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AARTIIND - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 2.8
| Stock Code | AARTIIND | Market Cap | 15,567 Cr. | Current Price | 430 ₹ | High / Low | 495 ₹ |
| Stock P/E | 42.2 | Book Value | 158 ₹ | Dividend Yield | 0.23 % | ROCE | 6.43 % |
| ROE | 6.22 % | Face Value | 5.00 ₹ | DMA 50 | 370 ₹ | DMA 200 | 401 ₹ |
| Chg in FII Hold | 0.30 % | Chg in DII Hold | 0.01 % | PAT Qtr | 146 Cr. | PAT Prev Qtr | 80.0 Cr. |
| RSI | 78.0 | MACD | 4.27 | Volume | 1,58,36,937 | Avg Vol 1Wk | 32,13,636 |
| Low price | 338 ₹ | High price | 495 ₹ | PEG Ratio | -1.24 | Debt to equity | 0.69 |
| 52w Index | 58.3 % | Qtr Profit Var | 211 % | EPS | 10.4 ₹ | Industry PE | 25.9 |
📊 Core Financials
- Revenue & Profitability: PAT rose from 80 Cr. to 146 Cr. (+211% variance), showing strong quarterly growth, but EPS remains low at ₹10.4.
- Margins: ROE at 6.22% and ROCE at 6.43% are weak, reflecting poor efficiency.
- Debt: Debt-to-equity ratio of 0.69 indicates moderate leverage.
- Cash Flow: Profitability is improving, but weak return ratios raise concerns about sustainability.
💹 Valuation Indicators
- P/E Ratio: 42.2 vs. industry average of 25.9 — expensive compared to peers.
- P/B Ratio: Current price (₹430) vs. book value (₹158) → ~2.7x, moderately valued.
- PEG Ratio: –1.24, suggesting growth is not aligned with valuation.
- Intrinsic Value: Valuation appears stretched given weak efficiency metrics.
🏢 Business Model & Competitive Advantage
- Aarti Industries operates in specialty chemicals, catering to pharmaceuticals, agrochemicals, and polymers.
- Competitive advantage lies in diversified product portfolio and strong client base, but profitability remains under pressure.
📈 Technicals & Entry Zone
- DMA 50 (₹370) and DMA 200 (₹401) are below current price, showing strong upward momentum.
- RSI at 78 indicates overbought territory; MACD positive suggests bullish sentiment.
- Entry Zone: Attractive only on dips near ₹380–400 for long-term investors.
- Long-Term Holding: Risky at current valuations; suitable only if margins improve significantly.
✅ Positive
- Strong quarterly PAT growth (+211%).
- Moderate debt-to-equity ratio (0.69).
- FII holdings increased (+0.30%), showing foreign investor confidence.
⚠️ Limitation
- Weak ROE (6.22%) and ROCE (6.43%).
- High P/E ratio (42.2) compared to industry average (25.9).
- Dividend yield of 0.23% is modest despite profitability.
📉 Company Negative News
- Stock trading in overbought zone (RSI 78), risk of short-term correction.
- PEG ratio negative (–1.24), indicating poor growth alignment with valuation.
📈 Company Positive News
- Quarterly PAT improved to 146 Cr., reflecting operational strength.
- DII holdings increased slightly (+0.01%), showing domestic support.
🏭 Industry
- Specialty chemicals sector benefits from global demand in pharma and agrochemicals.
- Industry average P/E (25.9) highlights Aarti Industries’ premium valuation.
🔎 Conclusion
- Aarti Industries shows strong quarterly earnings growth but weak efficiency ratios.
- Valuations are stretched compared to industry averages, making current levels risky.
- Recommendation: Accumulate only on dips near ₹380–400. Long-term holding viable only if ROE and ROCE improve significantly.