Aarti Industries is well diversified across product, customer, geography and end-user industry

Aarti Industries share price jumped as much as 6.7 per cent to Rs 925.20 apiece in Tuesday’s trade on BSE. With today’s surge in the stock, the market capitalisation of Aarti Industries stands at Rs 15,951.17 crore. Despite over 6% gain in the stock, Aarti Industries share price is still 22 per cent off from its 52-week high touched in May this year. Research and brokerage firms are quite upbeat on the stock with a massive return of up to 48 per cent. “Aarti Industries is well diversified across product, customer, geography and end-user industry. Significant opportunity for Aarti will arise from environmental related issues in China and companies looking to diversify supply chains,” said brokerage firm Angel Broking.

The brokerage firm has given a ‘buy’ rating to the stock with a target of Rs 1,284 which translates to an upside of over 48 per cent from yesterday’s close. Smallcap World Fund sold Aarti Industries shares in two transactions NSE and BSE each, according to the bulk data available on the bourses. Smallcap World Fund sold 15,97,950 shares of the speciality chemicals maker at an average price of Rs 854.71 each on the NSE. Similarly, the fund sold 10 lakh shares at Rs 855 each on the BSE. 

“In the near term revenue growth is likely to be impacted by lower volume off-take of speciality chemicals. However, we remain constructive on Aarti Industries’ long term growth given strong capacity building focusing on global markets, backward integration and increase in downstream products,” Geojit Financial said in its research report. The brokerage has recommended to accumulate the stock with a target price of Rs 1,151, an upside of 25 per cent from intraday’s high.  

On Monday, Aarti Industries said its long-term contract with a global firm to supply agrochemicals worth Rs 4,000 crore has been cancelled. In a regulatory filing, AIL informed that the company on June 15, 2017, had entered a 10-year contract with a global agrochemical major. “We would like to inform that on June 15, 2020, AIL has received a notice from the customer, opting to terminate the said contract,” the company said in a regulatory filing. Brokerage firm Prabhudas Lilladher said that the termination of Rs 400 billion multi-year contract is a setback. “AIL’s near term growth trajectory will face headwinds from weakness in discretionary spend (textiles, autos, aerospace etc; nearly 40% of AIL’s revenues) and weak global macroeconomic situation. However, we remain positive on the company’s long term opportunities,” Prabhudas Lilladher said in its report.