Aarti Drugs Limited has reported consolidated financial results for the period ended December 31, 2023.

Aarti Drugs has posted net profit of Rs. 36.71 crores for the period ended December 31, 2023 as against net profit of Rs. 39.60 crores for the period ended September 30, 2023. The company posted net profit of Rs.36.67 crores for the period ended December 31, 2022.

Aarti Drugs has reported total income of Rs. 607.61 crores during the period ended December 31, 2023 as compared to Rs. 642.22 crores during the period ended September 30, 2023. The company reported total income of Rs.664.97 crores during the period ended December 31, 2022.

For the 9 months period ended December 31, 2023, Aarti Drugs has reported total income of Rs.1911.54 crores as compared to Rs.1974.97 crores during the 9 months period ended December 31, 2022.

The company has posted net profit of Rs.124.28 crores for the 9 Months period ended December 31, 2023 as against net profit of Rs.110.18 crores for the 9 Months period ended December 31, 2022.

Adhish Patil, CFO & COO, Aarti Drugs Limited said, “In the face of geopolitical uncertainties and macroeconomic volatilities, 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. Nevertheless, it is noteworthy that there has been improvement in gross margins, attributed to stabilization of input costs for the majority of our products and operational efficiencies. However, at current selling prices level we expect the gross margin to improve further and also on the account of higher percentage of export sales in future."

Recently, 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. Formulation segment’s revenue stood at Rs. 79.3 crores for the quarter, a growth of 58.7% YoY with exports contribution of ~58%. In 9M FY24 revenues stood at Rs 257.0 crores, with growth of 18.2% YoY.

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 ~Rs. 162 crores and is expected to be in the range of Rs. 250-300 crores for the full year FY24. Greenfield Projects at Gujarat Sayakha for Speciality Chemicals and Tarapur on Dermatology products are on track and in the 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.”