1. At a Glance
Aarti Drugs Ltd (ADL) — the $1 billion Aarti Group’s pharma arm — is a global API and specialty chemical workhorse. It churns out 50+ molecules in antibiotics, anti-diabetics, anti-inflammatories, and anti-fungals, ships to 100+ countries, and somehow manages a ROCE of 12.9% without collapsing under raw material price swings. At ₹4,521 Cr market cap, P/E ~24, and EPS ₹20.54 (TTM), it’s reasonably priced compared to the pharma glitterati. However, sales growth over the past 5 years is just 5.7% CAGR — proving this is more of a grinder stock than a moonshot.
2. Introduction
Picture an industrial unit where the smell of solvents could knock you out, but the profits keep the boardroom awake. Aarti Drugs has been in this game since 1984, and unlike most flashy pharma IPOs of the last decade, it built its empire molecule by molecule.
It’s the largest manufacturer globally of fluoroquinolones, tinidazole, and celecoxib — and one of the top metformin producers worldwide. In other words, if your doctor’s prescription looks like a chemistry lab inventory list, there’s a decent chance something in it came from an Aarti plant.
Despite commodity API price swings and margin pressures, they keep delivering — because when you’re supplying to 100+ countries, someone, somewhere, is always running out of pills.
3. Business Model (WTF Do They Even Do?)
Three verticals:
- APIs – Bulk drugs forming the backbone of generic medicines globally. Think antibiotics, anti-diabetics, anti-fungals.
- Pharma Intermediates & Specialty Chemicals – Feedstock for other drug manufacturers and industries.
- Formulations – The finished dosage forms, adding some margin sweetness to the bulk game.
B2B heavy, exports-driven, with both regulated market clients (USFDA, EU GMP) and emerging market buyers. The model thrives on manufacturing efficiency, regulatory approvals, and keeping capex cycles steady.
4. Financials Overview
- FY25 Sales: ₹2,387 Cr
- FY25 EBITDA: ₹287 Cr (12% margin)
- FY25 PAT: ₹168 Cr (7% margin)
- EPS (TTM): ₹20.54
- Recalculated P/E: ₹492 ÷ ₹20.54 ≈ 23.96 (matches)
- Debt: ₹615 Cr (D/E ~0.48) — comfortable, but not zero
- Cash from Ops FY25: ₹245 Cr
Commentary: Margins have rebounded from FY23 lows, but sales growth is stuck in first gear. The 20% PAT jump in TTM comes more from operational discipline than topline fireworks.
5. Valuation
Method 1 – P/E
EPS = ₹20.54
Peer
