Aarti Drugs announced its financial results for the quarter and financial year ended 31st March 2022.

Consolidated Financial Highlights – Q4 FY22

Revenue stood at Rs 697.2 crore as against Rs 502.7 crore, a growth of 39% YoY. 

EBITDA stood at Rs 89.0 crore as against Rs 81.9 crore YoY.  EBITDA Margin (%) came in at

12.8%. 

PAT stood at Rs 55.3 crore as against Rs 51.6 crore YoY. PAT Margin (%) stood at 8.0%.

Consolidated Financial Highlights – FY22

Revenue stood at Rs 2,500 crore as against Rs 2,159.3 crore, up 16% YoY. 

EBITDA stood at Rs 340.8 crore as against Rs 441.6 crore YoY.  EBITDA Margin (%) came in at

13.7%. 

Standalone Business Highlights

Standalone Q4 revenue stood at Rs 642.1 crore as against Rs 452.9 crore, a growth of 42% YoY. 

The standalone business contributed 90% to the consolidated revenue for the quarter. 

61% of the revenues came from the domestic market and 39% from the export market for Q4FY22 for a standalone business. 

API volumes grew considerably at 23%, led by healthy growth in chronic therapies, especially in anti-diabetic segment. 

Domestic revenue grew approximately 37% while exports grew by around 50% year-on year for Q4FY22.

Within the API segment, the antibiotic therapeutic category contributed around 43%, antidiabetic around 17%, anti-protozoal around 14%, anti-inflammatory around 12%, antifungal around 9% and the rest contributed around 4% to total API sales for Q4FY22.  

Formulation Segment Highlights

Q4FY22 revenue for formulation stood at Rs 69.0 crore as against Rs 61.9 crore, a growth of 11% YoY.

39% of the revenue came from exports during the quarter. 

 Commenting on the results Adhish Patil, Chief Financial Officer – Aarti Drugs said, “The company reported resilient set of performance with improved product mix even though the entire globe continued to face unparalleled challenges in the business environment. The company posted robust revenue growth of 39% in Q4FY22, which was primarily driven by 46% YoY growth in API business along with 17.0% in Specialty Chemicals, Intermediates & Others. EBITDA and PAT grew by 9% and 7%, respectively. EBITDA and EBITDA margins were mainly affected due to continuous inflationary pressure on input costs. The company’s FY22 revenue stood at Rs 2,500 crore, a growth of 16% YoY. The improved product mix and better operating leverage partially offset the higher raw material costs. As communicated earlier, EBITDA margins and profitability are not exactly comparable on a YoY basis due to elevated API margins during FY21 on account of Covid-19 related disruptions. 

The growth trajectory in the API segment is expected to accelerate further in the upcoming quarters driven by the recently commissioned anti-diabetics facility, ongoing expansion and backward integration. The company continued the healthy pace of growth in Specialty Chemicals and Intermediates both for Q4 and FY22. The company’s presence in niche chemistry along with strong R&D skills is expected to drive the growth momentum further. 

Formulation segment revenue stood at Rs 69 crore for the quarter, a growth of 11% YoY. The formulation segment contributed 10% to the consolidated revenue for the quarter. Exports continue to be a key focus area for the formulation segment. 39% of the revenue came from exports during the quarter. 

On a consolidated level, the ongoing geopolitical conflicts, continuous inflationary pressure on manufacturing costs, China lockdown induced supply chain disruptions coupled with sharp upward movement in crude oil prices affected the margins and profitability. The company has undertaken multiple price hikes during the quarter to partially offset the impact. However, these price hikes weren’t sufficient as the velocity and volatility of increase in input costs remained very high. The company expects normalisation in the margins once the input prices stabilise which we expect by the end of Q2FY23. 

The company has successfully completed 3rd party mock audit for the US FDA import alert Tarapur facility and the final response will be submitted to the US FDA towards the end of H1FY23. The company remains confident of the positive outcome. Recently, for the same facility, the company has cleared Australia TGA inspection audit. 

The capex for FY22 stood at Rs 145 crore and is expected to be in the range of Rs 250-350 crore for the entire FY23 which would be funded through a mix of internal accruals and debt. The activity for Gujarat civil project work has picked up the pace and will be operational towards the end of FY23. Tarapur speciality chemicals brownfield expansion facility has commenced successfully and the scale-up batches have been undertaken since the start of the current month. For Tarapur greenfield API facility, Boiler and ZLD treatment plants would be operational by this month-end and the company is planning to scale up the batch production by the end of FY23. The balance sheet continued to remain strong with a comfortable net debt to equity of 0.52x as of March 31, 2022.