- 15 Nov 2022
- ICICIdirect Research
Aarti Industries Q2FY23 performance below our estimates except revenueAARTIIND - 515 Change: 3.40 (0.67 %)
Aarti industries reported revenue growth of 34.2% YoY to Rs1,685crore (I-direct estimate: Rs 1536.4 crore). Gross margins contracted by 531 bps YoY to 42%. EBITDA margins contracted by 445bps YoY to 15.8%, leading to EBITDA growth of 4.8% YoY to Rs267 crore (I-direct estimate Rs300 crore). The poor operational performance is primarily due to higher COGS (+47.7% YoY) and other expenditure (+30.7% YoY). Net profit decreased 17% YoY to Rs124.5 crore (I-direct estimate: Rs152 crore) mainly due to subdued operational performance. Depreciation grew by 27%YoY to Rs72.9 crore while finance cost grew by 202.6% YoY to Rs43.7 crore
The company has been passing on input inflation since last few quarters, which has led higher top-line growth along with higher volume uptick for certain products. However, lag in passing on entire input inflation impacting operational performance since last few quarters. Further, appreciation of US Dollar may also have impacted profit before tax. We expect once there will be stability in the crude, we can see sustainability in the operational performance of the company.