52-Week High: Pharma Co Enters Into Rs 3,000 Cr Contract With Global Agrochem

Shares of mid cap company Aarti Industries Ltd hit fresh 52-week high in trade on Wednesday after the company informed via its BSE filing that it has entered into a 9-year long-term supply contract for the supply of a niche agrochemical intermediate with a global agrochemical products and solutions company.

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, sunflower, etc). The global market for this herbicide is large and steadily growing.

The contract offers AIL a revenue potential of approximately over Rs 3,000 crores over a period of 9 years, with the contract supplies commencing from current fiscal year. This product (agrochemical intermediate) is an integral component of AIL's existing integrated product portfolio, with AIL being a leading manufacturer of this product in India. AIL's current CAPEX plans, across its existing manufacturing locations, are sufficient to meet this contract requirement and the company does not anticipate any additional CAPEX for this.

The global agrochemical market is valued at US$ 74 billion and is growing at a CAGR of about mid to high single-digit. Over the past decade, the easternisation of sourcing of the agrochemicals and its intermediates had been increasing steadily. This can be attributed to better cost competencies, global scale and size of manufacturing capabilities, challenges posed by energy crisis in developed economies, amongst others. This trend has resulted in an increased outsourcing of intermediate manufacturing to costcompetitive regions such as China and India.

Commenting on this development, Rajendra Gogri - Chairman & Managing Director at Aarti Industries Limited said, "This contract win is yet another step towards making our business more robust, resilient and predictable. Entering this contract in such a challenging macro environment is a testament to the efforts of our team and will go a long way in strengthening our integrated product value chain. We have established longstanding relationships with various customers across different end-user categories including the global industry leaders.And this contract underscores our commitment to transforming these relationships into additional future long-term opportunities."

Aarti Industries Stock Performance & Return: Current market price of Aarti Industries shares on BSE is Rs 642.50 per share with intraday gain of 1.48%. The 52-week high price of Aarti Industries stock on BSE is Rs 649.50 apiece and 52-week low price is Rs 438.05 apiece, respectively. Aarti Industries has a market capitalisation of Rs 23,290.88 crore. Aarti Industries shares rallied 29% in last 3-months, gained 4% in last 1-year, and declined 28% in last 2-years. In last 3-years, Aarti Industries shares gave return of 15%.

About: Aarti Industries Limited (AIL) is one of the most competitive benzene-based speciality chemical companies in the world. AIL is a rare instance of a global speciality chemicals company that combines process chemistry competence (recipe focus) with scale-up engineering competence (asset utilization). Over the last decade, AIL has transformed from an Indian company servicing global markets to what is fundamentally a global company selecting to manufacture out of India.

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