Buy Aarti Drugs; target of Rs 2090: Anand Rathi

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26 Aug, 2025 12:21

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Anand Rathi 's research report on Aarti Drugs

As a prominent partner of pharma companies seeking to diversify supplies from China, Aarti’s Q1 sales grew 34% y/y. A better product mix and higher realisations on key APIs (prices rose 10-15%) led to a 772bp gross-margin expansion. The EBITDA margin swung to a record 24.6% (a 1,110bp expansion). Absolute EBITDA grew 145% to `1.3bn. The better operating performance and lower tax rate rocketed adj. PAT 281% to `855m. On such a strong Q1, we raise our FY21e/22e/23e EPS 43.5%/ 29.5%/28.9%. We expect revenue/PAT to clock 18.9%/34.5% CAGRs over FY20-23.

Outlook

We retain our Buy rating, with a higher target of `2,090.

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