Hikal Ltd

Get PDF

About the Company

Hikal Ltd offers solutions across the life sciences value chain. They provide world-class active ingredients, intermediates and R&D services to global pharmaceuticals, animal health, biotech, crop protection and specialty chemicals companies.

Q3 2019 Updates

Financial Results & Highlights

Detailed Results

1. 1. Hikal has had a good quarter with sales growing at around 17% YoY while PBT and PAT climbing 22% and 24% respectively on YoY basis.
   2. The pharma division revenues have grown 19% YoY while the crop protection revenues have grown 15% YoY.
   3. The 9M revenues have seen a phenomenal growth of 24% YoY with PBT and PAT going up by 40% and 34% respectively on YoY basis.
   4. This indicates that the company’s efforts towards margin improvement have borne fruit and have helped profit grow at a faster pace than revenues.

Existing Contracts

1. US based innovator client: Contract manufacture two large volume molecules, a neuropathic pain reliever and an anti-cholesterol molecule exclusively for a leading US based innovator Company. Life-cycle extension and the volumes for both these molecules increased this year and the trend is set to continue for the coming year as well.
2. European innovator client: Long-term contract manufacturing agreement with a European innovator client to exclusively manufacture molecules commercially gaining momentum. One of these molecules being an anti-epilepsy drug that is widely used to control seizures and other one is a nootropic drug used for memory enhancement. These products are expected to grow in the future according to positive indications received from our client.
3. Business in Japan: Track record of meeting quality requirements in Japan established. Several products that have come through R&D have also progressed to the semi-commercial stage. Next year, management expects a repeat order of two intermediaries going into a new generation API to be launched in Japan.

Future Strategies: 

1. Diversifying Products & Clients
2. Capacity Expansion: Commissioned a new state-of-the-art plant in Mahad to manufacture an advanced intermediate for a key herbicide for a global innovator client.
3. Proprietary products: Started new initiative to create data for registration of their own product portfolio in several countries which will add value to their clients by making it easier for them to register products in global markets.
4. Existing Client Relationships: Targeting existing clients for additional molecules in their portfolio. Focusing on commercializing new molecules for several clients in existing & new markets. Select new clients based on chemistries to execute on a commercial scale and in-house technologies developed.

Analyst’s View

Hikal has posted good results both for the quarter and for the 9 months of the current financial year. They have been improving their margins which is evident from the fact that their profit growth is outpacing their revenue growth. Their focus on R&D and hybrid model of catering to both pharma companies and agrochemicals shows a lot of promise. The next few quarters should be very interesting when some of their new efforts should start bearing the fruits.

Disclaimer

This is not an investment advice. Please read our terms and conditions.