Hold Aarti Industries; target of Rs 403 Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Aarti Industries with a target price of Rs 403 in its research report dated November 07, 2025.

Broker Research

November 11, 2025 / 12:58 IST

hold

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Aarti Industries

Given the upcoming commissioning of multiple new projects, Reiterate HOLD with a target price of Rs403, valuing the stock at 24x Sep’27E EPS. ARTO reported a topline of Rs21bn, up 29% YoY and 25% QoQ, largely driven by a 65% QoQ increase in MMA volumes. Volumes in the Energy business which largely comprises MMA rose 118% YoY and 48% QoQ, with overall margins expanding by 190 bps YoY, supported by a favorable gasoline–naphtha crack during the quarter. However, Q3 FY26 is expected to see some margin compression as winter season progresses. The Non-Energy business recorded a 17% YoY and 15% QoQ increase in volumes. Agrochemical volumes recovered in select product categories, though margins remained under pressure. Demand growth in dyes and pigments was muted, while U.S. tariffs impacted polymer volumes during the quarter, with pricing pressure persisting across the segment. Management reiterated its EBITDA guidance of Rs18–22bn by FY28, implying a ~30% CAGR over the next three years. The company is pursuing multiple growth initiatives, including MMA debottlenecking, calcium chloride, PEDA, and other projects at Zone IV which are expected to drive growth going ahead.

Outlook

However, impact of U.S. tariffs and margin pressure across much of the product portfolio remain key concerns. The stock is currently trading at 23x Sep’27 P/E. Reiterate ‘HOLD’ rating.

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