#COMPANY #POTENTIAL

• The global oleochemicals market is valued at $37.88 billion in 2023. In FY24, the market is anticipated at ~$40.37 billion and it is estimated to reach at $65.38 billion in 2030. Oleochemicals finds application in numerous major fields including polymers, pharmaceutical, personal care, soaps & detergents, food & beverages and others. The use of oleochemical in personal care sector is estimated to grow due to its cost-efficiency and rising awareness of natural chemicals. The growing adoption of oleochemicals by chemical manufacturers to produce bio-surfactants, bio-lubricants and bio-polymers as sustainable alternatives to the petrochemicals is a major growth driver. Industry • Foods • Plastics Segments: : The global food additives market size is projected to grow from an estimated US$ 141 million in 2024 to US$ 167.88 million by 2029, registering a CAGR of 3.55% during the forecast period (2024-2029). This growth is driven by several factors, including the increasing popularity of functional foods, the growth of the processed food industry, and the rising demand for convenience foods. Additionally, increased awareness of food safety standards and the desire for extended shelf life are contributing to the market’s upward trajectory. and Packaging: The plastic additives market is undergoing significant growth, driven by various factors such as the expansion of the packaging industry, changing lifestyles, urbanization trends, and increased plastic usage across different sectors. With a forecasted CAGR of 5.3% between 2023 and 2030, the market indicates sustained momentum. Moreover, the Asia-Pacific region dominated the market in 2023, holding a substantial share of 55%. The growth factor mainly include increased demand in the packaging industry as it is used in a variety of industrial and household applications.

• Additionally, owing to the growing population, rapid urbanisation and rising middle-class incomes, APAC countries are expected to witness robust demand for Plastic additives in Automotive, Electronic & Electrical goods manufacturing and other specialty applications. • Cosmetics and Pharmaceuticals: The world cosmetics market is anticipated to increase at a CAGR of 5.3% from 2021 to 2027. The growth has been driven by a growing consumer base due to strikingly increased awareness, rising disposable income, the surge in cosmetics manufacturing, expanding urbanisation, rapid adoption of cosmetic products among millennials and increasing ecommerce sales. • Coating Additives: The global coating additives market is expected to grow at the rate of 5.5% CAGR from 2021 to 2030. The coating additives is anticipated to grow in automotive sector and paint industry.

#COMPANY #OUTLOOK

• In the food additives business, the company foresees its potential in the overseas market and going forward it is also optimistic about the growth arising from the domestic market. • In the plastic additives business, it plans to expand its domestic reach. • The company’s Thailand joint venture has commenced production trials and is in the process of product standardization. This is a very small plant. Further investment decision would be determined after the performance of the trial production. • The company’s manufacturing unit in Badlapur, Maharashtra, resumed operations in Q3 FY25 after being disrupted since 18th January 2024, due to a fire incident at an adjacent plant. • On 29th October 2024, the company signed a 60-year lease agreement for land at Jawaharlal Nehru Port Authority (JNPA) for its wholly owned subsidiary, Fine Organic Industries (SEZ) Private Limited. Once operational, this facility will manufacture products similar to the company’s current portfolio, primarily targeting international markets due to its Special Economic Zone (SEZ) status. The company has applied for environmental clearance, which is currently in progress. • The project is expected to entail a capital expenditure of ~₹750 cr, funded through a combination of debt and internal accruals. The commercial production at this new facility is slated to begin by FY27, strengthening the company's footprint in global markets.

Fine Organic Industries 3700-4160
Expected level 5300
Support 3400

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Aarti Industries Limited Company Details Report

Aarti Industries Limited is amongst the most competitive benzene-based, speciality chemical companies in the world. It has a derisked portfolio, i.e., multi-product, multi-geography, multi-customer and multi-industry. Its 100+ products are sold to 700+ domestic and 400+ global customers in 60 countries across the globe, with major presence in USA, Europe and Japan. The company uses feedstock materials such as benzene, toluene, nitric acid, chlorine, methanol, aniline, sulphur etc., along with a wide range of reactions to service leading chemical companies around the globe. Its key value chains include Nitro Chloro Benzenes (NCBs), Di-Chloro Benzenes (DCBs), Phenylenediamines (PDAs), Nitro Toluene Value Chain and Equivalent Sulphuric Acid (E.S.A) & downstream. The company’s end user industries are agrochemicals, pharmaceuticals, home & personal care, dyes & pigments, polymer, additives and other discretionary. AIL is committed to safety, health and advancing equipment quality with environment policies mapped to global benchmarks, ensuring customer confidence and business sustainability. The company has 11 zero liquid discharge plants and a strong focus on ReduceReuse-Recover across its 16 manufacturing sites. The company has 2 state of the art research and development centres across Maharashtra & Gujarat.

Industries wise revenue

Customers base

Geographical wise Revenue

#SALES #GROWTH

In FY25, the sales grew by 14% YoY to ₹7,271 cr mainly led by 17% volume growth. It witnessed decline in price realization during the year. The company witnessed volume uptick across end applications of dyes, pigments, polymer additives and energy, while agrochemicals continued to remain soft. Pricing pressure remained across all product chains during the year.

#EBITDA #GROWTH

In FY25, the EBITDA grew by 2.8% YoY to ₹1,000 cr. The growth was partly offset by increase in raw material cost consumed. including packaging material Out of the total expenses, the raw material cost (Incl. packing material, fuel, stores & spares) constituted ~70% followed by other expenses ~19%, employee benefits expenses ~7% and purchase of stock in trade & change in inventory ~4% of the total expenses.

#PAT #GROWTH

In FY25, the PAT declined by 21% YoY to ₹331 cr because of rise in depreciation cost and finance cost. Depreciation cost increased due commercialization of expanded capacities. to The finance cost was higher due to mark-to-market loss of ₹23 cr on a long-term external commercial borrowing (ECB) loan due to rupee depreciation in Q3 FY25. During the period, there was an exceptional gain of ₹2.3 cr on account of divestment of stake in a stepdown subsidiary, i.e., Nascent Chemical Industries Limited. In FY22, the profit includes termination income and shortfall fees.

#EBITDA #MARGIN

In FY25, the EBITDA margin contracted by 152 bps YoY to 13.8%. The margin contracted due to weak performance in Q2 FY25 and H2 FY25. The company witnessed margin pressures across various product. During the year, the energy end application witnessed lower margins due to pricing pressure.

#ROCE

In FY19, the return on capital employed moderated because of decline in PBIT and increase in capital employed. Capital employed increased mainly because of increase in reserves and higher long term borrowing. In FY22, the ROCE improved because of increased in PBIT supported by termination income. Excluding termination income, PBIT stood at ~₹1,031 cr and ROCE at ~14%. In FY25, the ROCE declined because of decline in PBIT and increased in capital employed led by rise in long term borrowings and increase in reserves.

#ROE

The return on equity also moderated from FY20. In FY22, excluding termination income ROE stood at ~15%. In FY25, ROE declined to ~6% because of decline in net profit.

#COMPANY #POTENTIAL

• The global speciality chemicals market is estimated to grow at a CAGR of 3%-4% to $830-850 billion by FY25. • The Indian chemical industry is witnessing a remarkable transformation. From a $186 billion market in FY20 (around 4% of the global share), it’s projected to reach a staggering $330 billion by FY25. This growth is fueled by a booming specialty chemicals sector, expected to climb at a stellar 11% CAGR, reaching $148 billion by FY25. Notably, this will contribute nearly half (~47%) of the total Indian chemical market value. • The growth would drive by end-user industries like food, automobiles, construction, textiles, and cosmetics. • The increasing pace of urbanization and growing young population with a disposable income will translate into a growing demand for end-user industries such as food processing, personal care and home care. This will add to the growth in the speciality chemicals sector.
• The China plus one strategy of global enterprises, higher domestic and export demand, import substitution on the back of government strategies such as ‘Make in India’ and ‘vocal for local’ and enhanced budgetary allocations augur well for the Indian CASE STUDY

#COMPANY #OUTLOOK

• In FY26, the volume growth would be largely from the existing capacity which has already been stabilized and ramp-up. • The management expects an EBITDA of ~₹1,800-₹2,200 cr by FY28, led by volume ramp-up, cost optimization and capex led growth. • In FY25, the company successfully completed several variable and fixed cost optimization initiatives. Hybrid Power Phase-1 achieved full scale utilization which will help in reducing carbon footprint along with cost savings. • The company expects Para Phenylene Diammine (PDA), Nitro Chloro Benzene (NCB), nitro-toluene (NT) and Ethylation capacity utilization to improve in FY26. The PDA capacity utilization to improve, led by increasing demand in USA because of tariff issue. • The zone-4 projects execution is progressing as per plan and is expected to commission gradually through FY26. Under zone-4 projects, the first block of pilot plant already commissioned. The next block which is of multipurpose plant and calcium chloride plant are expected to commission soon. The remaining block which are mainly of chloro toluene value chain would be commission by Q1 FY27. • The company is focusing on three value chains, i.e., chloro toluene value chain, dichloro toluene value chain and toluene for the fluorination value chain. It has a product portfolio of ~25-30 products under these value chains. These products mainly cater to agrochemical, pharma and dyes market. The domestic and exports split stood at ~60:40. • The company expects the margin to improve from FY26-27 with the commissioning and ramp up of chloro toluene value chain products which has higher margin. • The company signed agreement with Cleanmax & Prozeal for renewable power purchase. Aarti Industries renewable share in total power purchase will exceed 75% and is expected to achieve significant cost savings from Q1 FY27.

Aarti Industries 300-370
Expected level 450
Support 250

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