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Continued Chinese dumping in salicylic acid
View Risks →Aarti Drugs Limited — Q3 FY26
Aarti Drugs reported a mixed Q3 FY26 with consolidated revenue of ₹602.9 crore (+8% YoY) but EBITDA margin contracting to 9.3% (-180bps YoY) due to low capacity utilization, Chinese dumping, and a plant shutdown.
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Aarti Drugs reported a mixed Q3 FY26 with consolidated revenue of ₹602.9 crore (+8% YoY) but EBITDA margin contracting to 9.3% (-180bps YoY) due to low capacity utilization, Chinese dumping, and a plant shutdown. PAT surged 58% YoY to ₹40.5 crore, aided by a low base and formulation export growth (+58% YoY). Management cited an inflection point with stabilizing realizations and January sales showing positive momentum. Guidance includes 12-15% volume growth in FY27, EBITDA margin recovery to 12-13% near-term, and 14-15% steady-state. Key risks: continued Chinese dumping in salicylic acid and slower-than-expected ramp-up of greenfield facilities.
आरती ड्रग्स की तीसरी तिमाही के नतीजे मिले-जुले रहे। कंपनी की कुल कमाई ₹602.9 करोड़ रही, जो पिछले साल से 8% ज्यादा है। लेकिन मुनाफा कमाने की क्षमता (EBITDA मार्जिन) घटकर 9.3% रह गई, जो पिछले साल से 1.8% कम है। इसकी वजहें हैं - कारखानों का पूरी क्षमता से न चलना, चीन से सस्ते माल की डंपिंग और एक प्लांट का बंद होना। हालांकि, कंपनी का शुद्ध मुनाफा (PAT) 58% बढ़कर ₹40.5 करोड़ हो गया, क्योंकि पिछले साल का आधार कम था और दवाओं का निर्यात 58% बढ़ा। कंपनी का कहना है कि अब स्थिति सुधर रही है और जनवरी की बिक्री में तेजी आई है। आने वाले वित्त वर्ष में कंपनी 12-15% ज्यादा उत्पादन बेचने की उम्मीद कर रही है। मुनाफा कमाने की क्षमता जल्द 12-13% और बाद में 14-15% तक पहुंच सकती है। लेकिन चीन से सस्ते सैलिसिलिक एसिड की डंपिंग और नए कारखानों का धीमा शुरू होना जोखिम बने हुए हैं।
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Read Transcript →Quarter Snapshot
Formulation Revenue
₹76.6 Cr
+58% YoY
Formulation segment grew 58% YoY to ₹76.6 crore, with exports contributing 67%.
Sikar Plant Utilization
30%
+30pp QoQ
Sikar facility achieved 30% utilization in first quarter of operations, targeting 50% by March 2026.
Salicylic Acid Production
300 tons/month
N/A
Salicylic acid facility scaled to 300 tons per month, but utilization still below expectations.
Total Debt
₹540 Cr
N/A
Consolidated total debt stood at ₹540 crore, split equally between long-term and short-term.
What Changed vs Last Quarter
NEW
Volume growth of 12-15% in FY27
Management expects 12-15% volume growth in FY27, driven by new products (salicylic acid, methylamines) and single-digit growth in existing basket.
NEW
EBITDA margin recovery to 12-13% near-term, 14-15% steady-state
Management targets EBITDA margin of 12-13% in the near term and 14-15% at steady state, driven by backward integration, export mix, and formulation ramp-up.
NEW
Sikar plant utilization to reach 50% by March 2026, 75% next quarter
Sikar facility expected to ramp to 50% utilization in Q4 FY26 and 75% in the subsequent quarter, with full utilization within 12 months.
UPDATED
Capex of ₹150-200 crore per year for next two years
Management guided for annual capex of ₹150-200 crore over the next two years, including oncology product development, brownfield expansions, and energy improvements.
DROPPED
High single-digit value growth in H2 FY26
Management aims for high single-digit value growth in H2 FY26, driven by export demand and new capacities.
DROPPED
15% EBITDA margin target by end of FY27
Targeting 15% EBITDA margin on a consolidated basis by H2 FY27, driven by ramp-up of new plants and cost efficiencies.
DROPPED
15-20% revenue growth aspiration for FY27
If salicylic acid ramp-up succeeds, management expects 15-20% revenue growth in FY27.
NEW RISK
Continued Chinese dumping in salicylic acid
Chinese dumping persists, pressuring realizations. Management plans to file anti-dumping application by April 2026, but relief may take 6-8 months.
NEW RISK
Slow ramp-up of greenfield facilities
Salicylic acid plant ramp-up slower than expected due to technology changes and quality parameter adjustments, delaying profitability.
NEW RISK
High capex despite recent investments
Analyst raised concern about continued high capex (₹150-200 Cr/year) while new plants are still scaling up. Management defended citing smooth Sikar ramp-up and need for oncology investment.
RISK GONE
Salicylic acid plant ramp-up delays
The salicylic acid plant is still in stabilization; delays in achieving 800 tons/month breakeven could pressure margins.
RISK GONE
Pricing pressure on methylamines
Management acknowledged potential price erosion as new methylamine capacity comes online, which could impact margins.
RISK GONE
Tarapur plant closure risk
Voluntary closure of chlorosulfonation process at Tarapur due to gas leak; though no material impact currently, regulatory delays could affect operations.
Fast read
Guidance and risk preview
Management expects 12-15% volume growth in FY27, driven by new products (salicylic acid, methylamines) and single-digit growth in existing basket.
Chinese dumping persists, pressuring realizations.
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