Aarti Surfactants soars 11% as Q1 net profit rises 30% YoY

Shares of Aarti Surfactants jumped more than 11% in early trading on July 25, a day after the company posted increased net profit for the quarter ended June.
The chemical company’s net profit from April to June rose 30% year-on-year (YoY) to Rs 5.2 billion from Rs 4 billion in the previous year’s base quarter. The increase in net profit can be attributed to the improvement in the company’s operating indicators for the quarter under review.
EBITDA margin also increased to 9.9% in the first quarter from 7.3% a year ago. Furthermore, the resulting increase from Aarti Surfactants as well as the improvement in operating performance at a time when chemical companies are suffering from weak demand and pressure on margins bodes well for investors. As of 10:10 am, shares of Aarti Surfactants were trading up 6% at Rs 652 on the National Stock Exchange. Trading volume was also strong, with 75,000 shares changing hands on the exchange, well above the daily average of 13,000 shares traded in a month. However, one negative exception to the chemical company’s quarterly earnings was a 5.9% year-on-year decline in sales for the April-June period. Total sales came in at Rs 148.7 crore, down from Rs 158.1 crore in the same period last year. Slowing global demand and clearing of inventories in the industry could be factors leading to lower sales. The global chemical industry has experienced a bearish cycle due to the influx of cheap stockpiles from Chinese partners, stagnant demand and falling prices. The slowdown in the sector is also reflected in the performance of Aarti Surfactants stock, which has fallen 13.5% over the past year.