Aarti Industries - Raw Material Sourcing Secured; Capex Execution To Drive Revenue Growth: Anand Rathi

Anand Rathi Report

Aarti Industries Ltd. had entered into a 20-year agreement to secure nitric acid from Deepak Fertilisers d at ~Rs 80 billion with-effect-from April 01, 2023 and specifications based on formula-linked pricing.

This secures its raw material and enables it to focus on growth opportunities, and introduce -added products and chains for niche applications.

We are positive on Aarti Industries’ long-term performance and expect its revenue/Ebitda/profit after tax to clock 14%/24%/ 28% compound annual growth rates over FY23-25 on utilisation picking up at the recently commissioned capacities, the start of revenue from long-term contracts and the rising share of downstream and -added products.

The key short-term moniterables are demand slowdown in discretionary end-user industries, the challenging business environment (higher raw material and utility costs) and volatile margins.

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