- 30 May 2022
- ICICIdirect Research
Hikal Q4 affected by slowdown in demand, input cost and availabilityHIKAL - 308 Change: 12.40 (4.20 %)
News: Revenues de-grew 6% YoY to Rs 502 crore with Crop protection declining 17% YoY to Rs 194 crore. Pharma grew 3%YoY to Rs 308 crore. EBITDA margins declined by 838 bps YoY to 12% amid 272 bps YoY decline in gross margins and higher employee expenditure. EBITDA de-grew by 44% YoY to Rs 61 crore while profit for the quarter declined by 59% YoY to Rs 21 crore.
Views: Quarterly revenues were almost in line with I-direct estimates except for segment traction, wherein Pharma being affected by softening demand for APIs and supply chain disruptions while crop protection was affected due to raw material availability for some key raw materials. Significant increase in input cost has affected margins and are likely to recover gradually from H1FY23. Hikal continues to expand in both pharma, crop protection segments with separate focus and a calibrated approach but with strong headwinds due to the inflationary pressures and a sharp rise in input costs of raw material, energy and solvents, growth is likely to be tapered and margins contracting in FY23. We also keep tab on the compliance issues related to Hikal’s Taloja facility.