Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Hikal Ltd (BOM:524735) reported a significant EBITDA growth of 71% on a sequential basis in Q4 FY25.
-
The company's EBITDA margins improved by 410 basis points to 22.4% in Q4 FY25.
-
The pharmaceutical business showed strong growth with a 47% year-over-year increase in EBITDA.
-
Hikal Ltd (BOM:524735) is actively expanding its product portfolio and engaging with multiple innovative customers, contributing to a healthy pipeline.
-
The company is making strategic investments in high potency chemistry and new technology capabilities, which are expected to drive future growth.
Negative Points
-
The crop protection business is expected to have muted growth in FY26, with improvements anticipated only in FY27.
-
Hikal Ltd (BOM:524735) faces significant competitive pricing pressures in the crop protection sector, particularly from China.
-
The company's ROE and ROC are expected to be slightly depressed in FY26 due to recent capital expenditures.
-
There is uncertainty regarding the impact of US tariffs on the company's business, which could affect future growth.
-
The company has faced increased other expenses due to customer audits and additional maintenance requirements.
Q & A Highlights
Q: Can you elaborate on the growth outlook for FY 2026 and FY 2027, particularly regarding the muted growth expectation for FY 2026? A: The muted growth expectation for FY 2026 is primarily related to the crop protection business, which is expected to remain flat. However, the pharma business is projected to grow by approximately 12 to 15% in revenue. The crop protection sector is anticipated to resume growth in FY 2027. - Samir Hireat, Managing Director
Q: There has been a significant increase in other expenses this quarter. Can you explain the reasons behind this? A: The increase in other expenses is due to additional maintenance required for customer audits and certain shipments. There was also a provision made for doubtful debts as per accounting standards. These are not recurring expenses and will vary based on specific circumstances. - Kuli Jain, Chief Financial Officer
Q: How do you plan to address the seasonality in your business, particularly the heavy reliance on Q4? A: We are working towards reducing seasonality by streamlining product launches and validations. Many customers prefer to push inventory from Q3 to Q4, but we aim to balance this by improving our operational processes and customer engagement throughout the year. - Samir Hireat, Managing Director