply higher than the one-month daily traded average of 17 lakh shares.

The speciality chemicals company's net profit for the quarter gone by dropped 43 percent on-year to Rs 52 crore from Rs 91 crore, dragged down by higher expenses and weak operational performance.

Revenue grew 12 percent on-year to Rs 1,628 crore compared to Rs 1,454 crore in the previous year, reflecting the company’s efforts to expand market reach and diversify its product offerings. However, EBITDA margin contracted sharply to 12.1 percent in Q2 from 16 percent that it reported a year ago.

Brokerage firm Nuvama Institutional Equities regarded Aarti Industries' weak margin performance as the biggest drag on its quarterly earnings. It stated that the company's Q2 FY25 results were marred by a sharp dip in margins of its key product—MMA—and lower utilisation
amid higher channel inventory driving EBITDA contraction.

Follow our market blog to catch all the live action

Taking note of the ongoing margin pressure on its key product and limited relief in the near term, the management has also provided a conservative EBITDA guidance of Rs 1,800–2,200 crore by FY28.

For the near term, they project an EBITDA of Rs 1,050 billion in FY25, taking current industry dynamics into account. Although the company is exploring opportunities in CRAMS and new products, Nuvama still lowered its FY25/26/27 EPS estimates by 56 percent, 41 percent, and 34 percent, respectively. Nonetheless, the brokerage believes that the recent stock correction does offer valuation comfort, especially after its recent correction, prompting Nuvama to hold on to its 'buy' rating, although with a sharp 34 percent cut in its target price to Rs 600.

Emkay Institutional Equities also attributed the downward revision of EBITDA guidance on the lower-than-expected volumes for the company's star product due to macro volatility. However, much like Nuvama, Emkay also sees upside potential in the stock following its recent steep correction. Likewise, Emkay also retained its 'buy' call on the stock with a price target of Rs 675.

Looking ahead, HDFC Securities believes that Aarti Industries' sustained emphasis on capital expenditure and R&D will help it stay competitive and grow its customer base. "The toluene segment in India remains largely untapped and is primarily supplied through imports and Aarti Industries stands to gain long-term benefits by entering this market," HDFC Securities stated.

The brokerage also retained its 'add' call on the stock with a price target of Rs 532.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.