AARTIIND - Aarti Industries

📊 NSE: AARTIIND 🏢 Chemicals 📅 Last Updated: 12/13/2025 17:44

💰 Financial Performance

Revenue Growth by Segment

H1 FY26 revenue grew 9% YoY to INR 4,118 Cr. The energy segment's contribution increased significantly from 15% in FY23 to 36% in FY25, while agrochemicals revenue contribution declined from 30% to 18% and pharmaceuticals from 18% to 10% over the same period due to industry downturns.

Geographic Revenue Split

The geographic mix as of March 31, 2025, stood at 56% export contribution and 44% domestic contribution. The US market specifically contributes 15-20% of total revenues.

Profitability Margins

Gross margins compressed by 440 bps YoY to 33.1% in Q1 FY26. PAT for Q2 FY26 was INR 106 Cr, up 150% QoQ. H1 FY26 PAT was INR 149 Cr, down 21% YoY from INR 189 Cr in H1 FY25.

EBITDA Margin

EBITDA margins for FY26 are expected to settle at 12-14%, down from earlier estimates of 14-15%. Q2 FY26 EBITDA was INR 292 Cr, up 36% QoQ, driven by improved capacity utilization and cost optimization.

Capital Expenditure

Planned capital expenditure of approximately INR 2,800 Cr over the FY25-27 period, focusing on capacity additions in Zone 4 Jhagadia and a multipurpose ethylation unit at Dahej.

Credit Rating & Borrowing

CRISIL AA/Negative (downgraded from Stable) for long-term facilities and CRISIL A1+ for short-term facilities. Interest coverage moderated to 3.69 times in FY25 from 4.66 times in FY24 due to increased debt levels.

⚙️ Operational Drivers

Raw Materials

Key inputs (unnamed in documents) and energy products. Pricing pressure from Chinese suppliers dumping excess supply has impacted realizations.

Import Sources

China is a major source of pricing pressure and supply competition.

Key Suppliers

Chinese suppliers are noted for dumping products, impacting global pricing and Aarti's margins.

Capacity Expansion

Commercialization of capacities in 'Zone 4, Jhagadia' is expected in FY27. A multipurpose ethylation unit is also being established at Dahej.

Raw Material Costs

Inventory losses of approximately INR 30 Cr were recorded in Q1 FY26 due to corrections in key input prices. Raw material volatility remains a key weakness.

Manufacturing Efficiency

Margin improvement in Q2 FY26 was predominantly driven by operating leverage as business volumes increased.

📈 Strategic Growth

Expected Growth Rate

7-8%

Growth Strategy

Achieving growth through volume ramp-up in the energy additives business, commercialization of Zone 4 Jhagadia capacities in FY27, and operating leverage from increased capacity utilization.

Products & Services

Methyl Methacrylate (MMA), energy additives, agrochemicals, polymer additives, pharmaceuticals, and dyes.

Brand Portfolio

Aarti Industries Limited (flagship).

New Products/Services

Entry into the energy additives segment, which now contributes 36% of revenue as of FY25.

Market Expansion

Recalibrating strategy for the U.S. market and expanding presence in Europe, Middle East, and Africa (EMEA).

Market Share & Ranking

Market leadership in specialty chemicals is noted, though specific percentage ranking is not provided.

Strategic Alliances

Augene Chemical Pvt Ltd (50:50 Joint Venture).

🌍 External Factors

Industry Trends

The industry is seeing a shift toward energy additives to mitigate downturns in agrochemicals and pharma. Recovery is expected in FY27 as overcapacities in China bottom out.

Competitive Landscape

Intense competition from Chinese suppliers who are dumping products due to a decline in their local consumption.

Competitive Moat

Moat is built on integrated operations and market leadership in specialty chemicals, providing adequate operating efficiencies despite external pressures.