Aarti Drugs Limited, a Mumbai based diversified and fully integrated pharmaceutical company with interests in Active Pharmaceutical Ingredients (API), formulation, specialty chemicals and intermediates, Q2 FY23 revenue stood at Rs. 687.8 crore, a growth of 19% YoY.

The company's H1 FY23 revenue stood at Rs. 1,310 crore as against Rs. 1,161.3 crore, a growth of 13% YoY whereas PAT stood at Rs. 73.5 crore as against Rs. 91.4 crore YoY.

Around 62% of the revenues came from the domestic market and 38% from the exports market for Q2 FY23 for a standalone business. Domestic revenue grew approximately by 19% while exports grew by around 28% year-on- year for Q2 FY23.

Within the API business, the antibiotic therapeutic category contributed 44%, antidiabetic 17%, anti-protozoal 16%, anti-inflammatory 10%, antifungal 8% and the rest contributed 5% to total API sales for Q2 FY23. Q2 FY23 revenue for formulation stood at Rs. 82.5 crore as against Rs. 75.7 crore, a growth of 9% YoY

Commenting on the results, Adhish Patil, Chief Financial Officer, Aarti Drugs Limited said, “The company achieved healthy growth despite the geopolitical uncertainties, adverse currency movement and macro-economic volatilities, led by higher realizations in APIs and specialty chemicals. The quarter witnessed the highest-ever realizations for most of the API products along with moderation in input costs. We firmly believe that there is a potential for further moderation in the quarters, which in turn can expand the margin profile of the company. The company witnessed a marginal increase in Opex due to upward movement in power and fuel costs along with one-time arrears paid to the employees and labour contractors. Further, the finance cost was slightly impacted due to higher working capital requirements and even the interest rate has gone up in the quarter. Nevertheless, the business is optimistic about attaining its growth and margin goals on the back of higher efficiency and falling raw material prices."

Revenue from the formulation segment totalled Rs. 82.5 crore for the quarter, up 9% YoY. The formulation segment's share of the total revenue for the quarter was 12%. The formulation segment's core focus area remained exports. During the quarter, exports contributed 44% of the total revenue.

Specialty chemicals, intermediates & others continue to be a key enabler for growth of the company. The growth in this segment is mainly driven by the niche Chlorosulfonation products along with recently augmented capacity. The company will focus to further enhance the market share for this segment.

The Capex for H1 FY23 stood at Rs. 77 crore and is expected to be in the range of Rs. 200-300 crore for the entire FY23. The civil construction activity has picked up pace for Gujarat Capex which was impacted due to heavy monsoon during H1 FY23.

Tarapur specialty chemicals brownfield capacity which had taken scale-up batches earlier have now been ramped up and expected to contribute to the topline meaningfully from Q3 FY23 onwards. Tarapur greenfield API Capex is also expected to be completed within its timeline. These Capex initiatives, funded through an optimal mix of debt and internal accruals are expected to drive the growth across segments along with improvement in profitability and market share. 

The company remains optimistic about the prospects for all the segments. In the following years, the growth trajectory for all segments is anticipated to remain solid, driven by incremental capacity addition and higher utilisation of existing capacities.