Shares of Aarti Surfactants surged over 11 percent in early trade on July 25, a day after the company reported a jump in its net profit for the quarter ended June.
The chemicals company's net profit for April-June rose 30 percent year-on-year (YoY) to Rs 5.2 crore, up from Rs 4 crore clocked in the base quarter of the previous fiscal. The increase in net profit can be attributed to the company's improved operational metrics in the quarter under review.
EBITDA margin also expanded to 9.9 percent in Q1, as against 7.3 percent in the year ago period. Further, it was Aarti Surfactants' rise in bottomline along with an improved operational performance at a time when chemicals players are suffering with weak demand and pressure on margins that bode well with investors.
At 10.10 am, shares of Aarti Surfactants were trading 6 percent higher at Rs 652 on the National Stock Exchange. Trading volumes were also strong as 75,000 shares changed hands on the exchanges, higher than the one-month daily traded average of 13,000 shares.
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However, a negative outlier from the chemicals company's quarterly earnings was a 5.9 percent on year decline in its revenue during the April-June. The topline came at Rs 148.7 crore, down from Rs 158.1 crore in the same period last year. Sluggish global demand and inventory unwinding across the industry may be the factors behind a decline in revenues.
The global chemicals sector has been going through a downcycle on the back of an influx of low-cost inventory from Chinese counterparts, sluggish demand and fall in prices. The slowdown within the sector also reflected in the stock performance of Aarti Surfactants as it has slipped 13.5 percent over the past year.
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