Any current/future new fundraising through debt or equity?

Hikal Limited does not plan any fresh equity fundraising as per the latest call. For the current year, the company plans a CAPEX of approximately ₹200 crore. The funding for this CAPEX is expected to be 50% from internal accruals and 50% through borrowings (debt). The company already has outstanding term loans of ₹550 crore and working capital borrowings of ₹240 crore. Debt repayments have already commenced and will continue over the next few years. Kuldeep Jain (CFO) stated they are comfortable with current debt levels. Long-term total debt levels are expected to remain roughly stable by Marc

Any current/future capex/capital investment/strategic investment?

Current capital work-in-progress (WIP) as of June 30, 2023 is about ₹400-460 crores, largely for recently completed projects. Additional CAPEX of ₹100-120 crores is expected over the next three quarters to fully commission new capacities. New multipurpose animal health plant at Panoli is built and undergoing commissioning with validation batches expected in the next few quarters. The new capacity ramp-up will add around ₹500-600 crores in revenue potential beyond the existing asset base. Company plans about ₹200 crore investment in the current year, funded roughly 50% by internal accruals and

Future growth expectations in sales/revenue/volumes?

Revenue target of around ₹3,000 crore expected in a few years; not within the next two years but slightly beyond that (Sameer Hiremath). Existing gross block can achieve ₹2,400-2,500 crore with improved utilization and better product mix; new capacity to add ₹500-600 crore (Sameer Hiremath). Volumes declined in Q1 FY24 due to inventory destocking; volume uptick expected from Q3 FY24 onwards (Sameer Hiremath). Peak utilization of new capacity will take 3-4 years to achieve (Sameer Hiremath). Topline of ₹3,500 crore expected once optimal capacities are reached, which is 2-3 years post commission

Future growth expectations in earnings/operating earnings/profits/EPS?

Hikal expects a medium to long-term sustainable growth outlook despite short-term volatility, with demand uptick anticipated from Q3/Q4 FY24 onwards. Operating margins are targeted to improve from current 13%-14% levels back to historical 18%-19% within a few years for existing assets; new projects aim for EBITDA margins around 22%-24%. The company’s aspirational revenue target is around Rs. 3,000 crore in a few years, with current assets contributing Rs. 2,400-2,500 crore and new capacity adding Rs. 500-600 crore. Longer-term targets are significantly higher, with confidence in exceeding reve

Current/ Expected Orderbook/ Pending Orders?

The transcript does not provide specific details or figures regarding the current or expected order book or pending orders for Hikal Limited. However, the company mentions a strong pipeline of products under evaluation and implementation for global multinational clients. There is also mention of onboarding several new customers due to increased marketing efforts. The company highlights ongoing positive discussions with global innovators and opportunities for setting up dedicated capacities for clients. Overall, while exact order book numbers are not disclosed, the company indicates healthy dem

Hikal LtdQ1 FY24Pharmaceuticals & Biotechnology

Hikal Ltd Q1 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹204.4P/E: 59.4Market Cap: ₹2.5K CrSector: Pharmaceuticals & Biotechnology

Management growth scorecard

Revenue

Category 3

Margin

Category 1

Fundraise

Yes

Order

N/A

Capex

Yes

3 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

Revenue target of around ₹3,000 crore expected in a few years; not within the next two years but slightly beyond that (Sameer Hiremath).
Existing gross block can achieve ₹2,400-2,500 crore with improved utilization and better product mix; new capacity to add ₹500-600 crore (Sameer Hiremath).
Volumes declined in Q1 FY24 due to inventory destocking; volume uptick expected from Q3 FY24 onwards (Sameer Hiremath).
Peak utilization of new capacity will take 3-4 years to achieve (Sameer Hiremath).
Topline of ₹3,500 crore expected once optimal capacities are reached, which is 2-3 years post commissioning (Sameer Hiremath).
Improvement expected in volumes and margins from H2 FY24 onwards; sequential quarter-on-quarter recovery anticipated (Sameer Hiremath).
Medium to long-term growth outlook positive; demand recovery expected in pharma and crop protection segments (Sameer Hiremath, Manoj Mehrotra).

Margin guidance

Category 1

Hikal expects a medium to long-term sustainable growth outlook despite short-term volatility, with demand uptick anticipated from Q3/Q4 FY24 onwards.
Operating margins are targeted to improve from current 13%-14% levels back to historical 18%-19% within a few years for existing assets; new projects aim for EBITDA margins around 22%-24%.
The company’s aspirational revenue target is around Rs. 3,000 crore in a few years, with current assets contributing Rs. 2,400-2,500 crore and new capacity adding Rs. 500-600 crore.
Longer-term targets are significantly higher, with confidence in exceeding revenue of Rs. 6,000 crore by 2030; failure to do so would cause disappointment.
EBITDA margins for the new projects target approximately 24%-25%, with a blended margin expected around 20%-23%.
Enhanced operational efficiencies, new product mix, and commissioned capacities underpin growth and margin improvements over the next 3-5 years.

See what Hikal Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

Yes

Hikal Limited does not plan any fresh equity fundraising as per the latest call.
For the current year, the company plans a CAPEX of approximately ₹200 crore.
The funding for this CAPEX is expected to be 50% from internal accruals and 50% through borrowings (debt).
The company already has outstanding term loans of ₹550 crore and working capital borrowings of ₹240 crore.
Debt repayments have already commenced and will continue over the next few years.
Kuldeep Jain (CFO) stated they are comfortable with current debt levels.
Long-term total debt levels are expected to remain roughly stable by March 2024.
Cost of funds for the long-term borrowings is approximately 8.5%.

Order book

The transcript does not provide specific details or figures regarding the current or expected order book or pending orders for Hikal Limited.
However, the company mentions a strong pipeline of products under evaluation and implementation for global multinational clients.
There is also mention of onboarding several new customers due to increased marketing efforts.
The company highlights ongoing positive discussions with global innovators and opportunities for setting up dedicated capacities for clients.
Overall, while exact order book numbers are not disclosed, the company indicates healthy demand prospects, ongoing client engagements, and a favorable outlook for order inflow.

See what Hikal Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes

Current capital work-in-progress (WIP) as of June 30, 2023 is about ₹400-460 crores, largely for recently completed projects.
Additional CAPEX of ₹100-120 crores is expected over the next three quarters to fully commission new capacities.
New multipurpose animal health plant at Panoli is built and undergoing commissioning with validation batches expected in the next few quarters.
The new capacity ramp-up will add around ₹500-600 crores in revenue potential beyond the existing asset base.
Company plans about ₹200 crore investment in the current year, funded roughly 50% by internal accruals and 50% by debt.
Debt for CAPEX is manageable; no new long-term loans borrowed in recent quarter; debt-equity ratio is well within norms.
Commissioning and revenue contribution from new assets expected mainly from Q3/Q4 FY24 onwards.
Strategic focus on enhancing manufacturing, supply chain, and ESG integration through "Project Pinnacle" for sustainable growth.

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