Can Aarti Drugs Regain Its Profit Margins Amid API Price Pressures?
About Aarti Drugs
Aarti Drugs, part of the Aarti Group, is among India’s top API and specialty chemical manufacturers. The company supplies intermediates for anti-inflammatory and antibiotic therapies worldwide.
The company reported stable top-line growth with temporary pressure on operating margins due to lower realizations in key therapeutic APIs.
Financial Highlights (Q2 FY26)
| Metric | Q2 FY26 | YoY |
|---|---|---|
| Revenue | ₹680 Cr | +7% |
| EBITDA | ₹82 Cr | -6% |
| EBITDA Margin | 12.05% | vs 13.5% |
| Net Profit | ₹48 Cr | -8% |
Revenue ₹680 Cr — supported by higher volume in exports despite weak API pricing.
EBITDA ₹82 Cr — affected by increased raw-material costs and pricing pressure.
EBITDA Margin 12.05% — moderate contraction reflecting API market normalization.
Net Profit ₹48 Cr — shows resilient cost control amid challenging environment.
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Peer Comparison
| Company | EBITDA Margin | Revenue Growth |
|---|---|---|
| Aarti Drugs | 12.0% | 7% |
| Ipca Labs | 14.5% | 9% |
| Granules India | 17.3% | 8% |
Strengths & Weaknesses
Strengths
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Weaknesses
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Opportunities & Threats
- 💡 Shift of global sourcing from China to India.
- 💡 New therapeutic molecule launches in FY27.
- 📉 Input-cost spikes could affect profitability.
Valuation & Investment View
- Short-term: Range-bound trading likely near 540–580 zone.
- Medium-term: Margins to recover as input inflation eases.
- Long-term: Solid play on India’s API self-reliance theme.
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Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, highlights Aarti Drugs as a steady long-term API manufacturer with improving margins and export diversification. Explore more insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
SEBI Disclaimer: The information provided in this post is for informational purposes only...
