Aarti Industries posted revenue of ₹24 billion in Q1FY27, a 43% year‑over‑year increase and 8% rise from the previous quarter. The jump was largely due to the pass‑through of higher input prices across the business. This growth shows the company’s resilience in a cost‑inflated environment.
EBITDA margin widened by 340 basis points YoY, helped by gains in inventory levels and favorable foreign‑exchange movements. Despite rising costs, the company managed to improve its operating efficiency.
The Energy segment saw a 17% decline in volumes QoQ, mainly because of geopolitical disruptions in the Middle East. Revenue from that region fell to about 2% of total, down from roughly 15% in the previous quarter.
In contrast, the Non‑Energy business grew 12% YoY in volume. However, it still faced a 7% QoQ drop as raw‑material costs pushed up, putting pressure on sales volume.
Management expects margins to improve starting in Q2FY27, citing easing input costs and demand for newly launched products. They also highlight that better pricing power should offset some cost pressures.
The Polymer & Additives line saw its export share drop to 39% in Q1FY27 from 95% in Q4FY26, mainly due to large shipments to the US in the earlier quarter. Company forecasts that polymer volumes will level off from Q2FY27.
New projects and incremental capacity from MMA and DCB debottlenecking are slated to kick in during CY26. These additions are expected to drive medium‑term growth for the company.
While near‑term margins may stay pressured by high input costs, improving non‑energy demand and the upcoming capacity expansions should support earnings growth over the medium term.
The research team maintains an Accumulate rating with a target price of ₹526, valuing the stock at 28× FY28 earnings per share. The stock currently trades at about 26× FY28 EPS.
Overall, Aarti Industries shows a strong revenue trajectory and improving profitability, with several growth levers in place for the coming years.