Aarti Industries reports strong topline growth
News: Adjusted revenues grew 47% YoY to Rs.1744.73 crore (I-direct estimate: Rs.1567.6 crore) amid 58.7% growth in Speciality chemicals to Rs.1608.54 crore. The pharma business recorded a revenue growth of 40% YoY to Rs.347.8 crore. EBITDA margins contracted by 480 bps YoY to 19.2%, leading to EBITDA growth of 17.5% YoY to Rs.334.87 crore against our estimates of Rs.340.6 crore. The poor operational performance is primarily due to higher COGS. Net profit grew 27.4% YoY to 210.48 crore (I-direct estimate: Rs.181.7 crore) mainly due to lower taxes (10.96% vs 19.2% in Q3FY21).
Views: The company recorded Rs.631.25 crore compensation related to termination of contract and thus numbers looks higher, however adjusting to that, numbers seems largely in line. The company witnessed pressure in the gross margins due to higher RMAT cost for some materials which is expected to get normalise in the coming quarters. Going ahead, with expectations of more capex underway to improve the specialised portfolio share, one can expect meaningful bottom line growth in the long run.