Other income rose to Rs 95 lakh compared to Rs 82 lakh. Interest cost was down 37% to Rs 8.5 crore. Depreciation rose 3% to Rs 21.17 crore. PBT before EO was up 68% to Rs 42.25 crore. The company reported EO expense of Rs 1.2 crore (expenses related to covid 19) compared to Rs 15.4 crore in the corresponding previous year period. Exceptional item during Q2FY20 comprises customs duty Rs. 13.39 crore on past imports of raw materials at an Export Oriented Unit of the Holding Company and interest of Rs. 2.01 crore thereon, paid during the quarter on directions of the Customs authority. PBT after EO was up 324% to Rs 41.05 crore. 

Effective rate of taxes was up flat at 34%. PAT reported was up 323% to Rs 26.95 crore. 

Segment wise, Pharmaceutical Segment revenue stood at Rs 279.31 crore, up by 34% YoY and accounted for 75% of sales. PBIT from the same was up by 99% to Rs 49.74 crore and accounted for 86% of total PBIT with PBIT margin at 17.8% as compared to 12% for Sep19 quarter.  

For the quarter, sales from the Crop Protection Segment stood at Rs 92.61 crore down by 18% YoY and accounted for 25% of sales. PBIT from the same was down 63% to Rs 7.84 crore and accounted for 14% of total PBIT. PBIT margins stood at 8.5% as compared to 18.9% for Sep19 quarter.

Commenting on the results, Jai Hiremath, Chairman & Managing Director, Hikal Ltd. said, "The overall performance for Q2 has been better than the corresponding period last year as well as well the previous quarter due to higher sales offtake which resulted in better capacity utilization in our pharma division. Our EBITDA Margins improved on higher sales and significant operational efficiencies. 

Our Pharmaceutical division registered a strong growth of 34% for the quarter as compared to same quarter last year. This performance was led by strong volume off-take supported by new capacity at our Bangalore unit which was commissioned late last year. 

One of our long-term global customers in Crop Protection faced several operational challenges due to the ongoing COVID-19 restrictions at their facility. This led them to defer their volume off-take in Q2. We expect them to take the full supply by Q3 of this financial year. 

Our Capex programme, after a brief disruption due to COVID-19 lockdown has resumed and is going on at full swing. We expect to start commissioning several projects during Q1 of FY22. We are implementing several business excellence initiatives across our company to enable us to deliver sustainable growth in both our top-line and bottom-line in the near term. We also continue to explore new opportunities with customers and alternative raw material supplies in the domestic market under the "Atmanirbhar Bharat" initiative of the government. 

Based on the current operating environment, we expect that our performance in H2 will be much better as compared to in H1. We expect to close the current financial year with better financial performance as compared to the last financial year. We see several tailwinds in our business and as we start getting our new capacity on-stream, we expect revenues and profitability to grow faster in next several years. Our strong customer relations, new business opportunities as well as healthy product pipeline will enable us to renew our growth trajectory over the medium to long term."

Performance for the half year ended Sep20 

For half year ended Sep20, net sales remained flat at Rs 724.69 crore. The company operating margins rose 20 bps to 17.7%. As a result operating profits increased 1% to Rs 128.21 crore.  

Other income rose 6% to Rs 1.59 crore. Interest cost was down 29% to Rs 18.18 crore. Depreciation rose 3% to Rs 41.88 crore. PBT before EO was up 13% to Rs 69.74 crore. The company had EO expense of Rs 5.9 crore compared (EO expense was related to Covid expenses incurred during pandemic - Rs 3 crore paid to employees as ex-gratia in addition to normal compensation and Rs 3.7 crore of other expenses which includes Rs 1 crore of additional CSR expenditure) to Rs 15.4 crore in the corresponding previous year period (Exceptional item during the current period comprises customs duty Rs. 13.39 crore on past imports of raw materials at an Export Oriented Unit of the Holding Company and interest of Rs. 2.01 crore thereon, paid during the quarter on directions of the Customs authority). PBT after EO was up 37% to Rs 63.84 crore. 

Effective tax rate was up 200 bps to 34%. PAT reported was up 33% to Rs 41.95 crore. 

The scrip is currently trading at Rs 170