Shares of Aarti Industries hit a 52-week low of Rs 642, down 1 per cent on the BSE in Wednesday’s intra-day trade, as the stock started trading ex-pharma business effective today.
The stock, however, bounced back 11 per cent to Rs 710.55 from its intra-day low. At 02:04 PM, it was trading 5 per cent higher at Rs 683.50, as compared to 0.25 per cent rise in the S&P BSE Sensex. In the past one month, the stock of Aarti Industries has tanked 16 per cent.
The company has fixed Thursday, October 20, 2022, as record date to determine the members of ‘Aarti Industries’ to whom equity shares of ‘Aarti Pharmalab’ will be allotted. Shareholders will get one share of Aarti Pharmalabs for every four shares they hold in Aarti Industries.
In August 2021, the Company’s board of directors approved the demerger of the Pharmaceuticals’ segment allied activities into Aarti Pharmalabs (formerly known as Aarti Organics Limited), a wholly owned subsidiary Company of Aarti Industries. This strategic decision was taken with the rationale of achieving operational efficiencies by streamlining the businesses.
The management said it intended to demerge the Pharma business in order to focus and streamline each segment, allowing for better synergies and eliminating any segmental overlaps. “As a result, the pharmaceutical industry will be able to focus on the fast-moving pharma sector in India and around the world. Through aggressive capex plans, new chemistries, and value added products in pharma and specialty chemicals, the company is well-positioned to capture the market in the specialty chemicals and pharmaceuticals segment,” the management said.
“The pharmaceutical division has been growing consistently over the past few years. The revenues for the pharmaceutical business have grown at a CAGR of 20 per cent over a period of 5 years. To create overall value for our shareholders, and also to enable management of the Company to focus and adopt the relevant strategies necessary for promoting growth and expansion, the demerger was carried out,” Aarti Industries said in its FY22 annual report.
The demerger of Pharma Undertaking will facilitate a focused approach to the growth opportunities into respective segments, also enabling the segment to take strategic calls to capture onto these opportunities to grow, the company said.
The company further said it plan to add over 50 new products in the Pharma division with the Capex of Rs 350-500 crore in three years. “Strengthening our manufacturing capability, we plan to increase our manufacturing capacity by 1,200 KL with installation of 240 reactors under 10 manufacturing blocks in the next 5 years,” the company said.