According to experts, Aarti Industries is in a short-term downturn and is trading near its 700-level support. Aarti Industries’ share price has been consolidating since soaring to its all-time high in October 2021, following a significant post-Covid rally.
This multibagger stock reached a 52-week low of 708.40 on the NSE on Monday.
According to stock market experts, the sell-off in Aarti Industries shares is due to weak global sentiments, as the chemical company reported a 45 percent year-on-year (YoY) increase in revenue and a 42 percent YoY increase in PAT (Profit After Tax) on fundamentals, which may support the multibagger chemical stock to advance in the coming sessions.
Arijit Malakar is a writer who lives in India. “During Q4FY22, Aarti Industries recorded solid revenue growth of 50%, aided by the pass-through of raw material price increases and volume improvements,” noted Ashika Group’s Head of Research – Retail.
Despite a shortage of a crucial raw material, Nitric Acid, which hindered speciality chemical sales, this was achieved. Operating leverage aided EBITDA performance due to strong utilisation levels across plants.
Because of the time lag in cost pass through, there was some modification in margin. In Q4FY22, the company launched a long-term contract unit, which is expected to generate revenue of Rs 500 crore by the end of FY23.
The increase of Tarapur’s capacity for the USFDA-approved API facility is nearing completion, with commercialization planned in Q1 FY23.
The corporation has invested in a variety of initiatives over the years. By FY24, the company expects the majority of its marketed capacity to be utilised at 70-90 percent.”
“Going forward, the company will stay dedicated to investing over 3,000 crore by FY24 to accomplish its growth target,” said Ashika Group’s Arijit Malakar.
To alleviate the impact of a shortage of its critical RM nitric acid, the business is constructing a backward integrated nitric acid from concentrated nitric acid plant with a capacity of 200-250 TPD to partially meet the need.
The factory is anticipated to begin operations in FY24.
Given the affordable valuation, the multi-year development opportunity due to the China-plus approach of global value chains, and the domestic demand for downstream products, Aarti Industries has gained traction.”
Manoj Dalmia, Founder & Director at Proficient Equities, commented on the Aarti Industries share price, saying, “Global market sentiments, interest rate hikes, and supply-side concerns have all contributed to a sell-off in Aarti Industries shares.
Because of the rise in Benzene prices as a result of rising crude oil prices, the company’s API business volume has suffered a setback.
However, the chemical company’s revenue increased by 45 percent year over year, while its PAT increased by 42 percent.”
He claims that the stock is currently trading below the 200 DEMA, and that when a base formation forms, the price will turn around.
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