Q2FY21 revenues grew a decent 15.8% YoY to Rs. 372 crore on the back of 34.1% YoY growth in pharma segment to Rs. 279 crore. Crop protection segment fell 17.9% YoY to Rs. 93 crore due to deferral of Rs. 40 crore worth of shipment to Q3FY21. EBITDA for the quarter came in at Rs. 70 crore, up 19.6% YoY (including Covid related expenses of Rs. 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 Rs. 27 crore in line with operational performance. Delta vis-a-vis EBITDA was due to lower interest cost, partly offset by a higher tax rate.
Valuation & Outlook
Q2 revenues were in-line with I-direct estimates but profitability was higher due to better-than-expected operational performance. While pharma delivered a better-than-expected performance, crop protection performance was below par. Despite Covid-19, margin consistency is visible due to 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, (Rs. 300 crore out of which remaining Rs. 100 crore to be spent by Q1FY22) things are looking promising for FY22 onwards. Hikal remains a fair value proposition as it continues to expand in both pharma, crop protection segments with separate focus and a calibrated approach. This bodes well in the current scenario when Chinese supply disturbances, government incentives are likely to create opportunities for Indian players both in APIs, crop protection CDMO. We arrive at a valuation of Rs. 230 based on 14x FY23E EPS of Rs. 16.6.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Hikal_Q2FY21.pdf
Shares of HIKAL LTD. was last trading in BSE at Rs.171.3 as compared to the previous close of Rs. 167.7. The total number of shares traded during the day was 72789 in over 1683 trades.
The stock hit an intraday high of Rs. 171.8 and intraday low of 165.6. The net turnover during the day was Rs. 12316326.