Aarti Industries sees agrochem demand stabilising by FY25 second half

Rajendra V Gogri, CMD of Aarti Industries, an Indian manufacturer of speciality chemicals with a global footprint, expects agrochemicals demand to stabilise by the second half of the next financial year (FY25). On the discretionary side, demand has already started picking up, he said.

The agrochemicals sector has been facing significant challenges over the past few quarters. In July last year, there was a slew of profit warnings from global chemical companies as well, highlighting the weak demand environment, Chinese dumping, inventory de-stocking by customers, and falling prices. One of the chemical majors even called the situation 'Lehman-like'.

Gogri also provided details on the company's planned capital expenditure plan for this year and the next year. The company has outlined capex of around ₹ ₹2,500-3,000 crore over two years including ₹1,200-1,300 crore for FY24.

The overall debt is around ₹2,900 crore and it could increase in FY25.

Among chemicals, he said, benzene and toluene prices have seen an increase due to a rise in crude prices.

Toluene and benzene are present in various items including gasoline, nail polish, hair dye, acrylic spray paint, aeroplane glue, plastic cement, cleaning products, and paint thinners.

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In Q3FY24, Aarti Industries reported a revenue of ₹1,740 crore, slightly up from ₹1,667 crore in Q3FY23. The operating profit margin declined to 15.4% from 17.3%. The profit after tax (PAT) declined to ₹124 crore from ₹137 crore last year.

The market capitalisation of Aarti Industries is around ₹24,389.27 crore. Its shares have gained close to 25% in the past year.

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For the entire interview, watch the accompanying video