Earnings|Aarti Drugs Ltd (NSE:AARTIDRUGS): Q3FY23 Results Out; Total Income rise 4% YoY

Aarti Drugs Ltd (NSE:AARTIDRUGS) is a leading Indian pharmaceutical company that specializes in the manufacture and export of bulk drugs. The company has a diverse product portfolio that includes APIs, intermediates, specialty chemicals, and nutraceuticals. Aarti Drugs is headquartered in Mumbai and has manufacturing facilities located in Tarapur, Vapi, and Dombivali. The company’s products are sold in over 60 countries, including the US, Europe, and Asia.

Aarti Drugs Ltd announced its Q3FY23 results, reporting a consolidated revenue of Rs 1,975.0 crore, a growth of 10% YoY from Rs 1,802.7 crore. The company’s EBITDA for the quarter was reported at Rs 213.4 crore, compared to Rs 251.8 crore YoY, which was driven by a decline in EBITDA margin (%) from 14% to 10.8%. The company’s PAT for the quarter stood at Rs 110.2 crore, compared to Rs 149.7 crore YoY, resulting in a decline in PAT margin (%) from 8.3% to 5.6%.

For the 9MFY23 period, Aarti Drugs Ltd reported a revenue of Rs 665.0 crore, a growth of 4% YoY from Rs 641.5 crore. The company’s EBITDA was reported at Rs 71.7 crore, compared to Rs 96.7 crore YoY, which was driven by a decline in EBITDA margin (%) from 15.1% to 10.8%. The company’s PAT for the period stood at Rs 36.7 crore, compared to Rs 58.3 crore YoY, resulting in a decline in PAT margin (%) from 9.1% to 5.5%.

The company’s standalone business reported a revenue of Rs 626.5 crore, a growth of 5% YoY from Rs 594.8 crore, which contributed ~92% to the consolidated revenue for the quarter. The company’s revenue was majorly driven by the domestic market, contributing 61% of the revenues, while the rest came from the export market. The company’s domestic revenue grew approximately by 8%, while exports grew by around 2% YoY for Q3FY23.

Commenting on the results, Mr. Adhish Patil, Chief Financial Officer of Aarti Drugs Ltd, mentioned that the company’s overall API revenue for the quarter grew by 9% YoY. However, due to a correction in raw material prices, the company made some price adjustments to defend its market share, which resulted in inventory loss of approx. Rs 6 crores as a prudent practice. The gross margins were impacted by almost ~100 bps during the quarter due to API price correction. The company increased the inventory levels of imported KSMs and other raw materials due to a sudden spike of Covid-19 cases and holidays related to the Chinese new year. The finance cost also increased due to higher working capital requirements and rising interest rates.