Aarti Drugs (524348) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 revenue declined 7% year-over-year to ₹599.8 crore due to lower realizations and subdued API demand, though sequential revenue grew 8% from Q1 FY25; API volumes were flat YoY and up 8% sequentially.

• Q2 FY25 EBITDA was ₹68.5 crore (margin 11.5%), down 11% YoY; PAT was ₹35.0 crore (margin 5.8%), down 12% YoY; H1 FY25 revenue was ₹1,156.3 crore, down 11% YoY.

• The company completed a buyback of 665,000 shares at ₹900 per share in September 2024, reducing paid-up share capital to ₹91.27 crore.

• The first sustainability report was published, highlighting efforts to reduce carbon footprint.

• Aarti Drugs maintains a diversified presence across 100+ countries, with a robust product portfolio and a strong focus on R&D and backward integration.

Financial highlights

• Q2 FY25 consolidated net revenue was ₹598.3 crore, down 7% YoY; H1 FY25 revenue was ₹1,153.7 crore, down 11% YoY.

• Q2 FY25 EBITDA was ₹68.5 crore (margin 11.5%), down 11% YoY; H1 FY25 EBITDA was ₹134.6 crore (margin 11.7%), down 17% YoY.

• Q2 FY25 PAT was ₹35.0 crore (margin 5.8%), down 12% YoY; H1 FY25 PAT was ₹68.2 crore (margin 5.9%), down 22% YoY.

• Standalone revenue for Q2 FY25 was ₹54,309 lakhs, up from ₹49,296 lakhs in Q1 FY25.

• CapEx of ₹90 crore was incurred in H1 FY25, with a full-year estimate of ₹200 crore, funded mainly by internal accruals and some term loans.

Outlook and guidance

• Margins are expected to improve by FY25 year-end, driven by better pricing and export demand; operating leverage anticipated to improve in H2 FY25 with new projects coming online.

• FY25 sales are expected to be flattish compared to FY24 due to earlier weak demand and negative rate variance; FY26 is anticipated to be a turnaround year as new capacities ramp up.

• Long-term revenue guidance revised to ₹3,500–4,000 crore by FY27, down from earlier ₹4,200–4,500 crore, due to lower API prices.

• R&D pipeline includes complex generics and new age molecules for regulated and emerging markets.