Back

Results - Analysis

Inventory losses but stable core performance

Aarti Industries

01-Aug-2025, 11:26
Net sales (including other operating income) of Aarti Industries has declined 9.51% to Rs 1675 crore. Q1 FY26 unfolded amid an exceptionally volatile macroeconomic environment, marked by steep corrections in key raw materials like benzene and aniline, geopolitical uncertainties, and ongoing trade disruptions. These external factors led to short-term pricing pressure and supply chain challenges.

Operating profit margin has declined from 16.48% to 12.66%, leading to 30.49% decline in operating profit to Rs 212.00 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 57.91% to 62.87%. Purchase of finished goods cost rose from 4.11% to 4.33%. Employee cost decreased from 6.57% to 6.47%. Other expenses fell from 14.72% to 13.76%. Loss on forex transaction rose from 0.33% to 0.95%.

Other income fell 33.33% to Rs 4 crore. PBIDT fell 30.55% to Rs 216 crore. Provision for interest fell 6.25% to Rs 60 crore.

PBDT fell 36.84% to Rs 156 crore. Provision for depreciation rose 11.76% to Rs 114 crore.

Profit before tax down 71.03% to Rs 42.00 crore. Share of profit/loss were nil in both the periods. Provision for tax was credit of Rs 1 crore, compared to debit of Rs 8 crore. Effective tax rate was negative 2.38% compared to 5.52%.

Minority interest was nil in both the periods. Net profit attributable to owners of the company decreased 68.61% to Rs 43.00 crore.

Promoters' stake was 42.24% as of 30 June 2025 ,compared to 43.24% as of 30 June 2024 . Promoters pledged stake was 3.56% as of 30 June 2025 ,compared to 3.79% as of 30 June 2024 .

Commenting on the performance, Mr. Suyog Kotecha, CEO and Executive Director, said:

'This was a uniquely challenging quarter shaped by global and regional volatility. Yet, what remained consistent was our commitment to long-term value creation. Our volumes stayed resilient, key capacity expansions are ramping up, and our green and circular initiatives continue progressing as planned. We are already seeing signs of normalisation in customer activity, raw material costs, and logistics, which reinforces our confidence in a stronger performance ahead. With the recent development on the US tariff front, we are closely monitoring the situation to ascertain the impact and plan appropriate actions.'

Business Highlights

Inventory losses but stable core performance - A steep decline in prices of Key RM, such as Benzene and Aniline, trailing softer international prices, resulted in inventory losses during the quarter. However, except for the deferment in shipments due to logistics issues, volume trends remained largely intact across most key product lines and segments, demonstrating gradual recovery in diversified end-use demand.

Expanded capacities - Scale-up of MMA (Methyl Methacrylate) capacities from 200 KTPA to 260 KTPA will support volume growth in the coming quarters.

Energy applications - QoQ volume remains flat due to delays in bulk shipments from June to July. Increased market reach will support the volume ramp-up from the expanded capacities.

Base business - Recovery is visible in agro intermediates despite pricing pressures. Demand from dyes, pigments and pharma held steady. The Polymer and Additives segment is showing mixed trends across different product value chains.

Strategic Updates

Zone IV Project: Progressing on track with commissioning targeted in a phased manner from H2FY26, marking a key foray into multiple new advanced chemistries.

Augene Chemicals JV (with Superform): Construction and market development are advancing steadily; commissioning expected in H1 CY26.

Re Aarti JV ( with ReSL): Pilot plastic waste recycling plant in Hyderabad on schedule; technology design finalised and vendor alignment in progress

Green Energy Transition: First solar PPA-linked facility to begin power supply this year; second hybrid plant expected by early FY27

Full year results analysis

Net sales (including other operating income) of Aarti Industries has increased 14.13% to Rs 7271 crore.

Operating profit margin has declined from 15.27% to 13.71%, leading to 2.47% rise in operating profit to Rs 997.00 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 58.34% to 60.70%. Purchase of finished goods cost fell from 3.16% to 3.05%. Employee cost decreased from 6.25% to 6.19%. Other expenses fell from 17.20% to 16.24%.

Other income rose 54.55% to Rs 17 crore. PBIDT rose 3.05% to Rs 1014 crore. Provision for interest rose 30.33% to Rs 275 crore. Loan funds rose to Rs 3,847.00 crore as of 31 March 2025 from Rs 3,622.00 crore as of 31 March 2024. Inventories rose to Rs 1,454.00 crore as of 31 March 2025 from Rs 1,160.00 crore as of 31 March 2024. Sundry debtors were lower at Rs 786.00 crore as of 31 March 2025 compared to Rs 854.00 crore as of 31 March 2024. Cash and bank balance declined from Rs 516.00 crore as of 31 March 2024 to Rs 295.00 crore as of 31 March 2025. Investments rose to Rs 48.00 crore as of 31 March 2025 from Rs 23.00 crore as of 31 March 2024 .

PBDT fell 4.40% to Rs 739 crore. Provision for depreciation rose 14.81% to Rs 434 crore. Fixed assets increased to Rs 7,602.00 crore as of 31 March 2025 from Rs 6,695.00 crore as of 31 March 2024. Intangible assets increased from Rs 184.00 crore to Rs 228.00 crore.

Profit before tax down 22.78% to Rs 305.00 crore. Share of profit/loss were nil in both the periods. Provision for tax was credit of Rs 24 crore, compared to credit of Rs 21 crore. Effective tax rate was negative 7.82% compared to negative 5.32%.

Minority interest was nil in both the periods. Net profit attributable to owners of the company decreased 20.43% to Rs 331.00 crore.

Equity capital stood at Rs 181.00 crore as of 31 March 2025 to Rs 181.00 crore as of 31 March 2024. Per share face Value remained same at Rs 5.00.

Promoters' stake was 42.24% as of 31 March 2025 ,compared to 43.43% as of 31 March 2024 . Promoters pledged stake was 3.56% as of 31 March 2025 ,compared to 3.68% as of 31 March 2024 .

Cash flow from operating activities increased to Rs 1,242.00 crore for year ended March 2025 from Rs 1,210.00 crore for year ended March 2024. Cash flow used in acquiring fixed assets during the year ended March 2025 stood at Rs 1,386.00 crore, compared to Rs 1,328.00 crore during the year ended March 2024.

The scrip trades at Rs 411

Aarti Industries : Consolidated Results
Particulars	2506 (03)	2406 (03)	Var.(%)	2503 (12)	2403 (12)	Var.(%)
Net Sales (including other operating income)	1,675	1,851	-10	7,271	6,371	14
OPM (%)	12.7	16.5		13.71	15.3
OP	212	305	-30	997	973	2
Other Inc.	4	6	-33	17	11	55
PBIDT	216	311	-31	1,014.00	984	3
Interest	60	64	-6	275	211	30
PBDT	156	247	-37	739	773	-4
Depreciation	114	102	12	434	378	15
PBT	42	145	-71	305	395	-23
Share of Profit/(Loss) from Associates	0	0	-	0	0	-
PBT before EO	42	145	-71	305	395	-23
EO Income	0	0	-	2	0	-
PBT after EO	42	145	-71	307	395	-22
Taxation	-1	8	LP	-24	-21	-14
PAT	43	137	-69	331	416	-20
Minority Interest (MI)	0	0	-	0	0	-
Net profit	43	137	-69	331	416	-20
EPS (Rs)*	#	#		8.4	11.5
Notes
* EPS is on current equity of Rs 181.28 crore, Face value of Rs 5, Excluding extraordinary items.
# EPS is not annualised
bps : Basis points
EO : Extraordinary items
Figures in Rs crore
Source: Capitaline Corporate Database