Accumulate Aarti Industries; target of Rs 1020: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Aarti Industries

We tweak our FY21 estimates to factor delay in commissioning of long term contract and make other changes. AIL’s near term growth trajectory will face headwinds from weakness in discretionary spend (textiles, autos, aerospace etc; ~40% of AIL’s revenues) and weak global macro-economic situation. Cancellation of high margin and higher profile agrochemicals contract is a major setback as it would have opened doors to other large contracts in the segment. AIL with a diversified product portfolio of 200 products remain well placed to capitalize on rising investment in domestic downstream industries along with production shift from China.

Outlook

We remain structurally positive on AIL’s growth prospects but will wait for better entry points given the macro challenges. Maintain ACCUMULATE with a TP of Rs1,020 (Rs1,024 earlier).

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