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Nirmal Bang Report
Aarti Industries Ltd.'s Q4 FY22 operating performance came in line with our estimates. Both the segments namely, specialty chemicals and pharma contributed to the revenue growth.
Operating margin in pharma was similar to Q3 FY22 whereas specialty chemicals witnessed some contraction on account of raw material inflation and increase in other costs like power and fuel, logistics etc.
Nitric acid shortage continued in Q4 FY22 as well and hence production of select products was impacted. Management indicated a capex of more than Rs 1 billion towards concentration of nitric acid from weak nitric acid in order to create a back-up capacity by FY24-end.
Capacity created for first long term contract should achieve peak utilisation by FY24-end and Arti Industries is also considering a fresh capex of Rs 8-10 billion towards creating a complete value chain of Dicamba.
Second long term contract facility was commissioned during the quarter and is expected to contribute to revenue starting Q1 FY23.
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