Aries Agro Limited, together with its subsidiaries, manufactures and supplies micronutrients and other nutritional products for plants and animals in India, Kenya, Nigeria, Nepal, and Taiwan. Its products include water soluble NPKs, organic/bio products, high density inputs, crop specific products, slow release fertilizers, plant protection products, aqua culture and animal nutrition products, urban products, and other products. The company was incorporated in 1969 and is headquartered in Mumbai, India.

India

Aries Agro Limited

Basic Materials

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. On average, the company pays dividends annually. 

ARIES.NS reported revenue of INR 6 022mn in the last 12 months, up 20% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 105% from FY23 to INR 24.69.

The stock's performance has been mixed in the past six months, with growth following a decline. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 1ppts in total. At the same time, the stock's performance relative to its the peers from the same country and sector is different. The stock outperformed these peers by 5ppts over the past six months and grew 11ppts faster in the past month. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 11.5% in the last 12 months, up from 11.4% in FY23. 

Historically, ARIES.NS has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 5.3%, a growth from 3.1% in FY23. 

Aries Agro Limited reported a return on equity (RoE) of 11.9% in the last 12 months, up from 6.2% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 10.0%, above the peers. 

Another important profitability metric, return on assets (RoA), amounted to 5.9% in the last 12 months, an increase from 3.0% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.3 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

ARIES.NS has very poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is very unstable and is somewhat unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note strong debt servicing capacity, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, inadequate interest coverage.

In highly turbulent market conditions, ARIES.NS is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, ARIES.NS is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to average. We would also like to highlight the average intraday volatility of the instrument. 

From both historical and forecast perspectives, the stock is fairly priced compared to similar stocks. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITDA, overpriced on P/FCF. 

Aries Agro Limited

₹ 311

4

Aries Agro Limited

₹ 311

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₹ 311

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