Aarti Drugs (524348) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 revenue declined 15.9%-16% year-over-year to ₹555.3–₹557 crore, with EBITDA down 22% and PAT down 30.6%-31% due to lower realizations and subdued API demand.

• API segment contributed 80%-87% of Q1 FY25 revenue, with Formulation, Specialty Chemicals, and Intermediates & Others at 12%, 5%, and 3% respectively.

• Gross margin improved by 280 bps year-over-year to 35.4% in Q1 FY25, despite lower revenue.

• Dermatology product operations commenced but faced scale-up issues, impacting PBT by ₹6 crore in the quarter.

• Audited standalone and consolidated financial results for Q1 FY25 were approved by the Board on July 26, 2024.

Financial highlights

• Q1 FY25 EBITDA was ₹66–66.1 crore, with an EBITDA margin of 11.9%. PAT stood at ₹33.3 crore, with a PAT margin of 6.0%.

• EPS for Q1 FY25 was ₹3.62, down from ₹5.18 in Q1 FY24.

• Standalone revenue from operations for Q1 FY25 was ₹49,296 lakhs, down from ₹59,163 lakhs in Q1 FY24.

• Gross margin for standalone business improved to 34.1%-35.4%, with potential for a further 1% increase depending on demand.

• Formulation segment revenue reached ₹70.4–70.5 crore, up 4.2% quarter-on-quarter.

Outlook and guidance

• Margins are expected to improve in the second half of FY25, targeting 13%-14% EBITDA margin in H2.

• Full-year API business is expected to post some growth, with high single-digit volume growth for the year.

• Specialty chemicals segment is projected to achieve 50% year-on-year growth in H2 FY25.

• Long-term revenue target of ₹4,000–4,500 crore by FY27, assuming current prices and volume growth.

• Oncology formulation sales expected to begin in FY26, with majority of sales from FY27.