HIKALNSEQ4 & FY25May 19, 2025

Hikal Limited

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Management on call

Sameer Hiremath

MANAGING DIRECTOR

Anish Swadi

SENIOR PRESIDENT, BUSINESS TRANSFORMATION AND ANIMAL HEALTH

Vimal Kulshrestha

PRESIDENT, CROP PROTECTION DIVISION

Kuldeep Jain

CHIEF FINANCIAL OFFICER

Manoj Mehrotra

- PRESIDENT, PHARMA BUSINESS

Key numbers — 40 extracted

rs,

usiness; Vimal Kulshrestha, President of our Crop Protection business; and Strategic Growth Advisors, our Investor Relations Advisors. Talking about our Q4 and FY '25 performance, the year has been

INR552 crore

to stabilize by next financial year, that is in FY '26-27. In Q4 FY '25, our revenue amounted to INR552 crores with an EBITDA of INR123 crores, reflecting an EBITDA growth of 71% on a sequential basis. On a

INR123 crore

year, that is in FY '26-27. In Q4 FY '25, our revenue amounted to INR552 crores with an EBITDA of INR123 crores, reflecting an EBITDA growth of 71% on a sequential basis. On a Y-o-Y basis, EBITDA increased

71%

revenue amounted to INR552 crores with an EBITDA of INR123 crores, reflecting an EBITDA growth of 71% on a sequential basis. On a Y-o-Y basis, EBITDA increased by 31% and EBITDA margins improved by 4

31%

reflecting an EBITDA growth of 71% on a sequential basis. On a Y-o-Y basis, EBITDA increased by 31% and EBITDA margins improved by 410 basis points to 22.4%.For the full year

410 basis point

% on a sequential basis. On a Y-o-Y basis, EBITDA increased by 31% and EBITDA margins improved by 410 basis points to 22.4%.For the full year FY '25, revenue stood at INR1,860 crores. EBI

22.4%

sis. On a Y-o-Y basis, EBITDA increased by 31% and EBITDA margins improved by 410 basis points to 22.4%.For the full year FY '25, revenue stood at INR1,860 crores. EBITDA stood

INR1,860 crore

d by 410 basis points to 22.4%.For the full year FY '25, revenue stood at INR1,860 crores. EBITDA stood at INR328 crores, which is a margin of 17.7%, an increase of 270 basis points comp

INR328 crore

r the full year FY '25, revenue stood at INR1,860 crores. EBITDA stood at INR328 crores, which is a margin of 17.7%, an increase of 270 basis points compared to the previous year. In

17.7%

FY '25, revenue stood at INR1,860 crores. EBITDA stood at INR328 crores, which is a margin of 17.7%, an increase of 270 basis points compared to the previous year. In the Board meeting concluded th

270 basis point

ood at INR1,860 crores. EBITDA stood at INR328 crores, which is a margin of 17.7%, an increase of 270 basis points compared to the previous year. In the Board meeting concluded this morning, the Board of Directo

INR0.80

Board meeting concluded this morning, the Board of Directors has recommended a final dividend of INR0.80 per share, that is 40%, along with an interim dividend of 30% declared in February 2024. The total

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Guidance — 20 items

Sameer Hiremath

opening

“The global pharmaceutical industry is positioned for renewed momentum and growth, building on the steady recovery seen throughout FY25.”

Sameer Hiremath

opening

“Moreover, in the Animal Health Division, our project under the long-term agreement with the innovator is advancing as per plan with a validation of eight products completed successfully.”

Sameer Hiremath

opening

“Additionally, we are engaging with multiple innovator customers and are observing a significant positive momentum, which contributes to a very healthy pipeline going forward.”

Sameer Hiremath

opening

“Based on the above strategic initiatives, although we expect muted growth in FY 2026, we expect growth to resume in FY 2027.”

Manoj Mehrotra

opening

“Meanwhile, our food ingredient project remains on track and is expected to reach peak revenue within the next 2 to 3 years.”

Vimal Kulshrestha

opening

“By successful advancing these opportunities, we aim to reinforce our positioning as a preferred partner for global innovators and drive sustainable growth for our CDMO business over the medium to long term.”

Anish Swadi

opening

“Our transformation initiative, Project Pinnacle is delivering tangible results, driving sustained growth across our diversified operations.”

Sameer Hiremath

“We expect healthy growth in the Pharma business, which is on track.”

Sameer Hiremath

“The Crop business is where we expect flattish numbers for next year and it to resume in FY '27.”

Dhaval Shah

“So yes, crop anyways, your guidance was that H2 of '26 is where you are expecting some sort of improvement?”

Risks & concerns — 5 flagged

In the Crop Protection sector, while competitive pricing, especially from China remains a significant headwind, this sector is undergoing a major strategic shift led by the innovator customer companies, which are expected to stabilize by next financial year, that is in FY '26-27.

— Sameer Hiremath

As we have anticipated these challenges, as I mentioned in the earlier calls, we have taken several steps to mitigate the risk and drive future growth in our Crop Protection business.

— Sameer Hiremath

This is particularly evident in Crop Protection space where agrochemical players are under increasing pressure to accelerate innovation, reduce environmental impact and navigate tightening regulatory framework.

— Vimal Kulshrestha

But the Crop Division, there will be a kind of a drag on that because depreciation charge will come in significantly.

— Sameer Hiremath

So there will be a drag for next year because the Crop business, but it will get depressed next year actually.

— Sameer Hiremath

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Q&A — 10 exchanges

Great set of results. So one question from my side. In your opening comments, you mentioned about overall growth outlook being very strong for '27, but you mentioned a muted '26. So can you elaborate what do you mean by that? Because in the previous calls, the growth was looking good for '26 as well. So has there been change in the customer contract or something? Can you help us understand?

Sameer Hiremath

Yes, I think there's no change. We spoke about 2 different segments. We expect healthy growth in the Pharma business, which is on track. In fact, it may even be more accelerated than what we spoke earlier. The Crop business is where we expect flattish numbers for next year and it to resume in FY '27. Okay. Okay. So yes, crop anyways, your guidance was that H2 of '26 is where you are expecting some sort of improvement? That's right. Okay. Pharma, you are expecting what sort of growth in '26? We did INR1,170 crores this year. I mentioned around approximately 12% to 15% growth for the year revenu

Yes. So just want to clarify that as you have mentioned for a muted growth for '26, I think here also a lot of our contracts are going to commission on FY '26. So we are anticipating a better growth in '26 in our numbers. So is that for the Crop Protection business? Or overall, we will be having a muted number and most of the numbers would be coming in FY '27?

Sameer Hiremath

No, I think the muted numbers were for Crop Protection. Pharma will grow, as I mentioned. I think the previous speaker also asked the same question. And I mentioned that we will show growth in the Pharma business, while Crop will be flattish compared to last year. Okay. Okay. And in the PL side, employee salary is slightly lower in this quarter. So is it because of some head change or just because of the AI implementation? No, we've been able to optimize our personnel costs. Obviously, we've done a very detailed exercise over the last year to see which plants we can utilize and repurpose our p

A couple of questions from my end. To begin with, sir, if you could share your thoughts regarding our Pharma business? How do you envisage your FY '26 performance?

Sameer Hiremath

Yes, I think everybody seems to be asking the same question. I've already given a guidance of growth of 12% to 15% revenue growth, which we expect in FY '26. And that is going to be with more CDMO business and inquiries coming in. Yes. Sure. And sir, since we've already mentioned the revenue guidance, any -- can you throw some light on the margin guidance as well? Well, margin guidance will proportionately increase. If you look at the historical EBIT margin for last year, it will proportionately grow along with the growth in revenue because we also get some operational leverage benefits in the

Yes. Sir, first question is on the Animal Health business. So we've said that we have received validation for 8 products, if I'm not wrong. And we've also said that we are working with innovator and we are simultaneously working with other innovators as well. So is it that these 8 products also can be supplied to other innovators? Or is it that for the other innovators, we have to develop new set of products and it will again have its own set of time lines in terms of validation batches as well as the commercial validation batches, et cetera. So if you can just throw some light on this.

Anish Swadi

Yes. So the 8 products that we've developed are for global supply. we are free to sell those products across the world to any customer that requires them. Towith regards to your question, whether they require validation, every customer needs to validate the product in their own formulation. So yes, they will require validation in their own formulation. So the stipulated time lines that we'll follow with our primary customer will apply to all secondary customers. Fair enough. The second question in terms of the Crop Protection segment, this quarter, we've had a very strong set of margins. You'v

Thank you for a good set of numbers as shareholders. Two questions. One is on the ROE front and the ROCE front. We are at 7.3% ROE for this financial year and even the ROCE is at 9.9%. Do you see any improvement in FY '26?

Sameer Hiremath

Well, at the Pharma Division, definitely, there will be improvement. But the Crop Division, there will be a kind of a drag on that because depreciation charge will come in significantly. We recently capitalized... We recently capitalized a large asset in quarter 3. You must have seen the CWIP impact. So there will be a drag for next year because the Crop business, but it will get depressed next year actually. There will be a reduction next year. So next year, you expect the ROE to go down further? Slightly, yes. Slightly or same. Yes. So that's, I mean, as low as probably the FD rate the gover

Now compared to FY '24, any new capabilities we have added as a company in our agrochemical, Pharma in terms of chemistry skills, looking at the various opportunities which are coming up? And anything -- if you would like to highlight on anything?

Sameer Hiremath

So we put high potency chemistry is what we are launching this year. High potency. Okay. So this -- so in terms of -- so once you've launched it, then you -- how long does it take for you to take it to the customer and start from like the launching stage till the revenue stage, generally, how it's been in the past? And what sort of revenue... Sorry, yes. And what sort of revenue generally you get and what you look at for a new chemistry launch? Well, I mean, if you look at the new NCEs that are coming out, more than 50% of the new NCEs are now high potent chemistry. So that is what we'll be at

Sameer, a couple of questions from my end. You -- in one of the past calls, you had mentioned that you -- in terms of pipeline when it comes to Phase III molecules, 2 of them are very promising, right? And they will probably materialize sometime in '26 or '27. Do you have any update to share on those molecules? How is the innovator, what is the sense that we are getting on innovator? Are they on track to be the blockbusters that we expect them to be?

Sameer Hiremath

Sure, Manoj, why don't you take that? Yes. So we have 2 molecules in Phase III. So one of them is definitely moving faster, and we may get some revenues in FY '26 in the coming year. But by and large, it will be launched in 2027. So you will see a good launch ramp-up in '27. The second one is still not crossed the clinical hurdle. It's still in Phase III, and we have to really wait and watch. But overall, if you see, there are a number of other programs also which are in Phase I, Phase II. So overall, we have a healthy pipeline of the CDMO kind of launch molecule KSMs. Sure. So just taking thi

Yes. Sir, in terms of the addressable market for Pharma and agrochem molecules that we are working on, if you can just give us a broader understanding of that? So maybe a molecule usually has an addressable size of maybe $20 million, $25 million. Just to get an understanding how much potentially maximum revenues that we can generate once the molecule is commercialized, both in Pharma as well as agrochemical separately?

Sameer Hiremath

Was your question regarding particular projects or the total addressable market size? Can you just elaborate? So generally, when we are funneling our products, we must be looking at a particular market size. If that is too low, probably we may not be looking at that opportunity. So what is that we look usually for both Pharma and agrochemicals from a molecule perspective to work on? Yes. So I'll typically say, I think we look at typical minimum size of at least $5 million a project. I mean, ideally, we want to look at even $10 million. And some of the products that we have in our portfolio hav

Sir, what is the status of U.S. FDA observations, which we got in February?

Sameer Hiremath

We've responded to the FDA observations and all the observations have been responded by us. We're just awaiting the response. Sir, are they preserving nature or something we need to be looked at seriously? Well, there was no data integrity issue at all in any of the observations. So we have given our responses, and we wait to hear back from the FDA. As of now, we cannot make any comments regarding that. Yes.

Thank you, everyone, for joining our quarterly earnings call and our annual financial call for the year ended March 31, 2025. And thank you for your continued interest in our company. We appreciate your support as we navigate through the challenges of the global business environment. As we conclude this call, we want to assure you we are here to address any further questions or concerns. Feel free to reach out to us or our Investor Relations partner, Strategic Growth Advisors. Once again, thank you for your participation. Goodbye.

Management

Speaking time

Sameer Hiremath

Dhaval Shah

Moderator

Rohit Sinha

Rohit Nagraj

Pranay Dhelia

Prolin Nandu

Anish Swadi

Manoj Mehrotra

Kuldeep Jain

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Opening remarks

Sameer Hiremath

Thank you very much. Ladies and gentlemen, good afternoon, and a very warm welcome to all of you. We extend our gratitude to all of you for participating in our Q4 and FY 2025 results conference call. We are pleased to provide you with an update on the progress made by our company. We trust that you have had the opportunity to review our earnings release, investor presentation and the financial statements for the quarter and financial year ended 31st March 2025. These documents can be accessed on both Hikal's website and the stock exchanges website. I am Sameer Hiremath, Managing Director of Hikal Limited, and I'll be leading the discussion and presenting the financial results and the outcome on the business. Joining me on this call, I have Anish Swadi, Senior President, Business Transformation and Animal Health; Kuldeep Jain, Chief Financial Officer; Manoj Mehrotra, President, Pharma Business; Vimal Kulshrestha, President of our Crop Protection business; and Strategic Growth Advisors,

Manoj Mehrotra

Thank you, Sameer, and good afternoon, ladies and gentlemen. I'll start with the financials of the Pharma business. For quarter 4 FY '25, our Pharmaceutical business reported revenue of INR351 crores and EBIT of INR55 crores. For the full year FY '25, revenue stood at INR1,168 crores and EBIT of INR137 crores. EBIT grew of 47% on Y-o-Y basis. This is a significant increase of 327 basis points on Y-o-Y basis on the back of operating leverage. This momentum reflects our continued efforts in operational excellence, expanded customer base and improved capacity utilization. The CDMO segment continues to be a key strategic driver for us. We have a healthy pipeline of development programs from global pharma innovators and specialty chemical companies. On the API side, our API business continues to demonstrate quarter-on-quarter over growth, reflecting both market demand and the effectiveness of our commercial strategies. In parallel, we are enhancing our value proposition through an active pr

Vimal Kulshrestha

Thank you, Manoj. Good afternoon all the participants of this earnings call. In Q4 FY '25, the revenue for our Crop Protection business stood at INR201 crores with an EBIT of INR36 crores and EBIT margin of 18%. For the full year, revenue of Crop Protection business stood at INR692 crores with EBIT of INR79 crores and EBIT margin of 11.4%. We are actively engaging on CDMO opportunities with existing innovator companies as well as new customers and advancing promising discussions on new prospects. Momentum continues to build across our CDMO portfolio, spanning both development and contract manufacturing. We continue to work on manufacturing excellence initiative to improve our margins in current competitive environment and, of course, Chinese competition. Regarding our business vertical, own product vertical, we are actively expanding our product pipeline to drive growth. This includes targeting high potential opportunities that strengthen our portfolio and align evolving market needs.

Anish Swadi

Thanks, Vimal. First, I'd like to take you through the Animal Health business. We are making steady progress on the development of multiple APIs for our leading customer who is an Animal Health innovator under our long-term partnership. The validation for several of the products are on track and are scheduled to be completed in the upcoming quarter, which we will support product registration efforts and pave the way for commercial launches in the next several quarters across key global markets. In parallel, we are actively expanding our footprint in the Animal Health segment by engaging with new clients on process development and synthesis of complex molecules for NCEs or new chemical entities. Early-stage outcomes have been encouraging, reinforcing our position as a reliable partner for high-value differentiated chemistries. This segment continues to offer growth potential driven by rising global demand for veterinary therapeutics, increasing regulatory oversight and the shift toward

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