Hold Aarti Industries; target of Rs 545 Sharekhan

Sharekhan recommended Hold rating on Aarti Industries with a target price of Rs 545 in its research report dated November 06, 2023.

Broker Research

November 09, 2023 / 15:46 IST

Hold

Sharekhan's research report on Aarti Industries

Q2 PAT grew by 30% q-o-q to Rs. 92 crore (34% above estimate) reflecting a sharp rise in margins and tax benefit. Stellar earnings recovery was led by improvement in volumes and stable-to-better realisations for certain products. OPM rose 181 bps q-o-q rise to 16.1%. Demand from dyes, polymers, pigment spaces recovered; agrochem is still seeing challenges of destocking while some recovery was for specific molecules. H2 to be better with FY24 EBITDA guidance of Rs. 950-1,000 crore while FY25 would be normal as impact of destocking would ease. Capex planned at Rs. 2,500-3,000 over FY24-26 and debt to rise, peaking in FY26.

Outlook

Q2 gives hope of gradual recovery but we would wait for one quarter to assess sustainability of recovery trend and to turn constructive on Aarti. We maintain Hold rating on Aarti Industries with a revised PT of Rs. 545. High capex to mean rise in debt.

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