How has been the historical performance of Aarey Drugs?

Revenue and Operating Performance Trends

Examining net sales, Aarey Drugs experienced notable volatility between March 2019 and March 2025. The company’s revenue peaked at ₹492.68 crores in March 2022, followed by a decline to ₹473.94 crores in March 2025. Earlier years showed a dip in sales during March 2020 at ₹300.09 crores, likely reflecting broader market challenges. Despite these fluctuations, the company maintained a steady stream of operating income solely from net sales, with no other operating income reported during this period.

Raw material costs consistently represented the largest expenditure, closely tracking revenue movements. For instance, raw material costs were ₹472.87 crores in March 2025, nearly matching net sales, which constrained gross margins. The company’s selling and distribution expenses have gradually decreased from ₹6.70 crores in March 2020 to ₹3.37 crores in March 2025, indicating improved cost control in this area.

Operating profit before other income (PBDIT excl. other income) declined from ₹7.89 crores in March 2019 to ₹2.89 crores in March 2025, reflecting margin pressures. However, other income rose significantly to ₹9.81 crores in March 2025, bolstering overall operating profit to ₹12.70 crores. This diversification of income sources has helped stabilise earnings despite operational challenges.

Profitability and Margins

Profit before tax (PBT) has seen a downward trend from ₹8.99 crores in March 2019 to ₹6.10 crores in March 2025, with a peak at ₹10.03 crores in March 2022. Correspondingly, profit after tax (PAT) declined from ₹6.54 crores in March 2019 to ₹4.02 crores in March 2025. Earnings per share (EPS) followed a similar pattern, falling from 2.80 in March 2019 to 1.43 in March 2025, reflecting the pressure on net profitability.

Operating profit margins excluding other income contracted from 2.22% in March 2019 to 0.61% in March 2025, while PAT margins decreased from 1.84% to 0.85% over the same period. These margin compressions highlight the challenges faced in managing costs relative to revenue growth.

Balance Sheet and Financial Position

Aarey Drugs has demonstrated a strengthening balance sheet with shareholder’s funds increasing from ₹98.86 crores in March 2021 to ₹138.48 crores in March 2025. The company’s reserves have also grown steadily, reaching ₹107.51 crores in the latest fiscal year. Total liabilities rose moderately to ₹290.59 crores in March 2025, with total debt increasing to ₹34.86 crores, indicating a manageable leverage position.

Net block assets have shown incremental growth, standing at ₹16.22 crores in March 2025, supported by steady capital investments. Current assets remained robust at ₹265.61 crores, with inventories and sundry debtors constituting significant portions. The company’s book value per share improved from ₹38.5 in March 2020 to ₹46.9 in March 2025, reflecting enhanced net asset value for shareholders.

Cash Flow Dynamics

Cash flow from operating activities has been inconsistent, with a positive ₹10 crores in March 2025 contrasting with negative cash flows in prior years such as March 2024. Investing activities consistently reflected outflows, indicative of ongoing capital expenditure. Financing activities fluctuated, with a net outflow of ₹4 crores in March 2025 after inflows in earlier years. Overall, the company maintained a stable cash and cash equivalents position around ₹1 crore in recent years.

Summary and Outlook

In summary, Aarey Drugs has experienced a mixed historical performance characterised by fluctuating revenues and tightening profit margins. While operational profitability has been under pressure, the company’s ability to generate other income and maintain a solid balance sheet has provided some cushion. The steady growth in shareholder equity and book value per share suggests a foundation for potential recovery or growth, though investors should remain mindful of margin challenges and cash flow variability.

Given these dynamics, stakeholders may wish to monitor the company’s cost management strategies and revenue stabilisation efforts closely, as these will be critical to improving future financial outcomes.

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