Aarti Drugs Q4 FY25: PAT up 33%, ₹679 cr, EBITDA 14%

Key takeaway from the quarter

Aarti Drugs Ltd (BSE: 524348) reported a strong finish to FY25, with consolidated profit rising sharply even as the full year saw a revenue decline. The company said Q4 FY25 revenues rose 9% to ₹679 crore, supported by stronger global demand for APIs and stable input costs. Management highlighted better operating leverage, which helped lift margins versus the earlier quarters of FY25. The update also comes alongside higher disclosed promoter pledging over the last quarter.

Q4 FY25 financial performance at a glance

In Q4 FY25, the company reported EBITDA margin of 14% and profit after tax (PAT) of ₹63 crore, up 33% year-on-year, with a PAT margin of 9.2%. A market update also reported EBITDA of ₹95.2 crore in Q4 FY25, up 10% from ₹86.9 crore in Q4 FY24. On the cost side, management pointed to stable input costs and operating leverage benefits during the quarter. Separately, a results summary cited “total income” for Q4 FY25 at ₹621.07 crore, with profit before tax at ₹64.18 crore and PAT at ₹47.31 crore, indicating that different disclosures and line items are being referenced across sources.

API-led volume growth drove the quarter

Management said API volumes grew 15.5% in Q4 FY25, led primarily by exports. The company also said it achieved about 14.5% EBITDA margins in the standalone business, an improvement over the 11% to 12% band seen in the previous few quarters. In the segment split reported for Q4 FY25, API revenue rose 10% year-on-year to ₹553.1 crore. Formulation revenue fell 4% year-on-year to ₹64.8 crore, while specialty chemicals increased 18% year-on-year to ₹39 crore. Intermediaries and others rose 9% year-on-year to ₹19.8 crore.

FY25 was difficult, but margins held up

Management described FY25 as a challenging year due to muted global demand and elevated raw material costs. The company said higher-than-expected market volatility and falling input prices contributed to a 5% year-on-year revenue decline for FY25. Despite this, the company maintained annual EBITDA margins at 12.6%, citing cost efficiency and operational discipline. It also reported a 200 basis point-plus improvement in FY25 gross margins to 35.8%, helped by normalization of input costs in the second half of FY25.

API business decline and management’s explanation

For FY25, the company said API business revenue declined 4%. Management said the drop reflected a transient correction in global pricing and inventory cycles, and not structural weakness. On pricing, the management discussion referenced a rate variance of around minus 4% to 5% year-on-year for the quarter, while noting quarter-on-quarter stability. It also indicated potential for negative rate variance in the first half of FY26, with the second half expected to be more stable, subject to raw material movement.

Capex, new plants, and backward integration plans

Aarti Drugs said FY25 capex was ₹177 crore. Management said trial production has started at its greenfield project at Saika, Gujarat, focused on backward integration for its anti-diabetic product and select intermediates, with stabilization expected within the current quarter. The company expects the project to reduce reliance on external raw materials and improve supply chain reliability, supporting margin expansion over time. It also said initial operational challenges at the Tarapur greenfield project have now been largely resolved. Separately, the company said it entered into a share subscription and shareholders agreement with Prozil Green Power Private Limited and Proil Green Power 9 Private Limited.

Guidance: growth targets and margin expectations

On growth, management said it is aiming for double-digit revenue growth on a CAGR basis over the next two years. It also mentioned an initial target to cross ₹3,000 crore in revenues and then reach ₹3,500 crore, driven largely by volumes and without assuming rate improvements. In Q&A, management also described overall growth expectations of about 10% to 15% on a consolidated basis, while noting the formulation business is currently around 10% to 12% of the mix. For formulations, it mentioned a revenue growth target of 20% to 25% and EBITDA margin expectations in the 14% to 15% range as volumes improve. For FY26, management indicated a consolidated margin expectation around 14% and a stable guidance of 14% to 15% EBITDA margins.

Stock move and investor datapoints to track

After the Q4 FY25 performance update, Aarti Drugs rose 14.25% to ₹399.60, according to a market report. Another snapshot listed the current share price at ₹470. Reported screening datapoints in the provided dataset include EPS (TTM) of ₹20.35, ROE of 12.9661%, and ROA of 7.0792%. The same dataset flagged sales growth of -4.1138% and cited poor profit growth of about -6.91% and poor revenue growth of about -1.16% over the past three years. It also stated promoter pledging increased from 0% to 2.47% in one quarter.

Quarterly trend snapshot from recent filings

The company’s quarterly table in the dataset shows profit and EPS fluctuating across the last five reported quarters.

Key numbers table

What to watch next

The near-term narrative is tied to sustaining export-led API volumes while new capacities ramp up. Management expects backward integration at Saika and stabilisation at Tarapur to support operating discipline and margin resilience. It also flagged geopolitical and trade-related uncertainty, and noted exports to Pakistan are around 2.9% of sales with monitoring in place. Investors will track execution on capex-led projects, the pace of formulation growth, and whether FY26 margins hold near the 14% level indicated by management.