Aarti Industries Ltd's Q4FY18 standalone net profit rises 13.95% yoy to Rs84.70cr : In-line with Estimates

The company’s standalone revenue stood at Rs1,029.39cr, up 23.38% yoy and 3.96% qoq.

May 12, 2018 01:05 IST India Infoline Research Team

Aarti Industries Ltd Q4FY18

Standalone Results Q4FY18: (Rs. in cr)

Q4FY18 YoY (%)
Revenue 1,029.39 23.4
EBITDA 180.25 18.1
EBITDA Margin (%) 17.5 [78]
Net Profit (adjusted) 84.70 14.0
***EBITDA margin change is bps


Reco. Price


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Aarti Industries Ltd's standalone revenue for Q4FY18 came in at Rs1,029.39cr, up by 23.4% yoy. The operating profit for the quarter came in at Rs180.25cr, which increased by 18.1% yoy. However, EBITDA margin contracted ~78bps yoy to 17.5% in Q4FY18. The net profit after tax stood at Rs84.70cr for Q4FY18, up by 14% yoy. The consolidated revenue, operating profit and net profit of the company for FY18 are in-line with street estimates.

• Speciality chemicals volume increased by 9% yoy in Q4FY18. The company expects volume growth of 10-15% in FY19. Nitro toluene facility at Jhagadia which commenced in the month of September, 2017 has reached over 40% utilization. It expects nitro toluene capacity utilization to reach to 80% in FY19.
• In terms of realization, there was a marginal rise of ~2% yoy during the quarter. The remaining incremental increase in the revenue is majorly on account of push of raw material prices.
• Gross profit margin of the company declined by ~100bps yoy to 41%. This is on account of likely increase in cost of raw materials.
• The company is a net exporter at overall level. It performs hedging through forward contract. It reported a MTM loss of Rs10.68cr (including loss of Rs2.05cr for more than one year). It has further provided for revaluation loss on long term borrowing (ECBs) to the extent of Rs2.51cr as at March 31, 2018.
• Employee benefit expenses and other expenses increased significantly by 37.3% and 18.8% yoy to Rs50.92cr and Rs191.03cr respectively in Q4FY18. This further resulted into marginal reduction in the EBITDA margin.
• The effective consolidated tax rate of the company for FY18 stood at 19.3% as against 21.2% in FY17.
• Aarti Industries’ all operating segments reported double-digit revenue growth. The pharma segment (~17% of Q4FY18 standalone revenues) was particularly strong in the quarter with 46% yoy revenue growth and 100% yoy EBIT growth, as margins improved by ~468bps yoy.
• The specialty chemicals segment (~17% of Q4FY18 standalone revenues) registered 19% yoy revenue growth and 17% EBIT growth, as margins declined by ~27bps yoy.
• Home and Personal care segment (~7% of Q4FY18 standalone revenues) was relatively weak as even though revenue grew 33% yoy, it swung from positive EBIT to an EBIT loss of Rs1cr (vs. EBIT of Rs2.5cr yoy).
• Net debt of the company increased to Rs2,080cr as on March 31, 2018 as against Rs1,561cr as on March 31, 2017. The consolidated debt-equity ratio stood at 1.26x as on March 31, 2018. The debt service coverage ratio declined to 1.93x in FY18 as against 3.09x in FY17 on account of rise in debt of the company.
• Management has given a guidance of Rs600-700cr of annual capex in FY19 and FY20. This includes ~Rs200cr for capex towards multi-year contract signed by the company for both the years. The remaining capex is attributable towards debottlenecking of current facilities of the company.
• Board of Directors has recommended formation of a committee to review and recommend: (a) demerger of the Home and Personal Care segment and (b) merger of manufacturing operations of Nascent Chemicals Industries with the company. Aarti currently holds 50.49% stake in Nascent Chemicals through its wholly-owned subsidiary. Nascent Chemicals is engaged in trading and manufacturing of specialty chemicals, and it reported revenues of Rs21.9cr and net profit of Rs5.7cr in FY18.

Technical View:

Aarti Industries Ltd ended at Rs. 1,324.80, up by 5.7 points or 0.43% from its previous closing of Rs. 1,319.10 on the BSE.
The scrip opened at Rs. 1,313.40 and touched a high and low of Rs. 1,349.95 and Rs. 1,298.95 respectively. A total of 15,505 (NSE+BSE) shares were traded on the counter. The stock traded below its 50 DMA.

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