Aarti Industries zooms 9% as investors cheer positive outlook, shrug off poor Q2 numbers

Aarti Industries shares jumped more than 9 percent in the morning trade on November 6 as investors cheered management’s positive commentary and improved sequential performance, overlooking a disappointing September quarter.

The speciality chemicals company’s net profit (PAT) fell 27 percent on-year to Rs 91 crore and sales declined nearly 14 percent. According to the management, the company’s performance improved sequentially due to volume gains in several products.

Sequentially, net profit was up 15 percent and total income 2.8 percent.

There were headwinds related to inventory destocking, demand pressure from export markets and geopolitical uncertainties among others persisted during the quarter, the company said.

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The medium-to-long term trend will continue to be appealing, backed by steady demand recovery in key end-user industries, the company said.

Demand was recovering gradually and will take a few more quarters to normalise across various end segments and product lines. The second half of FY24 is anticipated to be better than the first half, the company said.

The management foresees FY25 to be a normal year, considering the current pace of recovery. In the quarter ended September 2023, its EBITDA performance was bolstered by volume expansion with stable-to-better realization for some products; balanced contribution from both regular and non-regular markets.

The benefits of higher tax depreciation and exemptions resulted in lower tax liability and accrual of deferred tax assets of Rs 9 crore.

Aarti Industries commercialised phase 1 of the acid unit revamp in the quarter under review. Other projects, too, are progressing as planned, the company said.

The company plans to add more than 40 products through an integrated value chain and increase chloro toulene base capacity to around 42,000 tonnes per annum.

The benzene-based speciality chemical company has guided for a capex of about Rs 2,500-3,000 crore for chemicals.

Also Read | Man Industries shares hit 52-week high on winning Rs 380-cr order for pipes

At 11.13 am, Aarti Industries was trading 8.8 percent higher at Rs 501.45 on the National Stock Exchange (NSE).

The share price has tanked more than 30 percent in the past year. The stock is down 17 percent this year.

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