Aarti Industries To Sustain 10% Volume Growth In FY26 On Capacity Expansion, Says CEO

Aarti Industries expects its volumes to grow by 9-10% in FY25, driven by improvements from capacity expansion, according to its Executive Director and Chief Executive Officer, Suyog Kotecha.

Talking to NDTV Profit, the top executive said that the volume growth in FY26 will also be in a similar range.

“We're roughly tracking 9% to 10% kind of volume growth for this year and across all segments put together. Even next year, we are budgeting for a somewhat similar kind of volume improvement. It is getting supported by our new capacity expansions,” he said. 

Two new capacities and a greenfield site will drive Aarti Industries’ volumes over the next eight quarters, according to the CEO.

“We commissioned two capacities in the last few months, which are getting ramped up in Q4 and will continue to get ramped up over the coming quarters,” Kotecha said. 

“We're also commissioning a new greenfield site in the next financial year. That will take a little bit more time to reach certain levels from a commercialisation point of view, but will also add significantly to our volumes in the next six to eight quarters,” he added.

According to Suyog Kotecha, the company also expects to surpass its margin guidance earlier than anticipated, as the company has been "prudent" in setting expectations.

Aarti Industries reported an 11.2% year-on-year decline in its Q3 Earnings Before Interest, Tax, Depreciation, and Amortisation (Ebitda) at Rs 231 crore. The Ebitda margin also contracted to 12.6%, down from 15% last year.

“We've been prudent in terms of our guidance, especially for the midyear three-year kind of time frame. We might get surprised with the earlier margin recovery,” Kotecha told NDTV Profit in an exclusive interview. 

The margin guidance provided by the company is based on the current market situation, he said.

“The guidance that we are giving is based on the current market situation. There are certain value chains in which we are present where there's a huge amount of capacity buildup that has happened in China. The global demand needs to pick up,” Kotecha mentioned. 

If one goes by the current demand-supply scenario, it will take over two years to get to a point where margin recovery can start, according to the top executive.

“At the same time, given our observations over the last four to six quarters, we think that it is appropriate to get guidance based on a 15% kind of Ebitda margin number. Then we will continue to watch out for how the Chinese capacity situation pans out over the course of the next four to eight quarters,” he said.

Shares of Aarti Industries Ltd. closed 0.42% higher at Rs 454.5 apiece on the NSE in comparison to the benchmark Nifty 50's rise of 0.89% on Tuesday.