Aarti Industries gets double upgrade from UBS, check stock reaction

Aarti Industries shares were trading on a flat note on Wednesday even as brokerage UBS upgraded its outlook on the chemicals stock, projecting a 30% rise after changing its rating from "sell" to "buy." The large cap stock rose 0.32% to Rs 479.35 in the afternoon session on Wednesday.  Market cap of the firm rose to Rs 17,364 crore. The stock lost 24% in one year. The share has gained 15.63% since the beginning of this year.

Total 1.19 lakh shares of the firm changed amounting to turnover of Rs 5.78 crore on BSE.

Aarti Industries share are trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. 

The fresh price target for Aarti Industries has been fixed at Rs 625 per share, up from a previous estimate of Rs 615. UBS noted that the prior "sell" rating was influenced by concerns over a peak in the chemical cycle and potential risks to guidance and consensus expectations within the energy segment, specifically Mono Methyl Aniline (MMA).

However, UBS believes that these challenges are largely past, and anticipates significant improvements ahead, driven by the new CEO’s strategic initiatives focused on cost optimisation and new growth opportunities.

Furthermore, the brokerage expects this gradual recovery to be supported by low channel inventory levels and an increase in MMA volumes, which has already been apparent over the past two quarters, along with ongoing strategic measures.

Profit after tax surged sequentially to Rs 96 crore in Q4, up from Rs 46 crore in the previous quarter. This growth was fueled by increased volumes, strategic pricing adjustments, and operational improvements.

For the quarter, revenue reached Rs 2,214 crore, reflecting a 9% increase compared to the previous quarter and a 13% rise year-on-year. EBITDA also saw a positive shift, rising 13% sequentially to Rs 266 crore. This performance indicates a consistent recovery in key product segments and a commitment to disciplined cost management, effectively countering macroeconomic fluctuations and uncertainties in global trade.

Throughout the full financial year FY25, the company achieved a 13% increase in revenue, with EBITDA standing at Rs 1,016 crore, aligning with its revised forecasts. Capital expenditures for the year amounted to Rs 1,372 crore, which were dedicated to capacity expansion, innovation initiatives, and improvements in energy efficiency. Additionally, the Board has proposed a final dividend of Rs 1 per share, representing 20% of the face value.

Aarti Industries is engaged in manufacturing and dealing Speciality Chemicals and intermediates. The company's portfolio includes basic chemicals, agrochemicals, speciality chemicals, and intermediates.