Aarti Drugs hits fresh all-time high; stock zooms 165% in 3 months

Aarti Drugs' Q4FY20 net profit more-than-doubled on a YoY basis
Shares of Aarti Drugs rallied 10 per cent on Friday to a new all-time high of Rs 1,299.50 on the BSE on expectation of good growth from its API (Active Pharmaceutical Ingredient) and formulation business.

In the past three months, the stock has zoomed 166 per cent, as compared to 17 per cent rise in the S&P BSE Sensex. At 11:24 am, it was up 7 per cent at Rs 1,262, against 0.6 per cent gain in the benchmark index.

For the January-March quarter (Q4FY20), Aarti Drugs' net profit more-than-doubled on a year-on-year basis to Rs 58.90 crore, on the back of strong operational performance. It had profit of Rs 28.40 crore in the corresponding quarter of previous fiscal. The higher profit during the quarter was attributed to exceptional item of Rs 8.39 crore and Rs 15.1 crore on account of deferred tax asset booked in profit & loss.

Operational revenue, however, declined 2.07 per cent YoY to Rs 450 crore from Rs 459 crore in the year-ago quarter. The lower revenue growth was attributed to the Covid-19 lockdown impact.

The company’s EBITDA (earnings before interest, taxes, depreciation and amortization) was up 32.5 y-o-y at Rs 80.70 crore. EBITDA margin increased by 370bps y-o-y at 15.9 per cent largely attributable to better product mix, higher realisation and lower crude prices.

According to analysts at Centrum Broking, the launch of new products would improve the company's margins in the coming quarters. The additional capacities of Metformin and further expansion in anti-inflammatory are likely to improve the revenues and margins.

Considering the API demand scenario due to china issues and the respective market share in the leading brands that it holds along with better realisation, the brokerage firm said in result update.


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