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Axis Securities Report
Aarti Drugs Ltd. reported revenue growth of 19.7% YoY which stood above our expectations. The active pharma ingredient segment grew by 22% while the speciality chemical segment reported a robust growth of 74% YoY.
This growth was further augmented by price increase in APIs as well as new capacity commissioned in the anti-diabetic segment. Aarti Drugs' gross margins improved by 220 bps QoQ, primarily driven by proactive price hikes, secular API volume growth across therapies, and strict cost control.
Ebitda margins improved by 150 bps owing to an increase in coal prices (quadrupled YoY) despite higher freight costs and raw material prices.
However, higher costs are likely to be transitory rather than structural in nature and are expected to taper off towards the end of FY22.
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