1 min read.Updated: 06 Oct 2021, 10:05 AM ISTLivemint
Given the strong future growth outlook, the brokerage has revised its recommendation from Hold to Buy and upgraded its target price on the specialty chemical stock
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Brokerage and research firm Axis Securities is bullish on specialty chemicals maker Aarti Industries and has raised its target price on the stock as it said that the company continues to consistently focus on growth through capacity expansion and ramping up utilization.
Given the strong future growth outlook, the brokerage firm has revised its recommendation from ‘HOLD’ to ‘BUY’ stance and has upgraded its target price on the specialty chemical stock to ₹1,080 per share (from ₹925 earlier).
Aarti Industries Ltd delivered a notable growth of 7.4% in FY21, supported by an 11% YoY growth in the exports segment, 7% growth in specialty chemicals segment, 15% growth in the pharma segment, and capacity utilization ramp-up. The growth was primarily driven by an encouraging recovery in the global economic activities post Covid-19 disruptions.
Global player in Benzene-based derivatives, strong R&D capabilities, robust financial strength, experienced and competent management bandwidth, wide portfolio of 250+ products, and 20 state-of-the-art manufacturing facilities are the key competitive strengths for the company, as per Axis Securities.
It further sees the company's foray into new downstream products and value chains, strong focus on capacity expansion, and improving profitability to act as growth drivers.
Increasing range of products having superior margins, growing presence in the domestic as well as international markets, and broadening the scope of opportunities should be the key strategies moving forward, the brokerage note stated.
“Currently, AILs plants are running at high utilization levels with demand in the domestic market for discretionary products having already reached pre-COVID levels while export markets are expected to resume normalcy by the end of H2FY22. Moving forward, focus on value-added products, production of more downstream products, and better operating leverage is expected to drive the company’s margin and profitability. The company is exhibiting good earnings growth visibility over a medium to long term," it added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.