Aarti Industries Suffers Worst Year-On-Year Fall In Quarterly Revenue In Four Years

Aarti Industries Ltd. witnessed its quarterly revenue drop year-on-year for the first time in nearly four years on account of a weakness in its specialty chemicals business.

The standalone revenue of one of India’s largest producers of benzene-based basic and intermediate chemicals fell 22 percent over the last year to Rs 1,019 crore in the quarter ended September, according to its exchange filing. That’s the first year-on-year decline in quarterly revenue since December 2015. Analysts tracked by Bloomberg had pegged the second-quarter revenue at Rs 1,220 crore.

Revenue from the company’s specialty chemicals division—accounting for almost 80 percent of the overall top line—fell more than 19 percent on a yearly basis to Rs 837 crore. That also hurt its operating income, which fell 1.2 percent year-on-year to Rs 238.5 crore. Still, the company’s net profit rose 15 percent over last year to Rs 142 crore, aided by a fall in financial costs and reduced tax outgo.

“On an adjusted basis, our top line has fallen by 17 percent year-on-year,” said Rajendra Gogri, chairman and managing director at Aarti Industries. A weakness in agrochemicals business (20-25 percent of total revenue) and automobile, including aerospace and other related segments (nearly 20 percent of total revenue) and a shift towards high-margin products, which as of now has a smaller share in overall revenue, impacted growth, he told BloombergQuint in an interview.

Aarti Industries manufactures 125 products with a chemistry of benzene, aniline, sulphuric acid, toluene and methanol.

Shares of the company have gained 14.2 percent so far this year. Thirteen of the 17 analysts tracking the company recommend a ‘buy’. The Bloomberg consensus target price is Rs 925.7, indicating about 14 percent upside from the current market price.

Watch | CEO Rajendra Gogri on Aarti Industries’ Q2 Results 2019-20