Multibagger stock: Aarti Industries share hits 52-week low. Right time to buy?

Multibagger stock: After giving strong rebound in post-Covid rally, Aarti Industries share price has been under consolidation after scaling to its life-time high in October 2021. On Monday, this multibagger stock hit its 52-week low of ₹708.40 on NSE. According to stock market experts, sell-off in Aarti Industries shares is due to the weak global sentiments as the chemical company has reported 45 per cent year-on-year (YoY) rise in revenue and 42 per cent YoY rise in PAT (Profit After Tax).

On fundamentals that may support the multibagger chemical stock to move forward in upcoming sessions, Arijit Malakar, Head of Research - Retail at Ashika Group said, “During Q4FY22, Aarti Industries reported robust revenue growth of 50% helped by the pass-through of raw material price increase and volume gains. This was despite the shortage of key raw material Nitric Acid, which impacted specialty chemicals sales. EBITDA performance bolstered by operating leverage due to high utilization levels across plants. Some moderation in margin was on account of time lag in cost pass through. Company commercialized a long term contract unit in Q4FY22, which will contribute a revenue to the tune of ₹500 crore by the end of FY23. The expansion of capacity for the USFDA approved API facility in the final stages at Tarapur and expected to commercialize in Q1 FY23. Over the years company invested in different projects. Company expects, most of its commercialized capacity to reach capacity utilization of 70-90% by FY24.”

Arijit Malakar of Ashika Group further added, “Going forward, company will remain committed to invest around ₹3,000 crore by FY24 to achieve its growth target. Company faced shortage of its key RM nitric acid and in order to mitigate the impact, company is setting up backward integrated Nitric acid from concentrated nitric acid with capacity of 200-250 TPD to partially meet the requirement. The plant is expected to start from FY24. There has been traction in Aarti Industries given the reasonable valuation, the multi-year growth opportunity due to the China-plus approach of global value chains and the domestic demand for downstream products.”

Speaking on Aarti Industries share price, Manoj Dalmia, Founder & Director at Proficient Equities said, "Aarti Industries shares have been suffering a sell-off due to global market sentiments, hiking interest rates and supply-side issues. The company has to suffer a setback in API in business volume due to rise in Benzene prices on soaring crude oil prices. However, the chemical company has reported 45 per cent YoY rise in revenue growth whereas its PAT has jumped 42 per cent in that period." He said that the stock is currently trading below 200 DEMA and a turnaround is expected when a base formation takes place formation.

Echoing with Manoj Dalmia's views, Ravi Singh, Vice President & Head of Research at Share India Securities said, "On technical setup, Aarti Industries share price is in a downtrend for short term and is trading near its support of 700 levels, its 200 DEMA."

"On technical setup, Aarti Industries is in a downtrend for short term and is trading near its support of 700 levels," said Manoj Dalmia of Proficient Equities.

Advising investors to avoid any kind of hurry in taking position in this multibagger stock, Ravi Singh of Share India Securities said, "The stock is in bearish trend and a breakdown below the support of ₹700 apiece levels may push the stock to ₹670 levels in near term."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.