Aarti Industries Shares Plunge 15%, Hit Lower Circuit; Should You Buy?

Shares of mid cap company Aarti Industries Ltd today witnessed steep decline of 15.67% at the time of writing the story. Today's decline in the shares of Aarti Industries is reportedly highest in more than a decade. Current market price of Aarti Industries shares on BSE is Rs 619.75 per share. The chief factors that led the sharp decline in Aarti Industries shares include the company's decision to revisit its EBITDA guidance as a result of high margin volatility and rising pressure from neighbouring country China. The company's market capitalisation stood at Rs 22,445.25 crore. Aarti Industries shares also hit lower circuit today at Rs 624.70 per share. The stock witnessed spurt in volume by more than 13.03 times today.

Aarti Industries highlighted fears about its financial outlook particularly revisiting the EBITDA guidance during the call. As per report, Aarti Industries' debt is likely to surge to Rs 3,500-Rs 3,600 crore as a result of the current capital expenditure. However, Aarti Industries maintained a positive outlooke despite the current challenges and expects to accomplish a volume growth of 20-30% for the financial year 2025. It remains optimistic too about reaching 40-50% capacity utilisation within the ongoing financial year.

Aarti Industries Quarterly Results: Earlier, Aarti Industries for the quarter ended June 30, 2024 announced a surge of 95.71% in its net profit to Rs 137.00 as against the net profit of Rs 70 crore declared in the corresponding quarter of last year. Its sales for the June 2024 quarter surged 31.19% to Rs 1855 crore as compared to Rs 1414 crore announced in the corresponding quarter of last year. Sequentially, the EBITDA of Aarti Industries surged 10% and 55% year-on-year (YoY) to Rs 311 crore. It declared its consolidated revenue at Rs 2012 crore, up 3% QoQ and 28% YoY.

Should You Buy Aarti Industries Shares? Out of a total of 25 analysts tracking Aarti Industries shares, 8 have recommended buy call, 5 suggested hold call and remaining 12 gave sell rating, according to Bloomberg. Meanwhile, brokerage firm Nuvama issued buy call with upgraded target price of Rs 903 from the previous target price of Rs 854. On the other hand, Morgan Stanley has "equal-weight" call on Aarti Industries shares with target price of Rs 615.

Aarti Industries Shares Performance: The 52-week high price of Aarti Industries shares on BSE is Rs 769.50 per share (as on 29/04/2024) and 52-week low price is Rs 438.05 per share (as on 26/10/2023), respectively. Aarti Industries shares slipped 13% in last 1-week, fell 4% so far this year, offered return of 36% in last 1-year, and declined again by 17% in last 2-years.

About: Aarti Industries Limited (AIL) is one of the most competitive benzene-based speciality chemical companies in the world. AIL is a rare instance of a global speciality chemicals company that combines process chemistry competence (recipe focus) with scale-up engineering competence (asset utilization). Over the last decade, AIL has transformed from an Indian company servicing global markets to what is fundamentally a global company selecting to manufacture out of India.

Disclaimer:

The stock has been picked from the brokerage report of Morgan Stanley and Nuvama. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.