1. At a Glance – Blink and You’ll Miss the Drama
Aarti Industries Ltd is back in headlines, and for once it’s not because investors are crying into their balance sheets.
Q3 FY26 came in hot: Revenue ₹2,492 Cr, EBITDA ₹323 Cr, PAT ₹133 Cr (after a ₹15 Cr labour-code provision). That’s a 222% YoY jump in profit, which sounds like a Diwali bonus… until you zoom out and notice ROCE chilling at 6.3%, debt flirting with ₹3,973 Cr, and the stock still down ~19% YoY.
Market cap sits at ₹13,523 Cr, CMP ₹373, P/E 36x – which is ambitious for a company whose capital employed is currently doing pranayama instead of sprinting.
But hey, volumes are back, utilization is improving, and Zone IV is finally showing signs of life. So the real question is:
👉 Is this the start of Aarti’s comeback arc… or just one good quarter after a long chemical hangover?
2. Introduction – From Chemical Rockstar to “Beta, Thoda Time Lagega”
Once upon a time, Aarti Industries was the darling of Indian specialty chemicals. Global leadership in NCB/DCB, deep benzene chemistry, long-term contracts, and clients like BASF, Bayer, Syngenta. Then came the great combo punch:
- Global chemical downcycle
- China demand wobble
- Massive capex funded by debt
- Margins compressing faster than a middle-class salary in Mumbai
Between FY22–FY25, profits fell, ROCE collapsed from 22% to 6%, and the stock delivered negative returns over 1, 3, and 5 years. Investors who bought at ₹900 learned the meaning of “long-term investing” the hard way.
Now Q3 FY26 says: “Boss, picture abhi baaki hai.”
Volumes are back, new plants commissioned, and management is promising margin recovery via higher-value products and renewables.
But promises in chemicals
are cheap. Cash flows are not.
3. Business Model – WTF Do They Even Do?
Aarti Industries is not a “one product, one trick pony.” It’s more like a chemistry buffet:
🔬 Core Strength: Benzene Value Chain
- Global No.1 in DCBs, Top 3 in NCBs
- Products flow from benzene → nitro → chloro → amines → downstream specialties
- High entry barriers due to:
- Environmental approvals
- Process know-how
- Customer qualification cycles (2–4 years)
🧪 Other Chains
- Toluene chain (nitro-toluenes, toluidines)
- Sulphuric acid & oleum
- Hydrogenation, ethylation, fluorination
- MMA (200 KTPA) – now a global scale asset
📦 End-Use Spread (9M FY25)
- Energy chemicals: 36%
- Agrochemicals: 18%
- Polymers & additives: 14%
- Dyes & pigments: 12%
- Pharma intermediates: 10%
Basically, if you spray it, swallow it (as medicine), coat it, or polymerize it – Aarti probably supplies something upstream.
4. Financials Overview – The Table That Decides Mood
Q3 FY26 – Consolidated (₹ Cr)
| Metric | Latest Qtr | YoY Qtr | Prev Qtr | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 2,492 | 1,843 | 2,100 | 35.2% | 18.7% |
| EBITDA | 323 | 231 | 291 | 39.8% | 11.0% |
| PAT | 133 | 46 | 106 | 222% | 25.5% |
| EPS (₹) | 3.67 | 1.27 | 2.92 | 189% | 25.7% |
👉 Annualised EPS = 3.67 × 4 = ₹14.7
Commentary:
Yes, the growth looks insane. But remember:
- Base was weak
- Margins are still below historical peaks
- Interest cost is eating like a hungry caterpillar
Question
