Aarti Pharmalabs Limited (APL), formerly known as Aarti Organics, was established in 1984 as a wholly owned subsidiary of Aarti Industries Limited. It was demerged in October 2022 into a separately listed entity. The company is an established, internationally recognized manufacturer of active pharmaceutical ingredients (API), pharmaceutical intermediates, new chemical entities (NCE), and xanthine derivatives in India.
APL operates through 6 manufacturing plants and 3 R&D centers, positioning itself as a significant player in the pharmaceutical manufacturing sector. The Scheme of Arrangement for the demerger of the Pharma Business Undertaking from Aarti Industries Limited into its wholly owned subsidiary, Aarti Pharmalabs Limited, became effective on October 17, 2022, and has been operational since July 1, 2021.
The company offers contract development and manufacturing organization (CDMO) services for drug substance/NCE development and manufacturing for pharmaceutical and biotech firms, with a focus on the Phase I/II/III, launch, and commercial phases. It has dedicated facilities for the production of corticosteroids, cytotoxic medicines, and oncology products.
APL's range of API products includes Ramipril, Quinapril HCL, Budesonide, Bambuterol HCL, Apixaban, Rivaroxaban, Cinacalcet, and others. Its range of intermediate products includes Abemaciclib Intermediate, Acalabrutinib Intermediate, Afatinib Intermediate, Apalutamide Intermediate, Azathioprine Intermediate, Bosutinib Intermediate, and others.
The company offers active pharmaceutical ingredients for various therapeutic areas, such as cardiovascular, anti-asthmatic, anti-cancer, anti-coagulant, anti-diabetic, arthritis, central nervous system (CNS) agents, skincare, overactive bladder, calcimimetic, decongestant, anti-thalassaemic, analgesic, and ophthalmologic medications.
In 2001, the company commissioned its first API manufacturing Unit in Dombivali (Unit 1) and started its Xanthine Unit. It further commissioned its first API manufacturing Unit 4 in Tarapur for Regulated Markets in 2005 and commenced Caffeine production at Unit 5 with a capacity of 100 Metric Tonnes (MT) per month in 2016. The company expanded blocks for CSD (Vapi) and API (Tarapur) units in 2022.
In 2023, APL commercialized Block V at Tarapur Unit 4 and enhanced its Xanthine capacity to 5,000 TPA. The company is strategically expanding its capacity, particularly in the Xanthine segment, while also focusing on high-margin products in regulated markets to enhance profitability.
Recent Financial Results:
On a full-year basis, the company's net profit rose by 25.58% to ₹272.40 crore, on a 14.16% increase in revenue to ₹2,115.07 crore in FY25 over FY24. Aarti Pharma demonstrated robust financial performance in FY25, with a 14% increase in full-year revenues and a notable 26% rise in profit after tax, driven by strong operational cash flow and margin expansion.
Quarterly Performance:
- Q4 FY25:
- Revenue: ₹564 crore (+11% YoY)
- Net Profit: ₹88.34 crore (+35.38% YoY)
- The company's board has recommended a dividend of ₹2.5 per equity share for the financial year 2024-25.
- Q3 FY25:
- Revenue from operations grew by 19.9% to ₹537.78 crore in the quarter ended December 31, 2024.
- Consolidated net profit jumped by 40.2% to ₹73.99 crore in Q3 FY25, as against ₹52.76 crore posted in Q3 FY24.
Nine-Month Performance:
On a nine-month basis, the company's consolidated net profit jumped by 21.4% to ₹184.06 crore in 9M FY25, compared to ₹151.65 crore in 9M FY24. Revenue from operations rose by 15.2% YoY to ₹1,551.30 crore in 9M FY25.
Aarti Pharmalabs Ltd has a market capitalization of ₹8,200 crore. The stock has a P/E ratio of 30.5, a book value of ₹220, and a dividend yield of 0.33%. The company maintains a ROCE of 17.4% and an ROE of 14.5%.
Despite facing competitive pressures and pricing challenges, especially in the CDMO sector, management remains optimistic about future growth, projecting a 30-40% revenue increase in this segment for FY26. Sustainability initiatives and a commitment to R&D further position the company favorably, aligning with long-term growth strategies and market demands.
The company has achieved Science Based Targets initiative (SBTi) approval, making Aarti Pharmalabs the first Indian Pharma company to get SBTi approval for its emission reduction targets. The company has a target to reduce scope 1 and 2 GHG emissions by 50% by FY32, taking FY22 as the base year.
APL's strategic focus on high-margin products in regulated markets and sustainable business practices positions it well for future growth in the pharmaceutical industry.
