Aarti Industries - Demerger To Marginally Impact Valuations: Systematix
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Systematix Research Report
To unlock value, improve operational efficiency and sharpen focus on business verticals, the board of Aarti Industries Ltd. approved the de-merger of its pharmaceutical unit into Aarti Pharmalabs Ltd. effective from July 01, 2021.
Aarti Industries' demerger will be net-negative as the profitability of the pharma business was better than the chemical business and it was also aiding the market capitalisation of the overall business.
The sales/Ebit share of the pharma business was 17%/22% in FY21 and adjusted return on capital employed was 16% versus 13% for the chemical business.
The demerger includes a part of the chemicals business (~3% of sales), which is a backward integrated facility for pharma raw material.
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