Improved numbers for Aarti industries

Aarti Industries showed an improvement in its revenue compared to the previous quarter. This improvement was due to better visibility of demand for products used in non-essential markets.There is an observed increase in demand for products like dyes, pigments, and polymers. Additionally, the company is securing more long-term contracts, and the global economic situation is improving. This makes us optimistic about the future because we expect to benefit from economies of scale in the coming months.

Even though there was a decrease in gross margins and slower growth in pharmaceuticals and agrochemicals markets, the EBITDA increased by 11% compared to the previous quarter.The management anticipates a volume growth of 20-25% in the fiscal year 2025, supported by new contracts and the expansion of nitro toluene production. They expect the EBITDA for the fiscal year 2025 to range between Rs 1400-1700 crore, and we predict it will likely be towards the lower end of that range.Recently, the company secured two long-term contracts. The first contract is valued at Rs 3,000 crore and is for a well-known herbicide ingredient, while the second contract, worth Rs 6,000 crore, is for a specialty chemical. Both contracts are expected to generate EBITDA margins between 15-20%. The current capital expenditure aligns well with these contracts.