Aarti Industries (AARTIIND) Q1 26/27 earnings summary

Executive summary

• Q1 FY27 saw strong YoY growth in revenue, EBITDA, and PAT, driven by higher input prices passed to customers, cost optimization, and operational resilience despite geopolitical tensions and supply chain disruptions in the Middle East.

• Sustainability focus was recognized with an EcoVadis Platinum rating and multiple ISO certifications, placing the company among the top 1% globally.

• Strategic partnerships and capacity expansions, including the JV with Superform and a plastic recycling initiative, are progressing, though some projects face delays due to labor and geopolitical issues.

• Diversified customer base and strategic redirection of volumes to alternate markets limited the impact of lost West Asia business.

• Consolidated net profit for Q1 FY27 was ₹155 Cr, up from ₹43 Cr year-over-year.

Financial highlights

• Revenue for Q1 FY27 was INR 2,627 crore, up 41% YoY, with EBITDA at INR 385 crore (up 79% YoY) and PAT at INR 155 crore (up 66% YoY); consolidated revenue reported at ₹2,387 Cr, a 42% YoY increase.

• EBITDA margin improved to 14.54% from 11.35% YoY, and net profit margin rose to 5.89% from 2.31% YoY.

• Working capital and debt levels increased due to higher feedstock prices and export volumes, leading to higher finance costs.

• Inventory and forex gains contributed INR 50–60 crore to EBITDA, though volatility made precise quantification difficult.

• Earnings per share (consolidated, basic) was ₹4.27, up from ₹1.19 YoY.

Outlook and guidance

• Volume recovery is expected in Q2 FY27 for both energy and non-energy businesses as supply chain issues ease, with stable demand in pharma and agrochemicals.

• CapEx for FY27 is on track at INR 700–800 crore, with INR 180 crore deployed in Q1; intensity to reduce from next year.

• Major expansion projects, including Zone IV and PDA, are progressing, though Zone IV faces a 3–6 month delay due to labor and war-related issues.

• Guidance for EBITDA of ₹1,800–2,200 Cr by FY28, with Debt/EBITDA targeted below 2.5x and contributions from the Augene JV.

• Continued focus on cost optimization, digital transformation, and new product development to drive growth.