INSUBCONTINENT EXCLUSIVE:
When investors were struggling to generate alpha during 2018, stock Aarti Industries was busy in hitting ball out of ground.
Shares of
company, which is engaged in business of specialty chemicals (78 per cent of revenue), pharmaceuticals (15 per cent) and home personal care
(7 per cent), rallied 27 per cent last year
The stock is again hogging limelight as several brokerages have picked midcap stock for their model portfolios for 2019.
The stock has
An investment of Rs 10,000 made on January 1, 2009 in stock would have become Rs 4,50,000 on December 31, 2018.
Brokerage firm Axis
Securities has recommended Aarti Industries as its New Year pick with a target price of Rs 1,740
deals will ensure revenue visibility
Industries said chemicals industry has been undergoing some tectonic shifts globally
of easternisation and reduction of capacities in China on environmental concerns
growth rate (CAGR) of 16 per cent and 24 per cent, respectively, in last 10 years
Axis Securities has projected a profit after tax (PAT) of Rs 455 crore and Rs 569 crore for FY19 and FY20
It reported a PAT of Rs 333 crore in FY18
However, it predicted a RoE of 24 per cent for FY20.
Aarti Industries is among top picks of Sharekhan for 2019.
Incorporated in 1984,
company is one of largest producers of benzene-based derivatives in India
It has 17 manufacturing plants, sells over 200 products and exports to more than 60 countries, which bring in around 45 per cent of revenues
During FY18, Aarti Industries announced demerger of its home and personal care business segment into a separate entity to be held by
existing shareholders, subject to court approval
The company expects demerger process to be completed during FY19.
Analysts say demerger will help company release capital deployed in
unrelated business and focus more on core business, i.e
speciality chemicals and pharmaceuticals.
The management says company is at an inflection point, as significant opportunities are clearly
visible thanks to China losing its competitive advantage in a challenging regulatory environment
Hence, to tap growth opportunities, company intends to add further capacities, for which board has approved Rs 750 crore fund raising.
The
company has been able to continue its strong performance, tapping growth momentum
This is expected to help it expand capacities further and meet rising demand, Sharekhan said in a report.
As many as nine analysts have
