Capitaline

Results 05-Aug-21

Analysis

Hikal

Continued growth trajectory

Hikal consolidated net sales increased 29.48% to Rs 456.78 crore in Q1FY22 compared to Q1FY21. Sales of Crop protection products segment has gone up 31.33% to Rs 182.71 crore (accounting for 40.00% of total sales). Sales of Pharmaceuticals segment has gone up 28.28% to Rs 274.07 crore (accounting for 60.00% of total sales).

Operating profit margin has jumped from 14.89% to 20.96%, leading to 82.26% rise in operating profit to Rs 95.76 crore. Raw material cost as a % of total sales (net of stock adjustments) decreased from 54.05% to 49.88%. Employee cost decreased from 12.10% to 10.40%. Other expenses rose from 18.71% to 19.03%.

Other income rose 396.88% to Rs 3.18 crore. Profit before interest, tax and other unallocable items (PBIT) has jumped 107.02% to Rs 79.95 crore. PBIT of Crop protection products segment rose 89.07% to Rs 31.84 crore (accounting for 39.82% of total PBIT). PBIT of Pharmaceuticals segment rose 120.89% to Rs 48.11 crore (accounting for 60.18% of total PBIT).

PBIT margin of Crop protection products segment rose from 12.10% to 17.43%. PBIT margin of Pharmaceuticals segment rose from 10.19% to 17.55%. Overall PBIT margin rose from 10.95% to 17.50%.

Provision for interest fell 17.46% to Rs 7.99 crore. Provision for depreciation rose 8.93% to Rs 22.56 crore.

Profit before tax grew 200.09% to Rs 68.39 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 17.85 crore, compared to Rs 7.79 crore. Effective tax rate was 26.10% compared to 34.18%.

Minority interest was nil in both the periods. Net profit attributable to owners of the company increased 236.93% to Rs 50.54 crore.

Promoters’ stake was 68.77% as of 30 June 2021 compared to 68.77% as of 30 June 2020 .

Commenting on the results, Jai Hiremath, Chairman & Managing Director, Hikal Ltd. said, “I am happy to report that we have recorded a strong performance in Q1 despite the challenges posed by the second wave of the COVID-19 pandemic. We have continued the growth trajectory that the company had established over the past two quarters.

Our Pharmaceutical business has performed well, registering a YoY growth of 28% for the quarter based on increased volumes of existing API Generics and CDMO products. We have a healthy pipeline of new products, supported by our new capacities which would come on stream as a result of the capex incurred over last 12-24 months.

The Crop Protection business registered a robust YoY growth of 31% in Q1 on the back of strong volume growth of our existing products and further scaled up volumes of a new product. We expect this positive momentum to continue in the next few quarters based on a healthy pipeline of projects at various stages.

Our operations were slightly impacted by the second wave of the COVID-19 pandemic. We were directly affected by government restrictions on oxygen supply. We had to shut down one of our dedicated plants at Taloja. We used this opportunity to perform regular maintenance activities in order to mitigate the loss of production.

The Company has opted for the new tax regime, which has resulted in a higher net profit. This when considered with the reduced finance costs as a result of successful renegotiation of lower interest rates, have strengthened the financial parameters of the Company. With this added liquidity, cost reduction efforts and enhanced operational efficiency as a result of our focused business excellence initiatives, we are confident of further sustainable profitability improvement in the coming years.

In line with our vision, we have set a bold aspiration of driving profitable growth and transforming our businesses across different verticals. As part of our transformation journey, we have already engaged a leading global consulting firm to work along with us. This will enable us to pivot our growth in a sustainable manner. The journey forward will entail accelerating growth in our existing Pharmaceutical and Crop Protection businesses, as well as investing in our emerging business verticals such as Animal Health and Biocides. We are confident about the prospects of all our businesses in the near future.

FY21 result performance

Net sales of Hikal increased 14.14% to Rs 1720.44 crore. Sales of Crop protection segment has gone up 6.51% to Rs 660.80 crore (accounting for 38.41% of total sales). Sales of Pharmaceuticals segment has gone up 19.48% to Rs 1,059.64 crore (accounting for 61.59% of total sales).

Operating profit margin has jumped from 18.12% to 18.77%, leading to 18.21% rise in operating profit to Rs 322.89 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 51.68% to 52.75%. Employee cost decreased from 10.35% to 9.56%. Other expenses fell from 19.91% to 18.90%.

Other income rose 34.59% to Rs 4.98 crore. Profit before interest, tax and other unallocable items (PBIT) jumped 20.24% to Rs 273.15 crore. PBIT of Crop protection segment rose 3.63% to Rs 103.27 crore (accounting for 37.81% of total PBIT). PBIT of Pharmaceuticals segment rose 33.21% to Rs 169.88 crore (accounting for 62.19% of total PBIT).

PBIT margin of Crop protection segment fell from 16.06% to 15.63%. PBIT margin of Pharmaceuticals segment rose from 14.38% to 16.03%. Overall PBIT margin rose from 15.07% to 15.88%.

Provision for interest fell 30.94% to Rs 36.2 crore. Loan funds declined from Rs 562.08 crore as of 31 March 2020 to Rs 515.20 crore as of 31 March 2021. Inventories declined from Rs 312.46 crore as of 31 March 2020 to Rs 266.70 crore as of 31 March 2021. Sundry debtors were higher at Rs 485.53 crore as of 31 March 2021 compared to Rs 340.44 crore as of 31 March 2020. Cash and bank balance declined from Rs 63.57 crore as of 31 March 2020 to Rs 36.81 crore as of 31 March 2021. Investments declined from Rs 0.68 crore as of 31 March 2020 to Rs 0.61 crore as of 31 March 2021.

Provision for depreciation rose 3.37% to Rs 85.24 crore. Fixed assets increased to Rs 901.62 crore as of 31 March 2021 from Rs 829.72 crore as of 31 March 2020. Intangible assets declined from Rs 66.31 crore to Rs 65.17 crore.

Profit before tax grew 45.40% to Rs 206.43 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 73.28 crore, compared to Rs 42.14 crore. Effective tax rate was 35.50% compared to 33.29%.

Minority interest was nil in both the periods. Net profit attributable to owners of the company increased 57.70% to Rs 133.15 crore.

Promoters’ stake was 68.77% as of 31 March 2021 compared to 68.77% as of 31 March 2020.

Cash flow from operating activities decreased to Rs 229.02 crore for year ended March 2021 from Rs 284.93 crore for year ended March 2020. Cash flow used in acquiring fixed assets during the year ended March 2021 stood at Rs 157.59 crore, compared to Rs 158.03 crore during the year ended March 2020.

The scrip is currently trading at Rs 614

Hikal : Consolidated Results
Particulars	2106 (03)	2006 (03)	Var.(%)	2103 (12)	2003 (12)	Var.(%)
Net Sales	456.78	352.77	29	1,720.44	1,507.26	14
OPM (%)	21.0	14.9		18.8	18.1
OP	95.76	52.54	82	322.89	273.15	18
Other Inc.	3.18	0.64	397	4.98	3.7	35
PBIDT	98.94	53.18	86	327.87	276.85	18
Interest	7.99	9.68	-17	36.2	52.42	-31
PBDT	90.95	43.5	109	291.67	224.43	30
Depreciation	22.56	20.71	9	85.24	82.46	3
PBT	68.39	22.79	200	206.43	141.97	45
EO Income	0	0		0	-15.4	-
PBT after EO	68.39	22.79	200	206.43	126.57	63
Taxation	17.85	7.79	129	73.28	42.14	74
PAT	50.54	15	237	133.15	84.43	58
EPS (Rs)*	#	#		10.8	7.7
Notes
* EPS is on current equity of Rs 24.66 crore, Face value of Rs 2, Excluding extraordinary items.
# EPS is not annualised
bps : Basis points
Figures in Rs crore
Source: Capitaline Corporate Database

Hikal : Consolidated Segment Results
	% of (Total)	2106 (03)	2006 (03)	Var.(%)	% of (Total)	2103 (12)	2003 (12)	Var.(%)
Sales
Crop protection products	40	182.71	139.12	31	38	660.8	620.39	7
Pharmaceuticals	60	274.07	213.65	28	62	1,059.64	886.87	19
Total Reported Sales	100	456.78	352.77	29	100	1,720.44	1,507.26	14
Less: Inter segment revenues		0	0	-		0	0	-
Net Sales		456.78	352.77	29		1,720.44	1,507.26	14
PBIT
Crop protection products	40	31.84	16.84	89	38	103.27	99.65	4
Pharmaceuticals	60	48.11	21.78	121	62	169.88	127.53	33
Total PBIT	100	79.95	38.62	107	100	273.15	227.18	20
Less : Interest		7.99	9.68	-17		36.2	52.42	-31
Add: Other un-allcoable		-3.57	-6.15	-42		-30.52	-32.79	-7
PBT		68.39	22.79	200		206.43	141.97	45

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