Hikal : Results Presentation Q4FY23

Results Presentation - Q4 FY23

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This presentation and the accompanying slides (the "Presentation"), which have been prepared by Hikal Limited (the "Company"), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.

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Certain matters discussed in this Presentation may contain statements regarding the Company's market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, the company's ability to successfully implement its strategy, the Company's future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company's market preferences and its exposure to market risks, as well as other risks. The Company's actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections.

© Hikal Limited

Executive Chairman's Message

Jai Hiremath

"For the financial year '23, we achieved revenue of Rs 2,023 Crores, which is a growth of 4% as compared to last financial year. FY23 has been a challenging year where we witnessed significant headwinds in both our businesses. Despite the challenges we have recorded a sequential quarter-on-quarter growth in profitability.

Our Board of Directors has recommended a final dividend of Rs 0.6 per share (30% of FV). Along with an interim dividend of Rs. 0.6 per share (30% of FV) declared in February 2023, the total dividend for FY23 stands at Rs 1.2 per share (60% of FV).

We are pleased to report that during Q4FY23, despite limited top-line growth, we were able to sequentially expand operating margins with efforts put forth by our team to reduce costs and strengthen operational effectiveness.

The Crop Protection business revenue stood at Rs 236 Crores in Q4 FY23 with YoY growth of 22%. We have seen softening of key RM prices and prices are stabilizing. Our multipurpose plant at Panoli is reaching completion and commissioning is underway. The crop protection industry is currently witnessing an inventory correction across the supply chain. We expect the situation to normalize from second half of this year.

For Q4FY23, our pharmaceutical business reported revenues of Rs. 309 Crores. The pharmaceutical industry is facing fierce competition, but price erosion is currently occurring at a slower pace than in the year 2022 suggesting that the worst of the erosion is behind us supported by improved raw material and logistics cost. On the CDMO side, there is a lot of inventory and destocking is taking place. We expect the situation to normalize by the end of Q2. We have a strong future pipeline in our CDMO business and are actively pursuing new opportunities. We have increased our footprint in emerging markets and added several new customers.

I am pleased to inform you our API facility in Panoli, Gujarat, was audited by the US FDA from 8-12 May 2023, and the audit was concluded with 'Zero' 483 observations which highlights our high standards of regulatory compliance.

Our new multipurpose facility for animal health is on track and should be operational during H1 FY24. Development of new products as a part of a long-term contract with an innovator animal health company is going as per our plan.

One of the key factors that sets us apart is our commitment to sustainability, which is the core of our ESG Strategy. We understand the growing global concern for the environment, and we are working to make a positive impact through our operations. Our investments in technology, waste reduction initiatives, and sustainable manufacturing processes will help position us as a preferred partner for our global customers.

Project Pinnacle initiatives have already begun to yield positive results and will help us emerge stronger, and more sustainable.

We foresee a slowdown in the coming couple of quarters due to the global economic downturn and increasing pricing pressure. However, we are focusing on operational excellence and capital efficiency to reduce costs and improve our margins to remain competitive in this challenging global environment. We are well positioned for sustainable growth in the medium to long term, driven by our focus on innovation, commitment to sustainability, global presence, and a strong financial foundation."

© Hikal Limited

Quarterly Financials Highlights

Robust performance in both Pharmaceutical and Crop Protection businesses, with recovery in EBITDA margins

Revenue - Q4 FY23

Rs. 545 Crore

YoY	QoQ
+9%	+1%

EBITDA - Q4 FY23

Rs. 90 Crore

YoY QoQ

+48% +21%

EBITDA Margin - Q4 FY23

16.5%
YoY	QoQ
+437 bps	+271 bps

PAT - Q4 FY23

Rs. 36 Crore

YoY QoQ

+74% +37%

EPS - Q4 FY23

Rs. 2.92

YoY QoQ

+74% +37%

© Hikal Limited