Introduction
Aarti Drugs Limited is a leading Indian pharmaceutical company primarily engaged in the manufacturing of Active Pharmaceutical Ingredients (APIs), formulations, and intermediates. The products of the company are widely used in therapeutic segments like antibiotics, anti-diabetic, anti-inflammatory, anti-fungal, and cardiology.
The company has strong presence in both domestic and international markets. The several formulation giants and generic drug makers in worldwide preferred partnership with the company due to its strict quality control reputation and conformity. Hence, Aarti Drugs supplies its product to major global pharmaceutical companies across regulated markets such as the U.S., Europe, and Latin America. Today, the company’s stock surges ~11%. Here, are the key reasons.
US FDA Import Alert Lifted
The key reason of Aarti Drugs’ stock surges is the removal of the US FDA (https://www.fda.gov/) import alert on its Tarapur facility. Active Pharmaceutical Ingredients (APIs) are one of the most lucrative and regulated pharmaceutical markets in the world.
Earlier, the US FDA imposed restriction on the company’s various key Active Pharmaceutical Ingredients (APIs) to export the United States. Now after removal of US FDA import alert, Aarti Drugs can restart exports of important APIs such as Ciprofloxacin, Zolpidem, Raloxifene, Celecoxib, and Niacin to the U.S. market. As APIs are high margin export of the company, it will improve the remarkable revenue again.
The removal of restriction signifies for the positiveness about the company. Sine US FDA is a very strict regulatory body and the company has successfully addressed all compliance issues. At this scenario, company has gained investors’ confidence on both its governance and future growth potential.
Financial Context
The market cap of the company is ₹ 4877 Crore. So, the company is in small cap category. The stock is trading in a current price ₹530. The 52-week high/low are ₹635/312 respectively. Hence, the stock is trading 16% lower from its 52-week high. The price earnings ratio of the stock is 29. The company is trading at a reasonable P/E. The ROE/ROCE are 12.7/12.9 % respectively. The company’s dividend yield is 019%. The face value of the company’s stock is ₹10. So, in future we can expect split from the company.
Since, it’s a small cap company. So, it’s better to compare the yearly results which is in between March-2024 and March-2025:
Revenue was ₹ 2,529 Crore in March-2024 and it is ₹ 2,387 Crore in March-2025.EBITA was 236 Crore in March-2024 and it is ₹ 212 Crore in March-2025. Accordingly, Net profit was ₹ 172 Crore in March-2024 and it is ₹ 168 Crore in March-2025. Hence, the EPS was ₹ 18.65 in March-2024 and it is ₹ 18.29 in March-2025.
Promoters holding has increased by 0.01% as compared to last quarter (In Dec-2024 it was 55.38% whereas in March-2025 it is 55.48%). FIIs are slightly decrease their holdings that is 0.03% (In Dec-2024 it was 2.28% whereas in March-2025 it is 2.25%). DIIs are increase their holdings by 0.93% (In Dec-2024 it was 8.77% whereas in March-2025 it is 9.70%). Publics are also decrease their holdings by 1.01% (In Dec-2024 it was 33.58% whereas in March-2025 it is 32.57%).
The company’s short-term and long-term performance:
The company’s short-term and long-term returns are: 1-day return: 10.70%, last 5 days return: 11.33%, 1-Month return: 15.16%, 6-months return: 28.13%,1-year return: -0.73%, 3 years return: 20.26%, 5-years return: 42.98% and its all-time return is 4883.15%.
Conclusion:
Aarti Drugs has established himself as a authentic API manufacturer with a strong global presence after successful the removal of US FDA import alert. This removal will also highly improve the company’s revenue growth as well as improve strong client relationships.
Good analysis
Brilliant