Hikal Ltd., incorporated in the year 1988, is a Small Cap company (having a market cap of Rs 4213.19 Crore) operating in Pharmaceuticals sector.
Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 535.33 Crore, up 15.42 % from last quarter Total Income of Rs 463.81 Crore and up 40.61 % from last year same quarter. Total Income of Rs 380.72 Crore. Company reported net profit after tax of Rs 50.92 Crore in latest quarter.
Investment Rationale
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.
