Aarti Industries Q4 Results Review - Volume, Margins Improve Sequentially: Systematix

Systematix Research Report

Aarti Industries Ltd.’s Q4 revenue increased 7% YoY and 2% QoQ to Rs 17.7 billion, (8% lower than our estimate), driven by sequential volumes uptick in the discretionary segment propelled by better demand recovery and also due to passing on of input price inflation.

Soft raw material costs led to 316 basis points QoQ improvement in gross margin to 39.6% (-228 bps YoY), more than our estimate of 36%. Other expenses increased 19% QoQ mainly on higher freight costs. Ebitda increased 13% YoY and 9% QoQ to Rs 2.8 billion, but fell 4% short of our expectation.

Ebitda margin expanded 80 bps YoY and 95 bps QoQ to 16%, overshooting our estimate of 15.3%, on a favorable product mix. Adjusted profit after tax (Rs 1.3 billion, -11% YoY, +6% QoQ) was broadly in line.

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