Aarti Industries Shares Plummet 16% After Earnings Report

Shares of Aarti Industries took a nosedive, falling over 16% during intra-day trading on August 13, following the release of its recent earnings report for the first quarter of FY25.

This sharp decline raised alarms among investors who were concerned about the company’s future guidance and ongoing pressures on its profit margins, especially with growing competition from Chinese firms.

The stock dropped to as low as ₹614.70, marking a significant fall from its 52-week high of ₹769.50 that was reached on April 29, 2024. However, it’s worth noting that the stock has still seen a rise of more than 40% from its previous low of ₹438.05, which occurred back in October 2023.

In its earnings report, Aarti Industries reported a net profit of ₹137 crore, which shows a healthy growth of 96% compared to the same quarter last year, along with a revenue of ₹2,012 crore, marking a 28% year-on-year increase.

The company attributed its revenue growth largely to volume increases but unfortunately suspended its FY25 guidance for EBITDA, citing significant margin volatility and pressures from competitors.

Management is optimistic about achieving volume growth of 20-30% during FY25, yet they also acknowledged potential disruptions in logistics, particularly due to issues in the Red Sea.

Industry analysts expressed mixed sentiments, with some, like Nuvama, holding a “buy” rating on the stock, while others, like Emkay and Morgan Stanley, have lowered their earnings forecasts due to expected margin pressures.