Aarti Drugs (524348) Q4 24/25 earnings summary

Executive summary

• Q4 FY25 revenue grew 9% year-over-year to INR 679 crore, with EBITDA up 10% and PAT up 33% to INR 63 crore, driven by strong global API demand and 15.5% volume growth, mainly from exports.

• FY25 revenue declined 5% to INR 2,403 crore, EBITDA fell 5% to INR 303 crore, and PAT decreased 2% to INR 168 crore compared to FY24, with cost efficiency measures maintaining annual EBITDA margin at 12.6%.

• API segment contributed 81% of FY25 revenue, with a focus on expanding specialty chemicals and formulations.

• Strong balance sheet with net debt/equity at 0.45x and robust operating cash flows of INR 245 crore in FY25.

• Buyback of 665,000 shares completed in September 2024, reducing paid-up capital.

Financial highlights

• Q4 FY25 EBITDA margin reached 14.5% standalone, with consolidated margin at 14%, and gross margin for FY25 improved to 35.8%.

• Q4 FY25 PAT margin rose to 9.2%, and FY25 PAT margin at 7.0%, up 20 bps year-over-year.

• EPS for FY25 at INR 18.4, nearly flat versus INR 18.6 in FY24.

• Net operating cash flow for FY25 at INR 245 crore, down from INR 359 crore in FY24.

• Tax expense for FY25 was INR 63 crore, up 33% year-over-year, with tax margin at 9.2%.

Outlook and guidance

• Double-digit revenue growth targeted for FY26 and FY27, with EBITDA margin guidance maintained at 14-15%.

• Revenue target of INR 3,000 crore by FY27, with a stretch goal of INR 3,500 crore; previous INR 4,000 crore target revised due to price volatility.

• Capex of INR 600 crore underway, targeting revenue potential of INR 4,200–4,500 crore with higher margins in 5–6 years.

• Focus on brownfield expansion, backward integration, and new product launches in API and formulations.

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