Aarti Industries (AARTIIND) Q2 24/25 earnings summary

Executive summary

• Celebrating 40 years, the company is transitioning to a more professionalized management structure, with a new CEO and expanded independent board oversight.

• Achieved consolidated revenue of ₹1,786 crore in Q2FY25, up 11.8% YoY but down 11.2% sequentially, with a global customer base across 60 countries.

• Q2 FY25 consolidated net profit was ₹52 crore, down from ₹137 crore in Q1 FY25 and ₹91 crore in Q2 FY24, with H1 FY25 net profit at ₹189 crore versus ₹160 crore in H1 FY24.

• Non-energy business volumes grew 22% YoY, while energy business volumes remained flat; margin pressure and soft demand persisted in key segments.

• The company operates in a single segment: Speciality Chemicals.

Financial highlights

• Q2 EBITDA was ₹202 crore, down from ₹311 crore in Q1; H1 FY25 EBITDA rose 18% YoY to ₹512 crore.

• H1 FY25 PAT reached ₹189 crore, up from ₹160 crore YoY; overall H1 volume growth was 15%.

• Q2 FY25 EBITDA margin at 11.04–11.3%, down from 14.6% in Q2FY24; H1 FY25 margin at 13.5%.

• 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 new capacities.

• CapEx for FY25 revised to ₹1,300–1,500 crore, with FY26 at ₹1,000 crore; focus on prudent capital deployment.

• Targeting 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 from CRISIL and India Ratings.