How has been the historical performance of Aarti Pharma?

Revenue and Profit Growth

Since fiscal year ending March 2022, Aarti Pharma’s net sales have shown robust expansion, rising from ₹1,199.94 crores to ₹2,115.07 crores by March 2025. This represents a compound growth rate exceeding 25% annually, reflecting strong market demand and operational scaling. The operating profit margin (excluding other income) has improved from 17.25% in 2022 to 21.95% in 2025, signalling enhanced operational efficiency and cost management.

Profit after tax (PAT) has also followed an encouraging path, increasing from ₹122.25 crores in 2022 to ₹272.40 crores in 2025. Correspondingly, the PAT margin rose from 10.19% to 12.88%, underscoring the company’s ability to convert sales growth into bottom-line gains. Earnings per share (EPS) have mirrored this trend, climbing from ₹26.83 in 2022 to ₹30.05 in 2025, indicating value creation for shareholders.

Cost Structure and Margins

The company’s raw material costs have fluctuated, peaking at ₹1,014.30 crores in 2023 before moderating to ₹835.80 crores in 2025. Despite this, total expenditure excluding depreciation has risen in line with sales, maintaining a healthy operating profit. Other expenses have increased steadily, reaching ₹412.10 crores in 2025, reflecting investments in growth and operational activities.

Interest expenses have risen moderately from ₹11.96 crores in 2022 to ₹26.90 crores in 2025, likely due to increased borrowings to fund expansion. Nevertheless, the company’s gross profit before depreciation and tax has more than doubled over the period, indicating strong earnings resilience.

Balance Sheet and Financial Position

Aarti Pharma’s total assets have grown from ₹2,039.90 crores in 2022 to ₹2,906.41 crores in 2025, supported by investments in fixed assets and capital work in progress. Net block value increased from ₹779.66 crores to ₹1,121.14 crores, signalling ongoing capacity enhancement. Shareholder’s funds have strengthened significantly, rising from ₹1,386.48 crores to ₹1,989.91 crores, reflecting retained earnings and reserves accumulation.

The company’s total debt increased to ₹396.35 crores in 2025 from ₹338.28 crores in 2022, with a notable rise in short-term borrowings. Despite this, the debt levels remain manageable relative to equity, supporting a stable capital structure. Deferred tax liabilities have also increased, consistent with growing profitability.

Cash Flow Trends

Operating cash flow has improved markedly, turning positive from a negative ₹43 crores in 2022 to ₹331 crores in 2025. This reflects better working capital management and higher profitability. However, cash flow from investing activities remains negative due to capital expenditure, reaching ₹-413 crores in 2025. Financing activities have contributed positively in recent years, with ₹65 crores inflow in 2025, supporting the company’s expansion plans.

Closing cash and cash equivalents have declined from ₹83 crores in 2022 to ₹6 crores in 2025, indicating utilisation of cash reserves for growth investments.

Summary and Outlook

Overall, Aarti Pharma’s historical performance reveals a company on a solid growth path, with increasing revenues, improving profit margins, and a strengthening balance sheet. The steady rise in earnings per share and shareholder funds highlights effective capital utilisation and value creation. While debt levels have increased, they remain within reasonable limits, supporting ongoing expansion without undue financial strain.

Investors may find the company’s consistent operational improvements and cash flow generation encouraging, although the decline in cash reserves warrants monitoring. The company’s focus on capital expenditure and asset development suggests a commitment to long-term growth prospects in the pharmaceutical sector.

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