Hikal is engaged in R&D, manufacturing and marketing of fine chemicals for the Pharmaceutical and Agrochemical industries. It collaborates with innovator companies and offer solutions in Contract Research, Custom Synthesis and Custom Manufacturing. One of very few global and only Indian Company to provide Active Ingredients for both Pharmaceuticals and Agrochemicals. First Indian Company to be member of Rx – 360, a global pharmaceutical supply chain consortium for upholding world class quality standards. World’s largest supplier of Thiabendazole, Pregabalin launched in US & EU last year & also started supplies in Japan & CIS

Stock Details
Market Cap. (Cr.) 1880
Book Value (Rs) 66.23
Face Value (Rs) 2
Equity (Cr.) 24.66
52 Wk. high/low 169.90/56.90
BSE Code/ NSE Code 524735/HIKAL
EPS 6.02
PE 22.16
ROCE (%) 15.07%
ROE (%) 14.16%
Debt Equity 0.91
Reserve (Cr.) 791.84
Industry Pharmaceuticals


Shareholding %  Jun-20 Mar-20 Dec-20
Promoters 68.77 68.77 68.77
FII 23.43 24.13 24.44
DII & Ins 1.13 1.27 0.36
MF 1.26 1.07 2.02
Others 23.43 24.13 24.44


Key Investment Parameters:

  • In a short span of time, banking on its chemistry skills, the company has been able to tap incremental customers via the CDMO route.
  • Hikal also operates as a dedicated API supplier as it expands its portfolio.
  • Strong Chronic health pipeline for CNS, CVS, Anti-diabetic & Pain/Inflammation therapy.
  • Operational efficiencies will going to improve significantly from here on. Vision of becoming global API supplier in coming years.
  • CDMO focused business model catering mainly to global innovators. Over the years, it has increased its product offerings with a foray into niche products and specialty chemicals.
  • The company has filed few new generation DMFs. It expects major revenues from FY22-23. Legacy product contribution is likely to go down in the next three to five years.
  • Pharma business is mostly exports; US: 50-55%, EU: 10-15%, Japan 10% (fast growing), RoW: 20%.
  • The company plans to grow domestic business in both pharma and crop segments.
  • Agrochem business has been a laggard.Company has some solid growth ahead.
  • Long-term exclusive CDMO agreement with a European innovator for anti-epilepsy & nootropic drug.
  • Looking at the global scenarios and it’s current valuation, stock has huge potential.
  • The management expects margin improvement from this year onwards on the back of several cost rationalisation and efficiency improvement measures undertaken during the pandemic.

Hybrid Business Model:


  • Contract & Custom Manufacturing
  • Generics
  • Human Health
  • Animal Health
  • Strong Relationships with Innovators, Mid size Pharma, Biotech & Generic Companies

Crop Protection

  • Custom Synthesis and Contract Manufacturing of Agrochemicals, Intermediates, Biocides and Specialty Chemicals
  • Preferred Supplier to Top Crop Protection Companies.

Research & Development:

  • Offers Right Combination of Capabilities, Quality combined with significant Cost Arbitrage
  • Full development & Scale up Service to Innovator Companies , Generic & Biotech Companies.

Focused Strategy

Aggressive Growth

  • Aggressive growth in Pharmaceuticals , Animal Health & Crop Protection.
  • Support NCE & Gx Molecules Serving a large range of Customers.

Develop Own Portfolio

  • Develop own portfolio of products as next wave of Hikal growth.
  • Life cycle extension

Human Health & CDMO Approach:

  • Filed 2 DMFs (Dapagliflozin & Empagliflozin)
  • Strong Chronic health pipeline for CNS, CVS, Anti-diabetic & Pain/Inflammation therapy.
  • Long-term exclusive CDMO agreement with a European innovator for anti-epilepsy & nootropic drug.

Future Strategy:

Existing Contracts     

  • Start with a specific product and expand horizontally.
  • European Innovator
  • USA based Food Ingredient
  • Japan – Several contract manufacturing opportunities

    New Relationships:

  • Added New innovator and biotech customers for early stage molecules for contract development.
  • Projects in various stages of clinical trials.
  • Approval process is lengthy & uncertain

    Generic Products

  • Gain market share in key APIs
  • Three-pronged strategy for API development (already generic, to be generic & future generic) will help build a pipeline from a long-term perspective.
  • Identified 6 to 8 new products for generic development.

Identifying New APIs

  • Plans to file 3-4 DMFs per year
  • De-bottlenecked two of our API blocks that manufacture an anti-convulsant drug
  • Installed a powder transfer system for automation which has increased the speed of operations and its efficiency

Overview of Crop Protection

  • Custom Synthesis and Contract manufacturing of Agrochemicals, Intermediates and Specialty Chemicals.
  • World’s largest supplier of Thiabendazole (TBZ).
  • On Patent Molecule Manufacture.
  • Strong Relationships with Global Leading Agrochemical Companies
  • Strong Japanese Presence

Key Relationships

 Thiabendazole: Versatile product used to control mold and other diseases in fruits and vegetables caused due to fungi, as an antiparasitic to control roundworms and in materials protection.

Product exclusively for European Innovator Client: The volumes of a fungicide that is used to control the Oomycete disease in potatoes, tomatoes and mildew in vegetables remained stable last year.

On-Patent New Generation Product: Fungicide Exclusively manufacture for a global innovator saw a significant increase in volumes due to better demand.

Two on – Patent products for a Japanese Innovator: Products predominantly used for controlling broad leaved weeds and for cotton crop treatment. These are high margin niche products and the volumes of both these products have a stable outlook going forward.

Niche plant growth regulator for a leading Japanese company: Product increases coloration of fruits as well as enhances fruit quality by increasing the Citric acid content.

Commerciali zed a new insecticide: Product is used to control a wide range of insects on rape, fruits, and as wood preservative to control termites. We expect the volumes to increase substantially due to the ban on some of the competitor products in the EU.

SWOT Analysis:


Segment Highlights – Quarter


  • Recovery in operations led by improved volume off-take by customers.

  • Commissioning of additional capacity enabled to meet higher demand.

  • Post relaxation of Nation-wide lockdown, the operations ramping up steadily at Bangalore and Panoli facilities

Crop Protection

  • COVID-19 pandemic lockdown impacted the global customer’s operations during the quarter leading to deferment of volume off-take.

  • Repeat local lockdowns in Maharashtra (Taloja & Mahad Site) further impacted the production schedule which were already disrupted due to Nation-wide lockdown.

Q1FY21 Performance:

Hikal Ltd. Quarterly Result (in Rs. Cr.) Jun-20 Mar-20 Jun-19 YoY(%) QoQ(%)
Net Sales 353 379 403 -12% -7%
Operating Expenses 300 308 335 -10% -3%
Operating Profit 52.48 70.63 68.51 -23% -26%
Other Income 0.64 1.73 0.68 -6% -63%
Interest 9.62 13.7 12.05 -20% -30%
PBDT 43.5 58.66 57.14 -24% -26%
Depreciation and Amortization 20.71 20.94 20.32 2% -1%
Profit Before Tax 22.79 37.72 36.82 -38% -40%
Tax 7.79 13.25 11.59 -33% -41%
Profit After Tax 15 24.47 25.23 -41% -39%
Net Profit 15 24.47 25.23 -41% -39%
Operating Profit Margin (%) 14.88 18.64 16.99 -12% -20%


Hikal is predominantly a B2B player that provides intermediates and active ingredients to global pharmaceutical, animal health, crop protection and specialty chemical companies. The pharma business is currently divided almost equally between generic active pharma ingredients (APIs) and contract development and manufacturing organization (CDMO) businesses. Animal health business accounts for 20-25% of CDMO business. In crop protection, 70% of revenues are derived from CDMO with the remaining from proprietary products, specialty chemicals and specialty biocides. Considering the expected strong growth in profitability, healthy balance sheet, improving return ratios and good corporate, we are seeing long-term growth prospects of the company. We are initiating buy with target price Rs. 225 with 9-12 months time span.


Elite Wealth Advisors Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Advisors Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as read more

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