Hikal slips 21% in one week, hits fresh 52-week low on disappointing Q4

The inflationary pressures and a sharp rise in input costs of raw material, energy and solvents, the management expects industry growth to be tapered and margins to be contract in the current fiscal.

Shares of Hikal hit a fresh 52-week low of Rs 303.50, down 4 per cent on the BSE in Friday’s trade. The stock of the company has fallen 21 per cent in the last one week after the firm reported a weak set of numbers for the quarter ended March 2022 (Q4FY22). In comparison, at 01:50 pm, the S&P BSE Sensex was up 0.5 per cent at 56,090 points. 

With the past one week's decline, the stock of the pharmaceutical company has corrected 59 per cent from its record high level of Rs 742 touched on August 17, 2021.

In Q4, Hikal’s consolidated profit after tax (PAT) declined 59 per cent year on year (YoY) to Rs 21 crore, due to higher operational cost and lower revenue. The company had posted a PAT of Rs 51 crore in the year-ago quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) contracted by 834 bps to 12.15 per cent from 20.49 per cent in Q4FY21.

The company’s revenue was down 5.6 per cent to Rs 502 crore from Rs 532 crore last year. The pharmaceutical segment recorded muted 3 per cent YoY revenue growth at Rs 308 crore due to demand softening and lower off-take by the customers. The crop protection segment de-grew by 17 per cent YoY to Rs 194 crore.

The muted revenue growth in pharmaceutical business 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 margins in Q4, which the management expects to continue through the first half of the year.

"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 be contract in the current fiscal", the management said.