Aarti Industries (AARTIIND) Q2 24/25 earnings summary

Executive summary

• Celebrating its 40th year, the company transitioned to a professional management structure with a new CEO and expanded independent board oversight.

• Integrated operations across chlorine, toluene, and benzene-based products, with a strong R&D focus and a global customer base in 60 countries.

• Q2FY25 consolidated net profit was ₹52 crore, down from ₹137 crore in Q1FY25 and ₹91 crore in Q2FY24; H1FY25 net profit reached ₹189 crore, up from ₹160 crore YoY.

• Revenue for Q2FY25 was ₹1,786 crore, up 11.8% YoY but down 11.2% sequentially; H1FY25 revenue was ₹3,797 crore, up 19.9% YoY.

• Facing margin pressure due to Chinese overcapacity and soft demand in key segments, but robust domestic demand and strategic alliances offer growth opportunities.

Financial highlights

• Q2FY25 EBITDA was ₹202 crore, down 13.3% YoY and 35% sequentially; H1FY25 EBITDA rose 18% YoY to ₹512 crore.

• Q2FY25 EBITDA margin was 11.04–11.3%, down from 14.6% in Q2FY24; H1FY25 margin at 13.5%.

• H1FY25 PAT reached ₹189 crore, up from ₹160 crore YoY; EPS for H1FY25 at ₹5.22, up 17.8%.

• Exceptional income of ₹2.3 crore from divestment of a step-down subsidiary.

• Interest costs remained stable; depreciation increased due to capacity expansions.

Outlook and guidance

• FY25 EBITDA guidance is ₹1,000–1,050 crore, with FY28 targeted at ₹1,800–2,200 crore, driven by volume growth, cost optimization, and CapEx-led expansion.

• CapEx for FY25 is estimated at ₹1,300–1,500 crore, with FY26 CapEx expected at ₹1,000 crore.

• Management aims for Debt/EBITDA below 2.5x and ROCE above 15% over the next three years.

• Focus on leveraging R&D for asset-light growth, strategic alliances, and entry into sunrise sectors like electronic chemicals and battery materials.

• The company retained its long-term issuer and bank facilities credit ratings of AA/Stable.