Prabhudas Lilladher's research report on Aarti Industries
Q4FY22 Revenue/ EBITDA/ PAT growth of 45%/30%/42% YoY led by improvement in realizations (cost pass through) and volumes (restricted due to shortage of nitric acid). Commencement of revenue generation from long-term contracts and ramp-up of recently commissioned plants to drive specialty chemical revenue while pharma revenue to be driven by higher volumes from regulated markets, value-added products and new intermediate products. Upcoming projects to aid penetration in some key therapies (anti-hypertension, cardio-vascular, oncology, corticosteroids).
Outlook
We expect healthy revenue/ EBITDA/ PAT CAGR of 18%/20%/24% over FY22-24E, on increasing capacity utilization (high capex intensity of Rs 45-50 bn over FY22-24E, with focus on high value derivatives) leveraging import substitution, rising domestic demand and China +1 strategy. We assign ‘Accumulate’ rating with TP of Rs 880 (19x FY24E EV/EBITDA).
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