Aarti Drugs Ltd share Price Today

Pharmaceuticals company Aarti Drugs announced consolidated Q4FY24 & FY24 results:

Q4FY24 Financial Highlights:

• Revenue stood at Rs 621.1 crore as against Rs 743.3 crore, a decline of 16.4% YoY
• EBITDA stood at Rs 86.9 crore as against Rs 94.4 crore YoY. EBITDA Margin (%) came in at 14.0%
• PAT stood at Rs 47.3 crore as against Rs 56.2 crore YoY. PAT Margin (%) stood at 7.6%

FY24 Financial Highlights:

• Revenue stood at Rs 2,532.6 crore as against Rs 2,718.2 crore, a decline of 6.8% YoY
• EBITDA stood at Rs 320.5 crore as against Rs 307.8 crore YoY. EBITDA Margin (%) came in at 12.7%
• PAT stood at Rs 171.6 crore as against Rs 166.4 crore YoY. PAT Margin (%) stood at 6.8%

Commenting on the same, Adhish Patil, CFO & COO, Aarti Drugs said, “We are pleased with our financial and operational performance in FY24 amid geopolitical uncertainties and macroeconomic factors and price volatilities. The company demonstrated resilient performance in FY24, where topline declined by 7% YoY during full year FY24, attributed to lower realizations stemming from negative rate variance and subdued export market demand in APIs business. However, there has been a notable improvement in gross margins, credited to the stabilization of input costs in latter half of FY24 and operational efficiencies across the majority of our product lines. Furthermore, we anticipate a further enhancement in gross margins in future, mostly driven by upturn in selling price levels and an anticipated growth in export sales. EBITDA Margin for FY24 improved by ~140 basis points and PAT margins improved by ~70 basis points due to improved gross contributions in standalone as well as formulation business along with efficient working capital management.

For Q4FY24, the company’s performance improved considerably on a sequential basis due to ease in the input costs and better product mix. On a sequential basis, the EBITDA margins improved by ~220 bps due to operating leverage driven by improved capacity utilization.

Amidst heightened interest rates, dollar shortages, destocking, supply chain hurdles, and conservative ordering, export demand encountered challenges in select regions during Q4 and FY24. Nonetheless, we anticipate a positive shift in the export landscape in the near future, on back of interest rate reductions, low stock levels and an upswing in demand. Despite these hurdles, our outlook remains optimistic, on attaining our growth and margin targets.

Formulation segment’s revenue stood at Rs 67.6 crore for the quarter, a growth of 19% YoY with exports contribution of ~62%. In FY24 revenues stood at Rs 324.6 crore, with growth of 18.5% YoY

In the Specialty Chemical industry, although India's domestic chemicals demand is projected to remain robust in 2024, with low expectations in price increase. The market faces various challenges of finding equilibrium amidst the introduction of new production capacities within the country, shifting trade dynamics, subdued global demand, and fluctuating upstream prices.

The company’s balance sheet continued to remain healthy with leverage remaining comfortably at 0.44x.

The capex for FY24 stood at ~Rs. 226 crore. Recently, Greenfield project at Tarapur Facility for dermatology products has been commenced and the ramp up is planned throughout H1 FY25. Greenfield Project at Gujarat Sayakha for Speciality Chemicals is on track which we plan to commence by end of Q1 FY25. With this, the operating leverage is expected to kick in from H2 FY25 with improved capacity utilization.

The company has incurred a capex of ~ Rs 543 crore in the last 3 years, mainly towards capacity expansion, backward integration and new product launches across API & Formulation segment. The majority of the company’s ? 600 crore capex has been completed and balance is expected to be completed soon. These initiatives are expected to reduce the costs along with expansion in the profit margins and the topline growth.

The Pharma API manufacturing industry is constantly evolving, and we are committed to staying ahead of the curve. In the upcoming year, we plan to continue expanding our capabilities and enhancing our offerings to meet the ever-changing needs of our customers. One of our key goals for the upcoming year is to improve our capacity utilisation, allowing us to better serve our growing customer base. We also plan to invest in new technologies and equipment that will help us streamline our processes, reduce carbon footprint and improve efficiency.”

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