Aarti Industries: Capex cycle likely to act as a tonic

Near-term challenge impacting the company’s performance is the shortage of key raw material nitric acid. This can be troubling for the next 6-12 months till the time new domestic capacities go on stream

Anubhav Sahu
September 07, 2022 / 11:34 AM IST
Aarti Industries: Capex cycle likely to act as a tonic

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PRO Only Highlights
-  Quarterly performance largely backed by improved realisations
-  Medium-term triggers China plus and protectionist measures for tyre industry
-  Valuations not inexpensive; but improved medium-term outlook

Aarti Industries’ (CMP: Rs 849; Market cap: Rs 30,782 crore) Q1FY23 performance was impressive, with a 45 percent jump in top line on a year-on-year (YoY) basis. Even though 25 percent increase was on account of the pass-through of raw material prices, 15-20 percent increase was due to the change in volumes and product mix. The EBITDA growth was 18 percent only, primarily due to gross margin compression and a shortfall in income due to the terminated contract in the...