Hikal Ltd share Price Today

Hikal is predominantly a B2B player that provides intermediates and active ingredients to global pharmaceutical, animal health, crop protection and specialty chemical companies.

• Pharma and crop protection are 58% and 42% of operating revenues, respectively. The pharma business is currently divided in 50:50 ratio of APIs and CDMO. Animal health business accounts for 20-25% of CDMO business
• In crop protection, 69% revenues are derived from CDMO while remaining is from proprietary products, specialty chemicals & specialty biocides
• One of the largest suppliers of Gabapentin API (CNS) and in crop protection, one of the largest suppliers of Thiabendazole (TBZ)

Muted quarter amid headwinds in pharma and crop protection.

• Revenues declined 6% YoY to ₹ 502.4 crore
• EBITDA was at ₹ 61 crore, down 44% YoY with margins at 12.1%
• Consequent PAT was at ₹ 21 crore (down 59% YoY)

Pharmaceuticals company Hikal announced Q1FY24 results:

• Revenue stood at Rs 388 crore
• EBITDA stood at Rs 50 crore, a 122% increase on a YoY basis
• PAT stood at Rs 7 crore
• Hikal’s long-term credit rating is maintained at A by ICRA

Commenting on the results, Jai Hiremath, Executive Chairman, Hikal said, “FY24 has started on a challenging note due to global macro-economic pressures and high channel inventories leading to lower demand across both our businesses. The chemical industry faced difficulties due to China's opening up and depressed market conditions specifically in the Crop Protection end-use markets.

For Q1FY24, we reported revenues of Rs 388 crore and EBITDA of Rs 50 crore. During the quarter we witnessed disruptive channel inventory correction across the supply chain in both businesses. We were able to navigate through the market headwinds on the back of improved cost control measures and softening of certain raw materials prices.

On July 22, 2023, the company received communication from Gujarat Pollution Control Board (GPCB) directing the company to seize operations within 15 days from the order date citing certain technical violations. The company has responded to the queries raised by the GPCB and the closure notice has been revoked. There has been no interruption in production and operations at the site, which continues to operate as normal. We are deeply committed to upholding the principles of responsible care and sustainable business practices.

For Q1FY24, our pharmaceutical business reported revenues of Rs 225 crore. In the pharmaceutical industry, we witnessed softening of raw material prices at the same time competitive pricing environment. On the Generics side, sales have stabilized, and the inventory is expected to normalize by the end of next quarter. We expect that the off-take will return to normalcy in the second half of this financial year. We have strengthened our sales network in geographies like Latin America, the Middle East, and Japan. On the CDMO front, we continue to have a strong future pipeline and are aggressively capitalizing on new opportunities. During the quarter, our API facility in Panoli, Gujarat, was audited by the US FDA, and the audit was concluded with ‘Zero’ 483 observations as a testament to our commitment to high standards of regulatory compliance.

Our crop protection business reported revenue of Rs 163 crore for Q1FY24. The global agrochemical industry has been going through a challenging phase over the last several quarters as end customers are destocking amid high channel inventories. The market is witnessing pricing pressure given the higher base of the previous year and very aggressive price competition from the Chinese companies. We are experiencing a decline in the prices of certain products due to the cost of inventory with channel partners. However, we anticipate a recovery in demand towards the end of Q3FY24. On the margins side, softening of raw material prices and deployment of cost improvement programs are expected to have a favorable impact.

In our animal health business, the progress on developing new products as part of a long-term contract with an innovative animal health company is progressing well. Our new multipurpose plant for animal health is on track at Panoli, Gujarat and commissioning is underway. We will be validating several products in the upcoming quarters.

We are well-positioned to benefit from the significant opportunities considering the current shift in the global supply chain and the diverse capability built over three decades. We are anticipating a better second half of the year with an up-trending revenue, realization from cost improvement programs, and raw material price stabilization. We are confident that the journey of longer-term sustainable growth and profitability is still very much intact.”

Result PDF