Aarti Inds close to new high

about 4 years ago
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Aarti Industries rose over 8.5% today at Rs.1159.90, which is just Rs.3 away from its 52-week high of Rs.1162.80.

The stock price jumped up after the company announced that it has inked a Rs.10,000 crore multi-year deal with Sabic Innovative Plastics US LLC.

The contract entails supply of a high value speciality chemical intermediate over a period of 20 years.

The supplies are expected to commence from 2020 with an estimated revenue generation of Rs.10000 crore over the contract period.

With this deal, Aarti Industries is set to enter a new chemistry range, first of its kind in India; and its end product is amongst the major growth initiatives for the customer.

Aarti Industries will be investing $35 - $40 million to setup dedicated large scale manufacturing facility for production of this speciality chemical intermediate, and will be built on the basic technology package received from the customer. The upcoming facility will be a 100% export oriented unit in Gujarat.

As a part of this contract terms, the customer shall provide $42 million as an advance to Aarti Industries in installments, which shall be adjusted against the supplies in future. This advance shall help reduce the net capital employed, enabling higher ROCE returns for this project.

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