Prabhudas Lilladher's research report on Aarti Industries
ARTO reported revenue of Rs19.5bn reflecting a 6% sequential increase, driven primarily by higher volumes in the dyes, pigments, polymer additives, and energy segment. However, the agrochemical business continues to face challenges. The energy segment, which has the highest contribution to revenue, saw a 21% sequential volume increase, supported by widening in customer base and geographical outreach, however pricing pressure led to lower than historical margins. Management has guided for FY28 EBITDA in the range of Rs18–22bn, implying a 30% CAGR over the next three years to be driven by contributions from recently commissioned projects and ongoing capex at Zone 4.
Outlook
We maintain a Reduce rating, valuing it at 24x FY27E EPS, and arrive at a target price of Rs 394.
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