AARTIIND - Aarti Industries Ltd Share Price

Aarti Industries management provided an optimistic outlook for FY26 despite external challenges. They reported a total revenue of Rs. 8,046 crore for FY25, marking a 15% growth, while EBITDA grew by 3% to Rs. 1,016 crore. The PAT for FY25 was Rs. 331 crore. In Q4 FY25, revenues were Rs. 2,214 crore, a 9% quarter-on-quarter increase, with EBITDA at Rs. 266 crore, reflecting a 13% sequential improvement, leading to a PAT of Rs. 96 crore.

The management highlighted key growth drivers moving forward:

1. Volume Growth: Overall portfolio volume growth was approximately 17% year-on-year for FY25, with Q4 non-energy business growing 14% Q-o-Q and energy applications soaring 21% Q-o-Q.
2. Sector Performance: Energy applications and certain segments of the base business, like Nitro Toluene and NCB, were identified as key contributors. The company anticipates continued positive demand in agrochemicals and other applications.
3. Capex Plans: FY25 CAPEX stood at Rs. 1,372 crore, with a projected FY26 spend of Rs. 950-1,000 crore focused on projects at Zone IV, including a collaborative renewable energy initiative.
4. Sustainability Initiatives: The partnership for renewable energy aims to reduce operational costs and enhance sustainability.
5. Three-Year Growth Guidance: The management reiterated confidence in achieving their three-year targets, maintaining focus on cost optimization and volume-led growth.

Overall, despite current market volatility, Aarti Industries is strategically positioned for sustainable growth, with clear initiatives supporting their outlook for FY26.

1. Question: "Could you give us indication on the year-on-year volume growth in FY "˜25 as well as the 4th Quarter?"

Answer: "In Q4, our non-energy business grew about 14%, and energy business volumes surged nearly 21%, with the latter partly due to a shipment pushed from Q3. Year-on-year, across FY "˜24 to FY "˜25, we achieved an overall volume growth of approximately 17%."

2. Question: "On the agrochemical business, why are prices still weak despite volume recovery?"

Answer: "While inventory destocking ended, we face a genuine demand-supply imbalance in agrochemical intermediates, primarily due to overcapacity in China. This results in our volume growth being met with marginal pricing, preventing significant price uptick at this stage."

3. Question: "Can you provide revenue or EBITDA targets for FY "˜26?"

Answer: "We do not provide specific yearly guidance. However, we remain optimistic about volume-led growth, adhering to our three-year strategy. Implementation of cost initiatives and ongoing projects will support our planned targets."

4. Question: "What is the expectation for your net debt in FY "˜26?"

Answer: "We expect to see a reduction in net debt by approximately Rs. 200-300 crore, driven by cash flow released from working capital. Our CAPEX intensity will also decline, aiding in this decrease."

5. Question: "What is your outlook on the US tariffs? Are most products exempt?"

Answer: "The impact is mixed; some products aren't exempt, providing a tailwind for us, while those that are may face challenges. Products competing with China benefit, while others could see pressure from higher costs. Overall, it's a diverse impact scenario."

6. Question: "What will the focus be for CAPEX in FY "˜26?"

Answer: "Most of our FY "˜26 CAPEX will be concentrated on Zone-4. Significant growth in revenue for this year will primarily come from utilizing existing, stabilized assets, with new facilities expected to contribute in subsequent fiscal periods."

7. Question: "What is the expected tax rate for FY "˜26?"

Answer: "Given our ongoing CAPEX cycle and high depreciation, we anticipate the tax rate to be around mid-single digit percentages in FY "˜26, following the negative rate we've seen this year."