Hikal Ltd. share price target

Hikal posted revenue of INR 5,145mn with 11.1% YoY growth which was 8.7% above our estimate of INR 4733mn driven by the strong growth in the crop protection segment. On segmental performance: The crop protection segment grew by 27% (YoY) to INR 2464mn on the back of Increased sales volume of CDMO products and favourable price increases for certain products. Pharmaceutical segment revenue remained flat at INR 2,682mn on account of slower offtake by several customers due to the higher price of products led by rising input costs. Management expects raw material challenges to continue in the next few months and is working with their suppliers and customers to mitigate the price fluctuations. Higher operational cost combined with flat revenues resulted in a...

Maintain BUY on account of 1) consistency in offtake for crop protection CDMO, 2) expected recovery in Pharma, 3) Visibility capex. That said we continue to monitor developments on recent critical issues- 1) Surat (Gujrat) GIDC incident and 2) MPCB notice for Taloja....

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Margin improvement on back of several cost rationalisation & efficiency improvement measures undertaken during the pandemic The crop protection segment maintaining growth due to sustained product...

Hikal posted revenue of INR 4,568mn with 29.5% YoY growth which was slightly below our estimate of INR 4,627mn on account of lower production days due to the unavailability of oxygen for industrial use. On segmental performance: The crop protection segment grew by 31% (YoY) to INR 1,827mn on the back of Increased sales volume of existing as well as new products. Pharmaceutical segment revenue surged by 28% to INR 2,741mn based on increased volumes of existing API Generics and CDMO products. EBITDA margin improved by 607 bps to 21%, (was 277bps above our estimate) supported by a favourable product mix. EBIT margin of the Crop protection segment improved by 532bps (YoY) with 40% (vs 43.6% in Q1FY21) contribution to overall EBIT. The pharmaceutical...

The Q4 performance was above I-direct estimates across all fronts. Q4 margin performance was the highest in the past five years, showcasing Hikal's focus on high margin products and backward integration besides cost control measures. Going ahead, the management expects a margin improvement of 50-100 bps from this year onwards on the back of several cost rationalisation and efficiency improvement measures undertaken during the pandemic. Going by the capex guidance, (| 200 crore over the next 18 months) things are looking promising for FY22 onwards. Despite the...

Hikal posted revenue of INR 5,325mn with 40.5% YoY growth which was above our estimate of INR 4,859mn mainly driven by strong growth in the both Pharmaceutical and Crop protection segment. On segmental performance: The crop protection segment grew by 54% (YoY) to INR 2348mn on the back of strong volume growth in existing products and commercialization of a new product from their newly built facility in Panoli Pharmaceutical segment revenue surged by 32% to INR 2,977mn based on increased volumes of existing API Generics and CDMO products. During the quarter, the company has filled US DMF for Favipiravir API to supporting both domestic and global markets. Despite 129bps contraction in gross margin, EBITDA margin managed to improve by 188bps to 20.5%, was 142bps...

Hikal posted revenue of INR 5,325mn with 40.5% YoY growth which was above our estimate of INR 4,859mn mainly driven by strong growth in the both Pharmaceutical and Crop protection segment. On segmental performance: The crop protection segment grew by 54% (YoY) to INR 2348mn on the back of strong volume growth in existing products and commercialization of a new product from their newly built facility in Panoli Pharmaceutical segment revenue surged by 32% to INR 2,977mn based on increased volumes of existing API Generics and CDMO products. During the quarter, the company has filled US DMF for Favipiravir API to supporting both domestic and global markets. Despite 129bps contraction in gross margin, EBITDA margin managed to improve by 188bps to 20.5%, was 142bps...

INR3,368mn mainly driven by strong growth in the Pharmaceutical segment. On segmental performance: The crop protection segment de grew by 17.9% (YoY) to INR 926mn and 12.7% (YoY) due to deferment of orders worth INR400mn which is expected to be supplied largely in Q3FY21. Pharmaceutical segment revenue surged by 34.1% to INR 2,793mn led by strong volume off-take supported by new capacity at Bangalore unit which was commissioned late last year. Despite 554bps contraction in gross margin, EBITDA margin managed to improve by 58bps to18.8%, was 29bps above our estimate. EBITDA margin was supported by 11% (YoY) decline in employee cost and flat other expenses in the growing topline. EBIT margin of the Crop protection segment declined by 1044bps...

Q2FY21 revenues grew a decent 15.8% YoY to | 372 crore on the back of 34.1% YoY growth in pharma segment to | 279 crore. Crop protection segment fell 17.9% YoY to | 93 crore due to deferral of | 40 crore worth of shipment to Q3FY21. EBITDA for the quarter came in at | 70 crore, up 19.6% YoY (including Covid related expenses of | 1.1 crore). EBITDA margins expanded 58 bps YoY to 18.8% due to lower staff & other expenses, partly offset by lower gross margins. Adjusted PAT grew 23.8% YoY to | 27 crore in line with operational performance. Delta vis-a-vis EBITDA was due to...

revenues. EBIT margin of Crop protection segment improved by 302bps (YoY) with ~46% contribution Target Price (INR) to overall EBIT. Pharmaceutical segment EBIT margin contracted by 45bps with ~54% contribution to overall EBIT. PAT came below our estimate at INR245mn (est INR329mn) dragged by operationally weak performance and higher tax expenses (35.1% vs 30.8%). On RM Sourcing from China: Hikal...

Hikal ventured into the pharma API business by virtue of acquisition of Novartis' Panoli plant in the year 2000. In a short span of time, banking on its chemistry skills, the company has been able to tap incremental customers via the CDMO route. Hikal also operates as a dedicated API supplier as it expands its portfolio. We expect the pharma segment to grow at 13.1% CAGR in FY20-22E to | 1135.3 crore on the back of new offerings and repeat business from CDMO customers. Crop protection growth to piggyback on client relationship...

Hikal ventured into the pharma API business by virtue of acquisition of Novartis' Panoli plant in 2000. In a short span of time, banking on its chemistry skills, the company has been able to tap incremental customers via the CDMO route. Hikal also operates as a dedicated API supplier as it expands its portfolio. We expect the pharma segment to grow at a CAGR of...