Buy Aarti Industries: Target Of Rs 1210: Sharekhan
Sharekhan is bullish on Aarti Industries recommended buy rating on the stock with a target price of Rs 1210 in its research report dated November 11, 2020.
Nov 13, 2020 / 12:32 PM IST
Sharekhan's research repor on Aarti Industries
Q2FY2021 results were broadly in line with revenue at Rs. 1,173 crore (up 15.1% y-o-y) and margin at 21.7% (down 185 bps y-o-y but largely in line with our estimate of 21.3%). EBIT margin for specialty chemicals segment declined by 678 bps y-o-y to 17.1% as margins were lower for products forming part of discretionary basket and higher overhead cost. EBIT margin for pharma segment expanded by 702 bps y-o-y to 25.5% led by higher contribution from regulated markets and value-added products. Management expects FY2021 profits to largely remain at previous year’s level, which indicates a strong 12.5% y-o-y growth in PAT in H2FY2021; company has guided for 15-20% PAT CAGR over next three years.
We believe that Aarti Industries would be a key beneficiary of Chinese substitution and rising domestic demand for specialty chemicals. Hence, we recommend a Buy on Aarti Industries with a PT of Rs. 1,210.
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