Aarti Drugs - Q4 FY20 (Audited –Cons)
Total income from operations at 449.6 Cr
459.1 Cr (-2.11%) YoY | 473.5 Cr (-5.07%) QoQ
Year ending revenue: 1,806 Cr Vs. 1,560 Cr (15.71%)
Net Profit of 58.8 Cr
27.4 Cr (114.61%) YoY 27.7 Cr (114.92%) QoQ
Year ending Net profit: 141.4 Cr Vs. 89.7 Cr (58.43%)
EPS (in Rs.) 25.26
12.06 YoY | 11.92 QoQ
Year ending EPS: 60.57 Vs. 38.48
View: Result is in line with the expectation. Although topline decreased but bottom line improved significantly in this quarter. Further net profit also includes profit on sale of assets of Rs 8.37 Cr.
Business Updates & Highlights:
EBITDA in Q4FY20 is around INR 72.1 Cr Vs. 57.1 Cr in Q4FY19 therefore up by 26.3% in YoY. EBITDA in FY20 is around 263.3 Cr Vs. 209.6 Cr in FY19. Operating profit margin is also stable in QoQ.
ROE and ROCE is around INR 19% and 28.2% respectively and book value per share is around INR 239 and share is currently trading at 3.6x of its book value. Company is currently trading at annualized PE of around 14.5 which is very fair as per industry benchmark. Promoter holding is around 61.4% in the company which is very good. FIIs and mutual fund hold around 1.07% and 4.19% in the company. Cash and cash equivalent as of March 2020 in operating activities is around INR 250.7 Cr. Liquidity position is slightly better in this quarter but still its high and debtor realization is around 3.5 months.
Share View: Share price high 880 (52 week) and now 860. Share is almost doubled in 1.5 months in march 20 share was trading around 480. Aarti Drugs Ltd is one of the leading pharmaceutical manufacturers in India. The company is engaged manufacturing of pharmaceuticals. ADL operates in the anti-diarrhea, anti-inflammatory and anti-biotic therapeutic segments. The Company is engaged in the manufacturing of Active Pharmaceutical Ingredients (APIs), Pharma Intermediates, Specialty Chemicals and also produces Formulations with its wholly-owned subsidiary – Pinnacle Life Science Private Limited.
Position: Share support price is INR 820/775. Mid/Long term investor should continue with the company with target price of INR 980
Opportunities: The Company is also in the process of acquiring an ISO 9002 compliance for all its units and one of the units has already been approved. Company has been able to carve a niche for itself and is looking forward to expand the volumes. Consumer spending on medicines is expected to increase, which will spur growth in the generic sector in the domestic market.
Risk: Share price trading at all time high any good correction in near future in the market can correct the share price eg. March when Nifty traded below 8000 and share was trading around 480.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
RD Stock (“High Returns with Low Risk is the Key”)