Hikal posts Q2 FY24 consolidated PAT at Rs. 12.57 Cr
Chemical

Hikal posts Q2 FY24 consolidated PAT at Rs. 12.57 Cr

Muted volumes coupled with pricing headwinds and high-cost inventories on our customers side impacted topline and profitability

  • By ICN Bureau | November 03, 2023

Hikal Ltd., a preferred long-term partner for leading global life sciences companies, announced its consolidated financial results for the period ended September 30, 2023.

Hikla has posted net profit of Rs. 12.57 crores for the period ended September 30, 2023 as against net profit of Rs. 6.92 crores for the period ended June 30, 2023. The company posted net profit of Rs.24.84 crores for the period ended September 30, 2022.

The company has reported total income of Rs. 435.87 crores during the period ended September 30, 2023 as compared to Rs. 388.99 crores during the period ended June 30, 2023. Hikal reported total income of Rs.560 crores during the period ended September 30, 2022.

Muted volumes coupled with pricing headwinds and high-cost inventories on our customers side impacted topline and profitability, Hikal said in a press release. However, sequential growth in revenue and margins is expected in the upcoming quarters.

Commenting on the results, Jai Hiremath, Executive Chairman, Hikal Ltd. said, “The global chemical industry continues to experience a challenging period with prices declining across product segments coupled with the high channel inventory levels and intense price competition. Customers are focusing on lower prices to bring down their average inventory cost while selectively making new purchases. We expect prices to bottom out, elevated inventory levels to subside and demand is likely to pick up from the end of this financial year resulting in an improvement in operating profitability quarter on quarter going forward.

“For Q2FY24, we reported revenues of Rs. 435 Cr. and EBITDA of Rs. 57 Cr. The softening of raw materials prices along with focused cost improvement initiatives helped us to improve our margins both on a QoQ and YoY basis.

“Our pharmaceutical business reported revenues of Rs. 270 Cr. and EBIT of Rs. 12 Cr. for Q2 FY24. On CDMO side, we continue to receive enquiries and we are in advanced stages of discussion with various global innovators. In the API segment, we are seeing signs of recovery on account of reduced price-erosion coupled with softening of certain raw materials prices leading to improved profitability. In the Animal Health segment, the progress on developing new products as part of a long-term contract with an innovator animal health company is on track. Our new multipurpose plant for Animal Health is completed at Panoli, Gujarat and commissioning is underway. We will be validating several products in the upcoming quarters.

“For Q2FY24, our Crop Protection business reported revenue of Rs. 165 Cr and EBIT of Rs. 22 Cr. The global agrochemical industry continues to go through its most challenging phase as customers and distributors are destocking amid high channel inventories. We anticipate a recovery in demand towards the end of FY24. Softening of certain raw material prices and deployment of cost improvement programs are helping maintaining margins. Our new multi-purpose facility at Panoli is under commissioning and stabilization of the plant is in progress.

“We are continuing our strategic transformation ‘Pinnacle Program’. Significant progress has been made in building new capabilities for technology and digitization and we are gaining traction with new customers.

“We are well positioned to benefit from the significant opportunities considering the current shift in the global supply chain and the diverse chemistries and capabilities across our various businesses. We expect a better second half with realization from cost-improvement programs and higher revenues. We expect to have sustainable growth along with profitability and are confident of medium to long-term prospects of our business.”

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