Shares of Aarti Industries (AIL) rose 8 percent on BSE to Rs 658.70 in Friday’s intra-day trade amid heavy volumes.
The average trading volumes on the counter jumped over four-fold. A combined 6.04 million equity shares of the company changed hands on the NSE and BSE.
In the past two days, the stock of the specialty chemicals company has surged 13 percent after it secured a four-year supply contract worth over Rs 6,000 crore with a multinational conglomerate.
At 10:42 am, AIL was up 7 percent at Rs 655.20 as compared to a 0.94 percent rise in the S&P BSE Sensex.
The stock had hit a 52-week high of Rs 661.40 on December 29, 2023.
AIL has signed a long-term agreement with a multinational conglomerate for the supply of a niche specialty chemical. The contract is expected to generate revenue of over Rs 6,000 crore for the company.
The product has been an integral part of AIL’s long-term growth strategy and its volume has consistently increased over the past 4-5 years, it said.
AIL’s ongoing capital expenditure programs will meet the contract requirements and hence it does not see any additional capital expenditure for this contract.
Earlier on December 27, AIL announced that it had entered into a long-term supply contract with a global agrochem major for a niche agrochemical intermediate.
The contract offers AIL a revenue potential of nearly Rs 3,000 crore for 9 years with the contract supplies commencing from the current fiscal year, the company said.
This agrochemical intermediate serves as a crucial input component for a widely used herbicide applied in diverse food and cash crops (such as corn, soybean, cotton, sugarcane, and sunflower).
The global market for this herbicide is large and steadily growing, it added.
Meanwhile, the management in the Q2 earnings call said they maintain optimism about potential demand revival in the end-use segments such as agrochemical, polymer additives, and other discretionary applications going forward.
“We expect the worst to be over in H1FY24 and anticipate that it will take a few more quarters for normalized demand across various end segments/product lines. Thus we expect consequentially better performance in H2FY24 and foresee FY25 to be a normalizing year given the current pace of recovery,” it said.
Analysts at Prabhudas Lilladher expect recovery post H2FY24 with higher capacity utilization of its products, increasing contribution from LT- contracts, and volume growth from newer projects.
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