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Dolat Capital Report
Aarti Drug Ltd.'s active pharma ingredient/specialty chemicals business contributed 80%/4%, to total revenues in FY22.
As much as 44% of API revenues are derived from antibiotics, which includes ciprofloxacin, Aarti's largest product. It has planned a capex of Rs 6 billion over the next three years started in FY22 for seven projects, out of which four would be towards API plants.
Lower gross margin due to higher raw material prices, freight rates and coal prices impacted by China lockdown and higher crude prices due to geopolitical tensions hit Ebitda margin (13%) in FY22.
Aarti Drugs is proactively taking price hikes across therapeutic areas to sustain its profitability, but they are not commensurate with the rise in input costs due to a lag in passing on price hikes.
We believe there is a strong revenue visibility over next few years on back of scale-up of facilities and ramp-up of export supplies.
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