Indian markets opened higher on December 23, tracking positive global cues, with the Nifty near 26,200. Early gains faded due to profit-taking, pushing benchmarks slightly lower. L&T, Shriram Finance, Titan, Cipla, and NTPC gained, while Tech Mahindra, TCS, ICICI Bank, Asian Paints, and Tata Consumer declined.
Research report by Prabhudas Lilladher’s on Aarti Industries states, We upgrade Aarti Industries (ARTO) to ‘Accumulate’ rating due to sharp correction in the stock price. ARTO is undergoing a structural transition from a contract manufacturer of market established molecules to a partnership driven, innovation-led platform, with strategic collaborations at the core of its growth strategy across agrochemicals, polymers, energy and advanced materials.
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The company aims to scale its quarterly EBITDA from ~Rs2.8bn to ~Rs4.5bn driven by Zone IV assets, rapid scale-up of capabilities, and deep R&D strength, cost savings initiatives and operating leverages, while consciously moderating balance-sheet risk through co-development, co investment, and long-term customer partnerships. The shift also reflects a move away from China-exposed commoditized chains toward differentiated chemistries, application-led solutions, and multi-year earnings visibility. ARTO’s transition toward becoming a long-term strategic manufacturing partner can emerge as a key structural strength over the long term.
However, in the near term, the company is facing dumping pressure from Chinese players across its existing value chains like PDA, NCB and NT, which could result in margin pressure. We expect revenue/EBITDA/PAT to clock 12%/16%/27% CAGR over FY25–28E. We upgrade the stock to ‘Accumulate’ rating from ‘HOLD’ with TP of Rs403, valuing it at 24x Sep’27E EPS.
