Q4FY21 Result Update - Hikal Ltd - ICICI Direct

Q4 revenues grew a robust 40.5% YoY to Rs. 533 crore tracking strong growth across both segments. Pharma posted 31.5% YoY growth to Rs. 298 crore whereas crop protection grew 53.8% YoY to Rs. 235 crore. EBITDA margins expanded 188 bps YoY, 81 bps QoQ to 20.5% amid lower staff expenses stemming from better operational leverage. Subsequently, EBITDA grew 54.7% YoY to Rs. 109 crore. PAT more than doubled to Rs. 4 crore.

Valuation & Outlook

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, (Rs. 200 crore over the next 18 months) things are looking promising for FY22 onwards. Despite the recent stock run-up, 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 maintain BUY and arrive at a valuation of Rs. 380 (earlier TP: Rs. 230) based on 20x FY23E EPS of Rs. 19.0.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Hikal_Q4FY21.pdf

Shares of HIKAL LTD. was last trading in BSE at Rs.325.85 as compared to the previous close of Rs. 342.5. The total number of shares traded during the day was 148308 in over 3963 trades.

The stock hit an intraday high of Rs. 345.05 and intraday low of 325.4. The net turnover during the day was Rs. 49503150.

Source : Equity Bulls

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