Aarti Industries Q4 up 25.1% at Rs133.84cr on higher inventory efficiency

Aarti Industries Ltd reported 12.07% yoy growth in standalone sales revenues for the Mar-21 quarter at Rs1,143.10cr. The sales performance was almost flat on a sequential basis. Aarti Industries has been one of the big beneficiaries of the big boom in specialty chemicals business in India after China reduced its chemicals output due to environmental reasons.

The operating profit for the quarter was also up 12.73% at Rs186.26cr in the Mar-21 quarter. This was despite the sharp spike in raw material prices due to supply chain constraints. The company more than made up for the sharply higher raw material prices through inventory efficiencies which reduced the funds stuck in the working cap cycle.

The growth of Aarti Chemicals came entirely from the specialty chemicals business while the pharma business was almost flat. The specialty chemicals was up 14% yoy at Rs1,049cr while the much smaller pharmaceutical business was also marginally higher at Rs.224cr. Pharma business had better EBITDA margins compared to specialty chemicals.

The standalone Profit after tax (PAT) for the Mar-21 quarter was higher by 25.1% at Rs133.84cr. The profit growth was largely an outcome of operating efficiencies getting transmitted. The net margins improved from 10.49% in the Mar-20 quarter to 11.71% in the Mar-21 quarter. NPM was lower on a sequential basis.

Financial highlights for Mar-21 compared yoy and sequentially