STOCK VIEW - AARTI INDUSTRIES

Aarti Industries

BSE: 524208  NSE: AARTIIND  CMP: 90.90
 Aarti Industries  is a leading manufacturer of Speciality Chemicals with diversified end-uses in Agrochemicals, Pharmaceuticals, High Performance Polymers, Paints, Pigments, Printing Inks, Rubber Chemicals, Additives, Surfactants, Dyes, Flavours & Fragrances, Home & Personal Care applications etc. This diversified end-user base helps the company de-risk itself from a downturn in any individual business segment as also capitalize on the growth opportunities in each end-user segment. In Q1FY13, its total sales grew 15% to Rs.448.89 crore with 26% higher EBITDA at Rs.68.11 crore as against Q1FY12 on a standalone basis. PBT rose 37% to Rs.34.44 crore while PAT rose 39% to Rs.25.04 crore. Segmentwise, Chemicals accounted for 57% of total sales of which 53% was from exports and had an EBIT margin of 15.9%; Agrochemicals formed 23% of total sales of which 47% was from export and had an EBIT margin of 17.9%; Pharma was 11% of total sales of which 52% was export and had an EBIT margin of 4.4%; Home and Personal care contributed 9% of total sales of which 48% was from exports and had an EBIT margin of 2.8%. The expansion of its hydrogenation capacity and backward integrated hydrogen gas generation plant is on track and expected to be commissioned in Q3FY13. Exports of Agri ingredients stood at Rs.49.22 crore in Q1FY13 compared to Rs.24.13 crore in Q1FY12 and Rs.142.89 crore in FY12. Production of SSP in Q1FY13 was 13,700 MT compared to 63,000 tonnes in FY12. The company recently commissioned the Granulator for SSP and is in the process of expanding capacity and targets to increase the volume to about 1,00,000 MT from FY14 onwards. At present, companies producing SSP are doing extremely well. The company has consistently performed well over the last many years as sales have grown from Rs.955 crore to Rs.1800 crore over the last five years and it has maintained its revenue growth target of 15% in FY12. Its Net profit has zoomed from Rs.36.65 crore to Rs.86 crore during same period. Last year, the ROCE was 16% while the average ROCE for the last five years is 18%. Last year’s dividend was around 70%. With a share book value of Rs.65 and dividend yield of 3.7% at the current share price, investors can keep a watch to accumulate this stock on dips for decent long-term growth.