homeearnings NewsAarti Drugs reports improved margins as it pins hopes on stable raw material prices
Aarti Drugs reports improved margins as it pins hopes on stable raw material prices
In an interview with CNBC-TV18, Adhish Patil, CFO of Aarti Drugs spoke about the impact of raw material prices and its potential impact on the company's margins.
Aarti Drugs, a prominent Indian company specializing in chemicals and pharmaceuticals with an extensive global presence, reported earnings for the June-ended quarter with an improvement in margins.
The company is highly sensitive to fluctuations in raw material prices and its margin maintenance largely hinges on the sustained stability of raw material prices. The raw material cost significantly influences the overall production expenses, and any adverse fluctuations can impact the company's profitability.
In an interview with CNBC-TV18, Adhish Patil, CFO of Aarti Drugs spoke about the impact of raw material prices and its potential impact on the company's margins. With a keen eye on market trends, Patil expressed confidence in the company's ability to maintain margins at current levels, provided raw material prices continue to remain stable. He also discussed how certain key active pharmaceutical ingredient (API) prices have corrected from their peak, offering potential benefits to the company's product profile.
He said, “Right now the raw material prices are also stabilised. If I compare the June quarter with respect to March (FY23) quarter, around 2-2.5 negative price variation was observed in raw materials. In the month of May-June, there was no decline in the prices. So, my intuition is that the prices won’t change hereon.”
However, Patil's positive outlook is rooted in the hope that raw material prices will remain steady, enabling Aarti Drugs to efficiently manage its costs and retain margins at their current levels. Such stability in raw material prices would provide a favourable environment for the company to continue delivering its products while safeguarding profitability.
He further highlighted that the company has observed a corrective trend in certain key API prices. API is the primary component in many pharmaceutical products, and changes in API prices can significantly impact the overall product cost. With some of the API prices having corrected from their peak levels, Aarti Drugs stands to benefit from potentially reduced production costs, thus contributing to better margins.
In addition, Patil mentioned that Aarti Drugs' product portfolio has experienced moderate price movements, not exceeding 8-9 percent. This stability in pricing suggests a favourable balance between costs and selling prices, supporting the company's margin maintenance efforts.
Despite the challenges posed by raw material price fluctuations and market dynamics, Aarti Drugs appears poised to maintain its resilience and growth trajectory. By closely monitoring price trends and carefully managing costs, the company aims to secure its position in the competitive pharmaceutical market.
The speciality chemicals and pharmaceuticals company remains committed to optimizing its operations, fostering innovation, and diversifying its product offerings. This forward-looking approach, combined with prudent financial management, is expected to bolster the company's ability to sustain margins and navigate potential market headwinds.
For more details, watch the accompanying video
(Edited by : Pradeep John)
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Lok Sabha Election 2024: What rural Delhi wants
May 16, 2024 10:10 PM
Over 50 onion farmers detained in Nashik ahead of PM Modi's visit
May 16, 2024 11:14 AM
Why Google CEO is cautiously optimistic about the election year
May 16, 2024 9:51 AM
Mark Mobius reveals how markets will react if NDA wins 400+ Lok Sabha seats
May 15, 2024 8:09 PM