Anand Rathi is bullish on Aarti Drugs has recommended buy rating on the stock with a target price of Rs 1028 in its research report dated May 19, 2020.
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.
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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