Buy Aarti Drugs; target of Rs 1028: Anand Rathi

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26 Aug, 2025 12:21

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Anand Rathi 's research report on Aarti Drugs

Aarti’s Q4 sales slipped ~2% y/y as operations were hurt in the last 10 days of the quarter by the Covid’19-related shutdown. The gross margin expanded 704bps y/y to 37% on higher realisations as prices of key APIs rose 10-15% and on benefits from the cost-rationalisation. The 15.9% EBITDA margin expanded 368bps y/y; absolute EBITDA grew 27.5% to `713m. Adj. PAT shot up 104.7% to `507m, driven by the better operating performance and lower tax rate.

Outlook

We expect revenue/PAT to clock 13.7%/20.3% CAGRs over FY20-22. We retain our Buy rating, with a higher target price of `1,028.

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