Pharmaceutical company Hikal announced Q2FY23 results: Revenue of Rs. 559 crore; YoY growth of 19% EBITDA of Rs. 70 crore PAT stood at Rs. 25 crores Hikal’s long-term credit rating is maintained at A+ by ICRA Pharmaceutical sales grew 4% YoY and stood at Rs. 290 crore as compared to Rs. 280 crore in Q2 FY22 Crop Protection sales grew by 42% at Rs. 269 crore as compared to Rs. 190 crore in Q2 FY22 Commenting on the results, Jai Hiremath, Executive Chairman, Hikal Ltd. said, “Hikal has recorded a steady performance in Q2 in line with earlier guidance of a sequential recovery as we continue to move towards resuming our strong growth trajectory. In Q2, we achieved the highestever quarterly revenue in the history of Hikal, backed by strong demand in our Crop Protection business. We continue to keep an eye on the macro-economic environment, any potential for supply chain disruption, rising energy costs and the ongoing geopolitical unrest. The Crop Protection business, with Rs 269 Crores revenues in Q2 FY23, witnessed a strong growth of 42% on a YoY basis on the back of robust demand from customers in both own products and CDMO segments. We expect this momentum to continue in the next few quarters. We have received several new enquires from global innovator companies which are at various stages of execution. The commissioning of the new Crop Protection multipurpose facility at Panoli, Gujarat will be in Q4 FY23 The Pharma division business revenue stood at INR 290 Cr registering a 4% growth on a YoY basis. Soft demand, as well as pricing pressures in the end market, continue to be a concern. We have commercialized two NCE advanced intermediate with large potential for global innovator companies. Cost improvement programs, softening of raw material prices and optimal product mix will improve margins going forward. Our new Animal Health multipurpose facility is expected to come on stream by the first half of next calendar year. Our efforts to develop alternate suppliers to reduce dependence on a single geography or vendor is on track and will help us in being a partner of choice to our global customers. To mitigate the increase in energy costs, we are further implementing renewable energy projects which will help reduce costs and lower our carbon footprint significantly. We are continuing our strategic transformation journey, ‘Pinnacle Program’. Ongoing initiatives will help to reach our bold aspiration of driving profitable as well as sustainable growth. Significant progress is being made in building capabilities in terms of resources as well as infrastructure. We expect to see a positive momentum in both businesses in the medium to long term.” Result PDF
Pharmaceuticals firm Hikal announced Q1FY23 Result : Revenue of Rs. 379 crore; YoY de-growth of 17% EBITDA of Rs. 23 crore; YoY de-growth of 76% PAT stood at Rs. (9) crores Hikal’s long term credit rating is maintained at A+ by ICRA Channel inventory correction by the Pharma customers Disruption in operations for the Crop Protection business Increased input raw materials, solvent and energy costs Increased depreciation on account of assets additions Marginal increase in finance costs in view of interest rate hikes Pharmaceutical sales de-grew 18% YoY and stood at Rs. 224 crore as compared to Rs. 274 crore in Q1 FY22 This de-growth is predominantly due to channel inventory correction at customers’ end Business excellence initiatives have resulted in reduction of costs to absorb some of the impacts of higher input prices Key wins for CDMO business for potential future growth Orders received for intermediates for a COVID drug from a Global innovator company Increased penetration in Latin America and Middle east market for the API Generics business Crop Protection sales de-grew by 15% at Rs. 154 crore as compared to Rs. 183 crore in Q1 FY22 This de-growth is predominantly due to disruption in operations at Taloja Higher forecast from existing global innovator companies Demand continues to remain strong Significant increase in inquiries from existing as well as new customers Construction of new multipurpose plant is on-track at Panoli. Expected to commission in the second half of FY23. Commenting on the results, Jai Hiremath, Executive Chairman, Hikal Ltd. said, “We had a challenging quarter where we witnessed significant headwinds in both our businesses. Our Pharmaceutical business witnessed a de-growth of 18% and revenue stood at Rs. 224 Crores in Q1 FY23, predominantly due to channel inventory correction at customers’ end. Additionally, this quarter we experienced margin pressure on account of higher input costs which have started easing out and a positive impact on margins is expected to be visible in the coming quarters. We expect the demand for our own products business to improve in the coming quarters. We continued to receive several new inquiries from global innovator companies for the partnerships in the CDMO business segment and successfully secured few projects from global innovators, which have a potential to turn into in significant incremental revenues in the coming years. We have a healthy pipeline of new products and are confident of capitalizing on our product mix going forward. In the Crop Protection business, revenue stood at Rs 154 Crores in Q1 FY23. Due to disruption in operations of our Taloja plant we lost production capacity for a significant part of the quarter. However, we utilized the time effectively by undertaking our annual preventive maintenance. Our plant is now fully operational, and our operations team is committed to make up the production loss to the best extent, over the next three quarters. We are on track for building our new multipurpose plant for launching new products, which is expected to come on stream by the end of this financial year. On the CDMO front, we continue to receive numerous new inquiries from both existing and new customers. We are working on several new products for global innovator companies. With the demand remaining robust in the market, we are very positive towards our growth story in the Crop Protection business. With the ongoing Russia Ukraine war, supply chain continues to be a concern for the overall industry. We continued to see a rise in the input costs of raw materials, solvents, utilities and fuel which has affected our margins. Our focus is to passthrough these increases in the input costs to our customers and optimize the fuel mix. We expect the prices of some of our key raw materials to soften in the upcoming months, which will improve our overall margins and profitability. We continue our efforts on cost improvement projects as well as to improve operational efficiency within our business excellence program to partly absorb the higher input costs. We will continue developing alternate domestic suppliers to mitigate the supply chain disruptions prevailing in present market on account of global geopolitical situation. Considering the uncertainties prevalent in macro environment, most global companies are looking for supply chain diversification (China-plus-one strategy). We are witnessing numerous inquiries from on potential collaborations, and we are well positioned to capture the influx of opportunities. In addition, we are also seeing significant traction in our emerging Animal Health business with enhanced inquiries. As part of our 10-year multi-product project with a global innovator, process development of several active ingredients is on-track, and a dedicated asset for Animal health business is under way which is expected to be commissioned by end of FY23. Our transformation journey, “Pinnacle Program” is witnessing good momentum across both businesses. We have taken various initiatives across the company to make Hikal to go from ‘Good to Great’. This will help reach our bold aspiration of driving profitable as well as sustainable growth. We are optimistic about our growth story. We expect a step wise recovery in the upcoming three quarters with tailwinds supporting us and are confident of coming back to our profitable growth trajectory by end of FY23.” Result PDF