Aarti Drugs (524348) Q3 24/25 earnings summary

Executive summary

• Received USFDA approval for API manufacturing, enabling exports to the US and Europe and supporting high-margin growth in regulated markets.

• Q3 FY25 revenue declined 6% year-over-year to Rs. 569 crore, with gross margin improving to 38.2% and PAT up 1% to Rs. 37 crore.

• API segment remains the primary revenue driver, contributing 83% in Q3 FY25; focus continues on expanding specialty chemicals and formulations.

• Achieved an EcoVadis Assessment Score of 69, placing in the 89th percentile globally, and received a Silver Medal for sustainability in 2024.

• Interim dividend of Rs. 1 per share declared for FY25; buyback of 665,000 shares at Rs. 900 per share completed in September 2024.

Financial highlights

• Q3 FY25 revenue: Rs. 569 crore (-6% YoY); EBITDA: Rs. 62 crore (-13% YoY); PAT: Rs. 37 crore (+1% YoY); EPS: Rs. 4.1 (+3% YoY).

• 9M FY25 revenue: Rs. 1,725 crore (-10% YoY); EBITDA: Rs. 197 crore (-16% YoY); PAT: Rs. 105 crore (-15% YoY); EPS: Rs. 11.6 (-14% YoY).

• Gross margin in Q3 FY25 rose to 38.2% (Q3 FY24: 33.3%); EBITDA margin at 11.2%.

• Standalone Q3 FY25 net profit: Rs. 3,162 lakhs; consolidated: Rs. 3,671 lakhs.

• Other income includes Rs. 1,134 lakhs from income tax refunds due to disposal of pending appeals.

Outlook and guidance

• Targeting double-digit revenue growth in coming years, with FY26 EBITDA margin guidance of 13%-14%.

• Revenue guidance revised to Rs. 4,000 crore consolidated in three years, with EBITDA margins expected to reach 15% by FY27-28, driven by backward integration and regulatory approvals.

• Capex of Rs. 600 crore over 4-5 years to expand API, formulations, and specialty chemicals capacity, funded mainly by internal accruals.

• Focus on backward integration, new product launches, and expansion into regulated and emerging markets.

• Dividend declaration and buyback signal confidence in financial stability.