Aarti Industries (AARTIIND)
CyclicalFairStock Score: 52/100 — MIXED
Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1
Key Financials
| Current Price | ₹534.1 |
| Market Cap | ₹19,373.23 Cr |
| P/E Ratio | 36.51 |
| ROCE | 6.32% |
| ROE | 6.74% |
| Dividend Yield | 0.19% |
| Profit Growth | 230.83% |
| Debt/Equity | 0.83 |
| Sales Growth | 36.76% |
| Free Cash Flow | ₹-156 Cr |
| Promoter Holding | 42.14% |
| 52-Week Range | ₹338.05 — ₹551.45 |
| Sector | Chemicals & Petrochemicals |
| Book Value | ₹164.74 |
Strengths
- Revenue grew 13.35%, and 5-year revenue CAGR is 10.04%, showing solid demand.
- Piotroski F-Score of 8/9 suggests healthy underlying financial mechanics despite low returns.
- Debt/equity of 0.70 is manageable for a chemicals business.
- Promoter holding of 42.14% aligns promoters with minority shareholders.
Concerns
- P/E of 43.70 and P/B of 3.01 are far above conservative value, with Graham Number at ₹190.47.
- ROE of 6.74% and ROCE of 6.32% are weak for a specialty chemicals franchise.
- Profit growth of 3.00% trails sales growth of 13.35%, showing clear margin compression.
- Free cash flow is negative at ₹156 Cr, and EV/EBITDA of 239.06 is a serious valuation red flag.
AI Analysis
At ₹465.85, Aarti Industries is not a value investment; it is a hope investment. The price-to-earnings ratio of 43.70 and price-to-book of 3.01 require flawless execution, yet the business is earning just 6.74% on equity and 6.32% on capital. Graham would say the margin of safety is missing, and the mathematics agree: the Graham Number is ₹190.47, while the price is ₹465.85. That leaves a deeply negative margin of safety, and the reported EV/EBITDA of 239x only reinforces the red flag. I do see some strengths. Revenue grew 13.35%, and the 5-year CAGR of 10.04% shows the company is serving real demand. A Piotroski score of 8/9 suggests financial discipline, and debt/equity of 0.70 is not alarming. Promoter holding of 42.14% aligns interests. But the economics need to improve before I am interested. Sales are growing much faster than profit: profit growth is only 3.00%. The latest quarter's net profit of ₹133 Cr against sales of ₹2,318 Cr is a thin margin. Free cash flow is negative ₹156 Cr, so reported earnings are not reaching the bank. Return on equity and return on capital below 7% are not signs of a durable moat; they are signs of pricing pressure or a cyclical trough. At a market cap of ₹16,213 Cr, the stock is paying for a future that has not arrived. The Altman Z-score of 2.42 reminds me to be cautious. I would wait for expanding margins, positive free cash flow, and a price closer to a conservatively estimated value. In the meantime, I pass.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer