Hikal Ltd., a preferred long-term partner for leading global life sciences companies, Q4 FY22 revenue has shown a degrowth of 5.6% to reach Rs. 502 crore whereas profit was down by 58.8% to reach Rs. 21 crore.   

Pharmaceutical sales grew by 3% at Rs. 308 crore as compared to Rs. 298 crore in Q4 FY21. Muted revenue growth is due to demand softening and lower off-take by the customers. Here the focus is on cost reduction and efficiency improvement projects to minimize the impact of rise in input costs.

Crop Protection sales decreased by 17% at Rs. 194 crore as compared to Rs. 235 crore in Q4 FY21. Demand for agrochemicals continues to remain strong for the CDMO and Own Products segment. The ongoing capex at Panoli, Gujarat to be commissioned during H2 FY23.

Commenting on the results, Jai Hiremath, Executive Chairman, Hikal Ltd. said, “For the financial year ’22, we achieved a PAT of Rs. 161 crore, which is a growth of 21% as compared to last financial year. Our Board of Directors has recommended a final dividend of Rs. 0.40 per share (20% of FV). Along with an interim dividend of Rs. 1.20 per share (60% of FV) declared in February 2022, the total dividend for FY22 stands at Rs. 1.60 per share (80% of FV)."

"The revenue for the pharmaceutical business saw a muted growth of 3% and stood at Rs. 307 Crores in Q4 FY22. It was in line with the recent trend witnessed by the API industry due to strong transient headwinds of softening demand and disruptions in global supply chains. This combined with the challenging raw material disruptions and significant increase in input costs has seen a pressure on our margins in Q4 which we expect to continue through the first half of the year. On a positive side, we continued to receive new inquiries from global innovator companies in the CDMO business segment. We expect this segment to be a lead growth driver in the next few years," commented Hiremath.

"The Crop Protection business revenue stood at Rs. 194 crore in Q4 FY22. We continued to face raw material availability challenges for some of our key products. However, the demand remains strong in the market. We will continue developing alternate domestic suppliers to mitigate future supply chain disruptions. We are investing in new capacity addition, which is expected to come on stream in the second half of this financial year. On the CDMO front, we continued receiving several new inquiries and are working on a portfolio of new products for global innovator companies," said Hiremath.

"As the industry faces strong headwinds due to the inflationary pressures and a sharp rise in input costs of raw material, energy and solvents, we expect growth to be tapered and margins to contract in the next year. We will continue to focus on passing through increased input costs to our customers. However, we do expect longer lead times given the inflationary pressures even customers are facing. To counteract the challenging environment, we continue to undertake multiple cost reduction as well as operational efficiency improvement initiatives within our business excellence program to minimize the impact of rising cost on our margins," says Hiremath. 

"We expect FY 2022-23 to be a challenging year, one of consolidation and the following year we will return to sustainable and profitable growth," added Hiremath.