Aarti Surfactants Limited

Basic Materials — Specialty Chemicals · NSE

₹499.50+₹13.90 (+2.86%)

DalalBaazaar Score

46 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Thin profit margins are the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

Company site ↗

The 60-second version of Aarti Surfactants Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Aarti Surfactants Limited, together with its subsidiary, produces and sells ionic and non-ionic surfactants for the home and personal care, agro and oil, and industrial applications in India and internationally.

IndustrySpecialty Chemicals

SectorBasic Materials

Employees393

Annual revenue₹853 Cr

How does it make money?

Turns over ₹853 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 393 employees supports ₹2.17 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.17 Cr

Who are its competitors?

The closest listed comparisons in its industry are ASIAN PAINTS LIMITED, PIDILITE INDUSTRIES LTD, SRF LTD, UPL LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 9.2% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE22.3%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +43% while net margin moved -32% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+43%

Margin effect-32%

DalalBaazaar Score

46/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE of 9.2% is below 10% — capital is not working hard
✗ ROCE has fallen by 3.2 points — returns are eroding
✗ EBITDA margin of 5.5% is thin — little cushion if costs rise
✗ Net margin of 2.0% is slim
• Revenue has compounded at 12.6% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

42/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

67/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

23.0x

3Y Median

27.1x

40 monthly readings · mean 29.6x · range 15.9x–45.8x

Sector Median

40.4x

median of 4 sector peers

🟢Current valuation is approximately 15% below its 3y median of 27.1x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 43% below the peer median of 40.4x.

vs. its own history

Fair

27.1x median over 40 months · -15%

vs. sector peers

Cheap

40.4x median of 4 peers · -43%

vs. generic bands

Fair

15x–35x

EV/EBITDA

10.4x

PEG

—

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 37% over 3 years.
Cash generation is improving
Free cash flow is up 131% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 12.4% to 9.2% — often a sign of competition or overexpansion.

Red Flags

1 item require attention · 1 watch

🟡Margins are compressingFinancial
EBITDA margin is down 2.5 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 37% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 43% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹32 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 8.0% to 5.5%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 12.6% CAGR
Latest reported year was 26.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 4%✓ 5.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Interest cover stays above 3x✗ 2.4x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹32 Cr
Profit that never becomes cash eventually stops being profit.
5Debt / EBITDA stays below 2x✓ 1.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.

Investment Checklist

7 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 5 neutral · 1 weak

Market Cap

₹423 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

23.0x

Fair

Fairly valued against the generic band

P/B Ratio

1.72x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹21.72

Profitable

Profitable on a per-share basis

ROE

5.0%

Weak

Weak capital efficiency

ROCE

9.2%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.43x

Low

Conservative leverage

Revenue Growth (YoY)

26.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

206.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.20%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹32 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

5.7%

Average

Average margins

Net Margin

2.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.32

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.72

Defensive

Steadier than the market

52W Range Position

51%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

502.4 / 532.0

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

42.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹597 Cr	₹586 Cr	₹649 Cr	₹853 Cr	+12.6%
EBITDA	₹48 Cr	₹63 Cr	₹43 Cr	₹47 Cr	-0.6%
EBITDA Margin	8.0%	10.8%	6.7%	5.5%	—
PAT (Net Profit)	₹13 Cr	₹21 Cr	₹15 Cr	₹12 Cr	-1.0%
EPS	₹16.47	₹25.16	₹17.19	₹14.56	-4.0%
ROE	7.6%	9.8%	6.3%	5.0%	—
ROCE	12.4%	15.7%	11.0%	9.2%	—
Total Debt	₹128 Cr	₹78 Cr	₹88 Cr	₹81 Cr	-14.2%
Free Cash Flow	₹14 Cr	₹36 Cr	-₹9 Cr	₹32 Cr	+32.1%

🟢 Revenue has grown at 12.6% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (-0.6% a year).

🔴 EBITDA Margin has fallen from 8.0% to 5.5% over 3 years (-2.5 pts).

🟡 PAT (Net Profit) has been broadly flat over 3 years (-1.0% a year).

🔴 EPS has shrunk at 4.0% a year over 3 years.

🔴 ROE has fallen from 7.6% to 5.0% over 3 years (-2.5 pts).

🔴 ROCE has fallen from 12.4% to 9.2% over 3 years (-3.2 pts).

🟢 Total Debt has shrunk at 14.2% a year over 3 years.

🟢 Free Cash Flow has grown at 32.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹517 Cr

Total Liabilities

₹272 Cr

Cash & Equivalents

₹12 Cr

Operating Cash Flow

₹77 Cr

Capex

-₹45 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

53.7%

Corporate Actions

Dividend Rate

₹1

Ex-Dividend Date

22 Sept 2026

Peer Comparison

Company	P/E	ROE
ASIAN PAINTS LIMITED	46.9x	22.3%
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

2 mixed1 negative3 general

Aarti Surfactants Share Price - Live NSE: AARTISURF Stock Price & Chart

Upstox, 16 Oct

Aarti Surfactants Q2 Results FY27: Date and Expectations

Univest, 08 SeptResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

We Ran A Stock Scan For Earnings Growth And Aarti Surfactants (NSE:AARTISURF) Passed With Ease

Simply Wall Street, 10 MayResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Aarti Surfactants Ltd leads gainers in 'B' group

Business Standard, 03 Aug

Aarti Surfactants fixes record date for NCRPS redemption

scanx.trade, 29 Jun

Q3 Results impact: Havells India shares drop 7% as profit misses estimates; Aarti Surfactants, Tips Music jump up to 20%

Moneycontrol.com, 20 JanResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health

MiddlingValuation · Risk

WeakBusiness Quality · Growth · Profitability

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation.

1 of 5 tripwires tripped — Interest cover stays above 3x · see Key things to watch ↑