Aarti Industries Q1 EBITDA Jumps 79%; Volumes Seen Recovering in Q2

Aarti Industries reported a 79% jump in consolidated EBITDA for the first quarter of FY27, reaching a level that surprised many who expected the geopolitical headwinds to hit margins harder. The specialty chemicals maker attributed the rise to an optimized product mix and forex gains, with inventory management also playing a role. Volumes declined during the quarter, but the company said the drop was contained by redirecting exports away from West Asia after tensions disrupted supply chains and pushed up freight costs.

Chief Executive Officer Suyog Kotecha said the company managed the situation by leaning on its diversified global customer base. “We effectively managed geopolitical disruptions by leveraging our global market presence and operational flexibility,” he said in the earnings release. The company moved a significant portion of West Asia-bound volumes to other international markets, limiting the overall business impact.

Volume degrowth was the main negative in the quarter. Kotecha expects that to reverse in Q2. “While these disruptions affected Q1 volumes, we expect volumes to recover in Q2 as demand scenarios tend to improve,” he said. The company’s ability to manage inventory and global supply chains insulated it from a significant raw-material deficit and supported better pricing with customers, he added.

Aarti is pushing ahead with several expansion projects, though some have slipped. The Zone IV expansion and chlorotoluene value chain projects faced labour constraints that delayed them by four to six months. They are now expected to be commissioned in phases over the next three quarters. The PEDA and MPP products have entered customer qualification and should ramp up over the next two quarters as MPP plants become operational in Q2 FY27.

Capital expenditure for the full year remains within the guided range of ₹700 crore to ₹800 crore, the company said. The Superform joint venture remains on track for commissioning and ramp-up in Q2. The Re Aarti chemical recycling project is progressing as planned for commissioning in the second half of the fiscal year.

Aarti completed a capacity expansion for fuel additives in July, raising it to 360 KTPA from 290 KTPA. The company also achieved an EcoVadis Platinum rating with a score of 87 out of 100, placing it among the top 1% of companies globally for sustainability performance.

On the digital front, the company executed more than 40 GenAI use cases during the quarter to improve efficiency and reliability. It said 70% of identified operational excellence ideas had been implemented, delivering gains in productivity, energy efficiency and product yields.

Kotecha struck a cautiously optimistic tone on the outlook. “While near-term macroeconomic uncertainties continue to persist, the fundamentals of our business remain strong,” he said. “Our focus remains on executing our growth roadmap, improving operational efficiency, strengthening customer partnerships and creating sustainable long-term value.”