Shares of Aarti Industries tanked in Monday's trade following a weak set of quarter results. Analysts said Aarti's Q2 was marred by a sharp dip in margins of its key product—MMA—and lower utilisation amid higher channel inventory. This also resulted in Ebitda contraction of 24 per cent YoY. A revised guidance was bigger concern, though.
Equirus Securities in a note said Aarti Industries has a history of setting a lofty guidance, only to repeatedly fall short. This has become all too familiar, it said.
"Despite a well-established pattern of missing targets since FY19, the management has continued to fan investor optimism to buoy the stock price. In FY24, it initially guided for a FY25E Ebitda of Rs 1,450-1,650 crore, then bumped it up to Rs 1,450-1,700 crore by 3QFY24, even hinting at achieving the higher end. Yet, this optimism was short-lived with FY25E guidance now slashed to Rs 1,000 crore," it said.
Similarly, the FY28E target has been revised down from Rs 2,900-3,300 crore to Rs 1,800-2,200 within a year.
"This repeated walk-back from bold promises speaks about Aarti's struggle with delivery and its growing credibility gap," Equirus said
This brokerage has maintain 'SHORT' with a December 2025 target price of Rs 320 against September 2025 target price of Rs 525 earlier. The stock fell 9.38 per cent to hit a low of Rs 430.20 on BSE.
"Adversely impacted by negative operating leverage along with higher interest and depreciation, PAT fell off 59 per cent YoY, coming in significantly below our and consensus estimates," said Nuvama Institutional Equities.
This brokerage said that Aarti Industries has been moving up the value chain, but adverse industry dynamics coupled with margin pressure in its key product has forced the brokerage's hands to cut its FY25, FY26, and FY27 EPS estimates by 56 per cent, 41 per cent and 34 per cent, respectively.
"This drives down the target price to Rs 600 (earlier Rs 903) while keeping the valuation at 30x P/E. Given the recent correction though, we retain ‘BUY’," it said.