Aarti Ind view CMP 1070: Aarti Ind has two major business segments - speciality chemicals (84% of FY20 revenue) and pharmaceuticals (16%). The company’s end-products from both segments are used in diversified sectors such as agrochemicals, automobiles, paints, printing inks, pharmaceutical and fast-moving consumer goods.
Scheduled Capex plan is around INR 260 Crs for special chemicals and APIs for FY 21-FY22. Company has generated strong cash flows from operation in last 3 years. Debt/EBITDA) deteriorated marginally to 1.89x in FY20 (FY19: 1.65x) due to its ongoing capex.
Company topline growth is single digit in past several however bottomline and EBITDA has been improved. Ongoing CAPEX on Speciality chemical will give leverage to enhance the topline in future.
Share strong support at 990/950. Share has declined for past 1 month due to promoter has offloaded some shares at various level and further one key client revenue visibility has also been impacted. Current position: Hold fresh investment: Only on SIP basis. Long term investor should continue with the company.
