Aarti Drugs Ltd Share Price – NSE  /  BSE

Pharmaceuticals, Small Cap

In a regulatory filing, Aarti Drugs said that the United States Food and Drug Administration (US FDA) has inspected the formulations (oncology) manufacturing facility of its subsidiary, Pinnacle Life Science at Baddi, Himachal Pradesh from 16 April 2024 to 22 April 2024.

On conclusion of the inspection, the company has received five inspectional observations in Form 483, where none of the observations are related to data integrity. The company will work closely with US FDA in resolving all points, the pharmaco stated in the press release.

“There is no impact on financial, operation or other activities of the company pursuant the observations received,” added the firm.

Aarti Drugs is primarily involved in manufacturing and marketing of active pharmaceutical ingredients (API), pharma intermediates and specialty chemicals.

The pharmaceutical company’s consolidated net profit rose marginally to Rs 36.67 crore in Q3 FY24 as compared with Rs 36.68 crore recorded in Q3 FY23. Revenue from operations fell 8.7% to Rs 605.94 crore in Q3 FY24 as compared with Rs 663.96 crore posted same period a year ago.

Shares of Aarti Drugs rose 1.14% to Rs 498.80 on the BSE.

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Aarti Drugs announced that the United States Food and Drug Administration (US FDA) has inspected the Formulations (Oncology) manufacturing facility of its Subsidiary (Pinnacle Life Science) at Baddi, Himachal Pradesh from 16 to 22 of April 2024.

On conclusion of the inspection, the company has received 5 inspectionalobservations in Form 483, where none of the observations are related to Data Integrity. The company will work closely with US FDA in resolving all points.

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Revenue from operations fell 8.62% to Rs 607.61 crore in Q3 FY24 as compared with Rs 664.97 crore posted same period a year ago.

Profit before tax increased 3.76% to Rs 51.55 crore in the third quarter of FY24 as against Rs 49.68 crore recorded in the third quarter of FY23.

EBITDA stood at Rs 71.8 crore in Q3 FY24, up 0.2% as compared with Rs 71.7 crore in Q3 FY23. EBITDA Margin improved by 100 bps to 11.8% in Q3 FY24 as against with 10.8% posted in Q3 FY23.

During the quarter, revenue from API segment declined 13% YoY to Rs 485.1 crore, intermediaries & others fell 61.9% YoY to Rs 10.1 crore while formulation business jumped 59% YoY to Rs 79.3 crore and specialty chemicals rose 3% YoY to Rs 31.4 crore in Q3 FY24.

On standalone basis, the company’s net profit declined 13.87% to Rs 31.62 crore in Q3 FY24 as compared with Rs 36.71 crore in Q3 FY23. Revenue stood at Rs 539.9 crore as against Rs 626.5 crore, a decline of 13.8% YoY. The standalone business contributed approximately 87% to the consolidated revenue for the quarter.

Around 67% of the revenues came from the domestic market and 33% from the exports market for Q3 FY24 for a standalone business.

Within the API business, the antibiotic therapeutic category contributed around 48%, anti-diabetic approximately 14%, anti-protozoal around 16%, anti-inflammatory approximately 10%, antifungal around 9% and the rest contributed approximately 4% to total API sales for Q3 FY24.

Meanwhile, the company’s board has declared interim dividend of Rs 1 per equity share for the financial year 2023-24. Record date has been fixed for the purpose of payment of interim dividend is 6 February 2024.

Adhish Patil, CFO & COO, Aarti Drugs, said, “The company has demonstrated resilience by achieving 8.4% year-on-year volume growth in APIs amidst lower realizations due to negative rate variance, which have impacted revenues in Q3 FY2024.

The demand for exports faced challenges in certain regions during the FY24 till date due to heightened interest rates, dollar shortages, destocking and conservative ordering. However, we anticipate a turnaround in the export business in near future, as we expect interest rate reductions and a surge in demand. Despite these challenges, we maintain a positive outlook, remaining optimistic about achieving our growth and margin objectives.

Specialty Chemical industry, while India's domestic chemicals demand is expected to stay strong in 2024, price expectations are not very robust as the market struggles to find the right balance amid new production capacities coming on stream in the country, changing trade flows, weak global demand and volatile upstream prices.

The capex for 9M FY24 stood at around Rs 162 crore and is expected to be in the range of Rs 250-300 crore for the full year FY24. Greenfield Projects at Gujarat Sayakha for Speciality Chemicals and Tarapur on Dermatology product is on track and in final stages of completion. Operational commencement for Dermatology is expected in Q4 FY24. This shall lead to operating leverage from next year once these projects are commissioned and capacity utilization is ramped up.

Despite short-term challenges, we maintain a positive outlook for both our API and non-API business. Ongoing projects and optimized capabilities will fuel steady growth in the coming years. Notably, we anticipate continued growth in exports within the formulation business. We are committed to overcoming challenges and achieving long-term success.”

Aarti Industries is a leading Indian manufacturer of speciality chemicals with a global footprint. The company is engaged in the manufacturing of Active Pharmaceutical Ingredients (APIs), Pharma Intermediates, Speciality Chemicals and produces Formulations with its wholly owned subsidiary-Pinnacle Life Science Private Limited.

Shares of Aarti Industries were lower 4.96% to Rs 508.20 on the BSE.

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Aarti Drugs announced that the Board of Directors of the Company at its meeting held on 24 January 2024, inter alia, have recommended the interim dividend of Rs 1 per equity Share (i.e. 10%) , subject to the approval of the shareholders.

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