API business opportunities push Aarti Drugs; stock zooms 132 per cent in 6 months
Aarti Drugs Ltd’s API business, which is the highest revenue contributor to the company, contributed around 80 per cent is in strong traction despite Coronavirus epidemic that has hit supplies from China to other large drugmakers across the world.
Currently, India imports over 60 per cent of its APIs consumption from China and other countries, which opens up significant opportunities for Indian API manufacturers like Aarti Drugs. The company has geared up its API production by nearly 44 per cent to 25,591 MT in FY20.
The company has also informed about COVID-19 pandemic on various aspects of business activities. Aarti Drugs operate in the healthcare industry that comes under the category of essential services due to which; the company’s business has not been affected amid lockdown. The company’s operations were closed only for six days i.e. from March 24 to March 29. Subsequently, based on the company’s product profile, it has been granted permission to operate further for manufacturing facilities.
Looking at the demand and supply chain scenario, there is no such material impact on them. The company has incurred more transportation cost, which it can pass on to its customers.
The company’s revenue mix as of FY20 stood at API-80 per cent, formulations-11 per cent, speciality chemicals-3 per cent, intermediates-2 per cent and others-4 per cent. For FY20, the company registered a revenue growth of almost 16 per cent YoY to Rs 1,806.10 crore while its PAT surged almost 58 per cent YoY to Rs 141.40 crore. The company holds a strong cash balance of Rs 764 crore (cash & cash equivalent), which is almost 26 per cent of its current market capitalisation.
Aarti Drugs is engaged in the manufacturing of active pharmaceutical ingredients (APIs), pharma intermediates, and speciality chemicals. It also manufactures formulations through its wholly-owned subsidiary-Pinnacle Life Science Private Limited.
Aarti Drugs have zoomed nearly 132 per cent in the last six months and made a new lifetime high of Rs 1,320 on July 06, 2020.