Aarti Industries Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Aarti Industries Ltd trades at ₹493, in a confirmed uptrend and 26 weeks into that stage. That is +6.2% against its own 200-day average. It sits at 75% of a 52-week range of ₹353 to ₹540. On relative strength it has been ahead of the NIFTY 500 on a trailing-13-week view for 9 straight weeks.

Today the stock is in a confirmed uptrend — week 26 of stage 2, confirmed. At ₹493 it trades +6.2% versus its 200-day average and sits at 75% of its 52-week range (₹353–₹540).

Against the market, two honest reads. Cumulative: over the last 10.5 years the stock moved +424% while the NIFTY 500 moved +273% — ahead of the index over the full window. Recent form: on a trailing-13-week view the stock has been ahead for 9 straight weeks — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Story check

Aarti Industries Ltd's story is not scored yet against the markers our research file set on 22 August 2026. Where it sits in its own cycle: MID_EXPANSION. Our fortnightly research layers last read it on 22 August 2026.

Our read, 22 August 2026. Aarti Industries is transitioning from capital expenditure intensity to volume monetization as capacity additions in fuel additives and specialized chemical blocks lift operating margins from cyclical troughs.

From the numbers. The stock trades at a price-to-earnings multiple of 41.2x, representing the 70th percentile of its 10-year historical range against a median of 32.2x. The multiple expanded from cyclical troughs of 21.4x in September…

From the price. Price stage 2, week 26 — above its 200-day line, relative strength falling.

From the research. Aarti Industries is transitioning from capital expenditure intensity to volume monetization as capacity additions in fuel additives and specialized chemical blocks lift operating margins from cyclical troughs.

🚨 Where they disagree. The stock trades at a price-to-earnings multiple of 41.2x, representing the 70th percentile of its 10-year historical range against a median of 32.2x. The multiple expanded from cyclical troughs of 21.4x in September 2022 as trailing earnings troughed and began recovering. Year-on-year valuation momentum shows an early downward inflection as trailing net profit recovery outpaces market capitalization gains. With the valuation multiple positioned 28% above its 10-year median, future equity returns require continued operational delivery from newly commissioned assets rather than further multiple expansion.

What is proven. Aarti Industries is transitioning from capital expenditure intensity to volume monetization as capacity additions in fuel additives and specialized chemical blocks lift operating margins from cyclical troughs.

What is not proven yet. Zone 4 commercial production fails to generate an annualized EBITDA run-rate exceeding 250 crore by the fourth quarter of fiscal 2027, or quarterly operating profit margin drops below 13.0% on normalized inventory spreads.

🚨 What would change our mind. Zone 4 commercial production fails to generate an annualized EBITDA run-rate exceeding 250 crore by the fourth quarter of fiscal 2027, or quarterly operating profit margin drops below 13.0% on normalized inventory spreads.

Layer 1 read, 22 August 2026 — KEEP. Four quarters into a real chemicals recovery, share still 48% below its high — but debt promises keep slipping. The turn is visible in three numbers moving together: quarterly revenue up 42.5% year on year to 2,387 crore, operating margin up from 12.7% to 16%, and profit up 260% to 155 crore. That combination — more volume AND better margin at the same time — is what happens when a company finishes building factories and starts filling them, helped by an 18% US tariff on its product against 34% for Chinese rivals. What holds me back is money discipline and honesty about the quarter: management spent 1,125 crore against a promise of under 1,000, ended the year with net debt flat at 4,300 crore against a promise to cut it, and 50 to 60 crore of the quarter's profit came from currency gains and selling…

What would change Layer 1’s mind. Quarterly operating margin dropping back below 13% on normalised inventory spreads — that is the timeline's own kill-switch and it is the right one, because 13% is where the June 2025 trough sat and a return there would say the four-quarter recovery was inventory and currency rather than utilisation. The second, sharper trigger from my own dig: if operating cash flow falls again in FY27 while debtor days push past 62 and net debt stays above 4,300 crore, the operating leverage is being consumed…

Layer 2 read, 22 August 2026 — ADVANCE. Real volume recovery outweighs the temporary margin boost, but the next quarter must prove it.

What would change Layer 2’s mind. ADVANCE flips to DROP if the September-quarter operating margin falls below 13% after the low-cost inventory benefit fades and Zone 4 slips again rather than starting product launches.

Layer 3 read, 22 August 2026 — BENCH. The recovery is real, but conflict, temporary margin help and weak cash conversion make the risk too high. The hard operating turn is visible in revenue, margin and profit moving up together, but management says Rs 50-60 crore of the quarter's EBITDA support came from foreign exchange and old inventory. L3 also confirmed that West Asia's revenue share fell from about 15% to 2% and that Zone 4 remains delayed, so the Timeline's earnings-quality and execution risks are escalated rather than cleared.

What would change Layer 3’s mind. DEPLOY only after a clean quarter keeps operating margin above 13% without material FX or inventory support, redirected West Asia volumes hold economics, debtor days fall below 62, and net debt declines; a renewed margin drop below 13% flips this to DROP.

The test written in advance. Zone 4 commercial production fails to generate an annualized EBITDA run-rate exceeding 250 crore by the fourth quarter of fiscal 2027, or quarterly operating profit margin drops below 13.0% on normalized inventory spreads. — the thesis as written as stated by the next result.

The test written in advance. Project Execution Delays and Qualification Lags — Project Execution Delays and Qualification Lags Commercial output confirmation of the multipurpose plant in August 2026 and initial batch qualification counts. by the next result.

The test written in advance. Quality of Earnings: One-Off Margin Support — Quality of Earnings: One-Off Margin Support Q2 FY27 gross margin and operating profit margin trajectory once low-cost inventory effects dissipate. by the next result.

Lever 1 · Operating leverage — BUILDING. Fixed cost dilution from 80-85% plant utilization expands operating profit margin from 13% to 16%, lifting quarterly net profit to 155 crore. What proves it keeps working: Operating Leverage Inflection. It stops working if Zone 4 commercial production fails to generate an annualized EBITDA run-rate exceeding 250 crore by the fourth quarter of fiscal 2027, or quarterly operating profit margin drops below 13.0% on normalized inventory spreads.

Lever 10 · New geographies — BUILDING. US tariff cut on MMA to 18% vs China at 34% combined with Chinese export VAT rebate removal restores pricing spreads in core value chains. What proves it keeps working: Trade Tailwinds & Tariff Disparities. It stops working if Zone 4 commercial production fails to generate an annualized EBITDA run-rate exceeding 250 crore by the fourth quarter of fiscal 2027, or quarterly operating profit margin drops below 13.0% on normalized inventory spreads.

Lever 6 · Order-book wins — BUILDING. Phased commissioning of the 1,600-1,800 crore Zone 4 complex and 50:50 Superform JV adds high-margin specialty chemicals from FY28. What proves it keeps working: Zone 4 Platform & JV Commercialization. It stops working if Zone 4 commercial production fails to generate an annualized EBITDA run-rate exceeding 250 crore by the fourth quarter of fiscal 2027, or quarterly operating profit margin drops below 13.0% on normalized inventory spreads.

Lever 4 · Paying down debt — BUILDING. Annual capital expenditure stepping down to 700-800 crore in FY27 from 1,125 crore initiates balance sheet deleveraging. What proves it keeps working: Capital Expenditure Compression & FCF Generation. It stops working if Zone 4 commercial production fails to generate an annualized EBITDA run-rate exceeding 250 crore by the fourth quarter of fiscal 2027, or quarterly operating profit margin drops below 13.0% on normalized inventory spreads.

Sources: our stock research file (22 August 2026) · quarterly results through Jun 26 · the company’s own earnings calls. The story check is re-scored every results season; the record below never changes.

Revenue Revenue is the top line: everything the company billed its customers in the period.

Aarti Industries Ltd reported ₹2,387 Cr of revenue in the Jun 26 quarter, +42.5% year on year. That is the 4th straight quarter of year-on-year growth. Over 10 years it has compounded at 10.7% a year. The last full year, FY26, came in at ₹8,286 Cr. The last four reported quarters add to ₹9,010 Cr.

Why this happened. Policy changes in major export destinations are creating structural advantages for integrated Indian chemical manufacturers. The reduction in United States import tariffs on methyl methacrylate from 25% to 18% compares favorably against a 34% tariff on Chinese competitors. Concurrently, China's cancellation of export VAT subsidies has supported a 10% price recovery in the nitrochlorobenzene chain, mitigating multi-year dumping pressures.

FY26 revenue came in at ₹8,286 Cr (+14.0% on the year), capping 10 years at 10.7% compound. The latest quarter (Jun 26) printed ₹2,387 Cr, +42.5% year on year — the 4th consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +27.6% growth against the decade's 10.7% — the current year is running faster than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +27.0% over the last 4 quarters against +15.0%/yr over the last 8 — accelerating; TTM profit +124.1% vs +4.7%/yr — accelerating.

FY26-Q4. revenue ₹2,205 Cr and profit ₹137 Cr as reported.

FY27-Q1. revenue ₹2,387 Cr and profit ₹155 Cr as reported.

Why-sources: our stock research file (22 August 2026) and the company’s own results for those quarters.

Operating margin Operating margin is what is left of every ₹100 of sales after running the business, before interest and tax. It is the cleanest read on pricing power and cost control.

Aarti Industries Ltd's operating margin is 16.0% in the Jun 26 quarter, +3.0 percentage points against the same quarter a year ago. Across 13 fiscal years the operating margin has ranged 14.0% to 28.0%. The current quarter sits inside that band.

Why this happened. Aarti Industries has passed its margin trough. Operating profit margin improved from 13% in Q1 FY26 to 16% in Q1 FY27, allowing revenue growth of 42.5% YoY to translate into a 260.5% YoY surge in net profit to 155 crore. As sunk fixed costs from recent capacity investments are absorbed across higher volume output, incremental revenue drops to operating profit at above-average conversion rates.

The latest quarter's operating margin is 16.0%, +3.0 pp against the same quarter a year ago. Across 13 fiscal years the operating margin has ranged 14.0%–28.0%.

Why the margin moved: operating margin went +3.3 pp year on year while gross margin went +2.8 pp — the gain came mostly from the gross line: input costs and pricing.

FY26-Q4. revenue ₹2,205 Cr and profit ₹137 Cr as reported.

FY27-Q1. revenue ₹2,387 Cr and profit ₹155 Cr as reported.

Why-sources: our stock research file (22 August 2026) and the company’s own results for those quarters.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Aarti Industries Ltd earned ₹155 Cr of net profit in the Jun 26 quarter, +260.5% year on year. It is the 4th consecutive quarter of growth. Full-year FY26 profit was ₹419 Cr. The 10-year compound rate is 4.6%. That is 6.5% of the quarter's revenue. The same quarter a year earlier earned ₹43.0 Cr.

Jun 26 profit was ₹155 Cr, +260.5% year on year — the 4th consecutive quarter of growth. On the full year, FY26 printed ₹419 Cr (+26.6%), and the 10-year compound rate is 4.6%.

Why profit moved: revenue contributed +42.5% and the margin +3.0 pp — the quarter was margin-led: most of the profit growth came from keeping more of each sale.

Pace comparison, last four quarters: profit +149.0% vs revenue +27.6%. Profit is growing faster than sales — fixed costs are being spread over a bigger base, and each extra rupee of revenue drops more to the bottom line.

FY26-Q4. revenue ₹2,205 Cr and profit ₹137 Cr as reported.

FY27-Q1. revenue ₹2,387 Cr and profit ₹155 Cr as reported.

Why-sources: our stock research file (22 August 2026) and the company’s own results for those quarters.

Cash flow — the router The P&L says what was earned; the cash-flow statement says what actually arrived. Operating cash flow (CFO) against profit is the cleanest lie detector in the accounts.

Over the last 3 fiscal years 277% of Aarti Industries Ltd's reported profit arrived as operating cash — the cash follows the profit. In FY26 that was ₹781 Cr of operating cash against ₹419 Cr of profit. After ₹1,229 Cr of capital spending, ₹−448 Cr was left as free cash.

FY26: operating cash of ₹781 Cr against reported profit of ₹419 Cr, leaving free cash of ₹−448 Cr after ₹1,229 Cr of capital spending. Across the last 3 fiscal years the conversion rate is 277% of profit.

Cash-flow readings here are annual — that is the resolution our series carries, so this section moves once a year.

Why conversion sits at 277%: the cash cycle tightened 83 days between FY21 and FY26 — cash that used to wait in the cycle now reaches the bank sooner.

Router verdict: the bigger cash user is investment — capital spending ran 3.0× depreciation over three years, so the next section's job is to check what that build-out is buying.

Where the cash goes Working capital is the cash tied up between paying suppliers and getting paid: debtor days (customers owe), inventory days (stock waits), and the cash conversion cycle (the whole loop, in days of sales).

Aarti Industries Ltd's cash conversion cycle runs 54 days in FY26, down from 137 days in FY21. Capital spending ran ₹3,915 Cr over the last 3 years. At FY26 sales of ₹8,286 Cr each day of that cycle holds about ₹22.7 Cr, so roughly ₹1,226 Cr sits inside the business at any moment.

FY26: debtors at 62 days, inventory at 129 days — roughly 4.2 months of stock waiting to sell; that is where the cash sits while it waits — for a full cycle of 54 days, tighter than FY21's 137.

The full loop: cash goes out to suppliers and production on day 0; stock waits 129 days to sell; customers pay about 62 days after that; and suppliers themselves are paid at 137 days — netting out to the 54-day cycle.

In money terms: at FY26 sales of ₹8,286 Cr, each day of the cycle holds about ₹22.7 Cr — so the 54-day loop keeps roughly ₹1,226 Cr sitting inside the business at any moment.

On the investment side: capital spending of ₹3,915 Cr over the last 3 fiscal years against ₹1,286 Cr of depreciation — the company is building well ahead of wear-and-tear. Capital work-in-progress stands at ₹2,187 Cr (FY26) — capacity paid for but not yet earning.

The synthesis: the cash is going into capacity, not disappearing into the cycle — the question becomes whether the new capacity earns.

Return on capital Return on capital employed (ROCE) is the profit the whole business earns on all the money in it — equity and debt together. It is the single best test of whether growth creates value or just size.

Aarti Industries Ltd earns a ROCE of 7% in FY26. That is up from a trough of 6% in FY25. Return on invested capital clears the cost of that capital by −4.2 percentage points, so growth here is not yet paying for the capital it uses. The wiring behind it is 5.1% net margin on 0.62× asset turns.

FY26 ROCE is 7%, recovered from a FY25 trough of 6% — the full ladder below shows the fall and the climb, undoctored.

🚨 Why the return is what it is — the wiring (FY26): 5.1% net margin × 0.62× asset turns × 2.23× balance-sheet leverage ≈ 7.1% on equity. Margin does its share; leverage is a meaningful part of the equation.

The capstone test — ROIC − WACC: 7.8% − 12.0% = a −4.2 pp spread. The 12.0% is a standing assumption for the cost of capital in India, not a per-stock estimate — read the sign and the size of the spread, not the decimals. Negative — growth at these returns destroys value until the returns recover.

Debt Debt-to-equity says how much of the business is funded by borrowings. Low is the safe corner; the trend matters as much as the level.

Aarti Industries Ltd carries total debt of ₹4,966 Cr against shareholder equity of ₹5,955 Cr as of Mar 26, a debt-to-equity of 0.83. On the annual view that ratio went from 0.57 in FY22 to 0.83 in FY26. Read the returns elsewhere on this page with that leverage in mind.

Why this happened. Following the culmination of major greenfield construction, management guided FY27 capex to 700 to 800 crore (180 crore deployed in Q1 FY27), marking a significant moderation from 1,125 crore in FY26. As EBITDA expands toward the 1,800 crore medium-term framework, lower capital reinvestment will release positive free cash flows, allowing net debt to decline from 4,300 crore.

Mar 26: total debt of ₹4,966 Cr against shareholder equity of ₹5,955 Cr — a debt-to-equity of 0.83. On the annual view, debt-to-equity went from 0.57 (FY22) to 0.83 (FY26). Read the returns on this page with that leverage in mind.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Foreign institutions cut 3.6 points of Aarti Industries Ltd over 8 quarters, the biggest move on the register. That takes foreign institutions to 7.0% of the company. Domestic institutions moved +2.6 points over the same window, to 21.1%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Foreign institutions: −3.6 points over 8 quarters to 7.0%; Domestic institutions: +2.6 points over 8 quarters to 21.1%; Promoters: −1.4 points over 8 quarters to 41.8%.

Why the register moved: rotation — foreign institutions −3.6 points against domestic institutions +2.6 points over 8 quarters, with promoters −1.4 points — one class of institutions handing the register to the other, not a verdict change by the people closest to the numbers.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Aarti Industries Ltd: the Z-score is not available for this stock, so we say so rather than invent one. It is a distance-to-distress estimate from the balance sheet, not a forecast of failure. The debt, cash-flow and return sections above carry the balance-sheet evidence this page does hold, and each of them states its own reporting date.

The safety line in one sentence: the Z-score is not available for this stock, so we say so rather than invent one.

Valuation P/E is the price of ₹1 of annual profit: how many rupees the market pays for each rupee the company earns in a year.

Aarti Industries Ltd trades at 34.2× P/E, mid-range by its own standards (57th percentile). Its long-run median P/E is 32.0×, measured across 10.6 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/E of 34.2× is mid-range by its own standards (57th percentile), against a long-run median of 32.0× measured over 10.6 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

Why the multiple sits where it does: over the past year annual EPS moved +26.6% against a +26.5% price move — earnings outran the price, pushing the multiple DOWN its own range.

The price move, decomposed: over 5y, of the −9.8%/yr price move, ~−3.5%/yr came from earnings growth and ~−6.3 pp from the multiple (compressing); over 10y, of the +13.9%/yr price move, ~+6.5%/yr came from earnings growth and ~+7.4 pp from the multiple (expanding). The split is the honest approximate (price return minus earnings growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is unremarkable against its own past, so the story rests on the earnings line underneath it, not the multiple.

What the price assumes This reading works the multiple backwards. It asks one question: what yearly rate of profit growth is a buyer at the market price already paying for? The number is the growth rate that makes eleven years of profit — six years growing, then five fading — add up to that day's market price, once each year is discounted at 11% a year.

Solved at its 26 August 2026 price, Aarti Industries Ltd was paying for profit growth of about 24.1% a year. Profit itself has compounded 4.6% a year over the past 10 years. Today the market pays 34.2× P/E, the 57th percentile of its own 11-year range.

What the two numbers say together. The multiple is unremarkable against its own past, and the growth the price is paying for is far above what this company has actually delivered.

How to hold this number: it is a reading of one day's price, taken on 26 August 2026, not a running figure — every other number on this page, the multiple included, is read off the live quote as of 11 September 2026. A higher price is paying for more growth and a lower price for less, so it moves whenever the price does, and this page does not restate it between measurements.

Stage: Mixed Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Aarti Industries Ltd reads as mixed on its fundamental arc. Mixed — no clean majority across the growth curves, ROCE holding at 8.9% — the per-curve reads carry the story. The read is built from 12 quarters across 4 curves, on full evidence.

Why it matters: when the curves disagree, the per-curve reads above matter more than any single verdict.

4-Factor Sector Score

53.5/100 — rank 12 of 28 in Speciality Chemicals · 100% evidence confidence

Aarti Industries Ltd scores 53.5 out of 100 against the 28 companies it is compared with in Speciality Chemicals, ranking 12. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 27.7 + 8.3 + 9 + 8.5 = 53.5. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if profit growth turns negative or margin improvement reverses while sector-relative strength deteriorates.

Said versus delivered

What Aarti Industries Ltd's management promised, set against what actually arrived — 4 tracked promises on the record. Read straight from the company’s own earnings calls. A promise that slipped stays on this page after it is met.

JV EBITDA Treatment in Guidance Changed Without Reconciliation · 31 July 2026. Management's treatment of the Superform-linked JV in the EBITDA outlook is not consistent. In May 2026, management said the 50:50 JV would not consolidate into AIL EBITDA and would be reported separately; in July 2026, management said the Rs 1,800-crore guidance included EBITDA from Origin, without clarifying whether this was a consolidated figure, a separate JV contribution, or a change in the guidance convention.

🚨 Zone 4 Multi-Purpose Plant Missed Committed Q4 FY26 Commissioning Target · 5 May 2026. Both the Nov 2025 and Feb 2026 calls explicitly committed to the Zone 4 Multi-Purpose Plant commissioning in Q4 FY26, with the Feb 2026 call describing it as commissioning 'within this quarter' (Q4 FY26). The May 2026 call reveals the MPP and PEDA are still under commissioning trials, representing a 3-4 month delay now attributed to labor constraints and commercial LPG issues - factors not flagged at all during the Feb 2026 call when commissioning was presented as imminent and on track.

🚨 MMA 360 KTPA Capacity Expansion Missed Explicitly Stated Q4 FY26 Deadline · 5 May 2026. Both prior calls committed to the MMA debottlenecking expansion to 360 KTPA completing in Q4 FY26, with the Feb 2026 call explicitly stating availability 'by end of this fiscal i.e., Q4FY26.' The May 2026 call shows the expansion was not commissioned by quarter-end and reframes the timeline as market-demand-driven with the qualifier 'in line with the market requirements,' with no explanation provided for why the committed deadline was missed.

Superform JV Commissioning Target Broadened from Q1 FY27 to H1 FY27 · 5 May 2026. The Feb 2026 call specifically committed to the Superform joint venture commissioning in Q1 FY27, a precise quarterly target. The May 2026 call, referring to the same venture as 'Oijen, the superfoam joint venture,' now targets commissioning in H1 FY27 without any explanation. The shift from a specific quarter to a two-quarter semi-annual window signals a potential delay of up to one quarter from the prior commitment.

Every quote above is taken word for word from the company’s own earnings calls.

Frequently asked questions