HIKALNSEQ2 FY26November 19, 2025

Hikal Limited

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Management on call

Sameer Hiremath

VICE CHAIRMAN AND MANAGING DIRECTOR

Anish Swadi

SENIOR PRESIDENT AND HEAD OF BUSINESS TRANSFORMATION AND ANIMAL HEALTH

Kuldeep Jain

CHIEF FINANCIAL OFFICER

Manoj Mehrotra

PRESIDENT, PHARMACEUTICAL BUSINESS

Key numbers — 40 extracted

rs,

r; Manoj Mehrotra – our President and head of the Pharmaceutical Business; Strategic Growth Advisors, our Investor Relations advisors. Talking about our Q2 FY26 performance: If we look at the end

Rs. 319 crore

ilience to navigate near-term uncertainty. The consolidated revenue for Quarter 2, FY26, stood at Rs. 319 crores, the EBITDA of Rs. 8 crores. We were able to maintain operational stability despite financials b

Rs. 8 crore

uncertainty. The consolidated revenue for Quarter 2, FY26, stood at Rs. 319 crores, the EBITDA of Rs. 8 crores. We were able to maintain operational stability despite financials being affected by a short-ter

Rs. 699 crore

sulted in under-absorption of fixed costs during the quarter. For H1 FY26, the revenue stood at Rs. 699 crores for the company with an EBITDA of Rs. 32 crores. While the first half has been impacted in our p

Rs. 32 crore

g the quarter. For H1 FY26, the revenue stood at Rs. 699 crores for the company with an EBITDA of Rs. 32 crores. While the first half has been impacted in our pharmaceutical business due to regulatory develop

Rs. 190 crore

h are being ramped up as we speak. The pharmaceutical business revenue for the quarter stood at Rs. 190 crores with an EBIT margin of negative 9.2%. As you know, the Bangalore facility of Hikal received OAI

9.2%

ceutical business revenue for the quarter stood at Rs. 190 crores with an EBIT margin of negative 9.2%. As you know, the Bangalore facility of Hikal received OAI status earlier this year in May follow

Rs. 129 crore

he niche CDMO segments. During the quarter, our Crop Protection segment revenue recorded sales of Rs. 129 crores with an EBIT of minus Rs. 10 crores. The margins remained under pressure due to the ongoing pric

Rs. 10 crore

arter, our Crop Protection segment revenue recorded sales of Rs. 129 crores with an EBIT of minus Rs. 10 crores. The margins remained under pressure due to the ongoing pricing challenges stemming from oversup

Rs. 8 crore

rter 2 FY 2026, our consolidated revenue stood at Rs. 319 crores. EBITDA for the quarter stood at Rs. 8 crores, translating to a margin of 2.6%. Lower than expected sales have resulted in under-absorption of

2.6%

stood at Rs. 319 crores. EBITDA for the quarter stood at Rs. 8 crores, translating to a margin of 2.6%. Lower than expected sales have resulted in under-absorption of fixed costs during the quarter.

Rs. 32 crore

alf-year FY 2026, consolidated revenue reached Rs. 699 crores, and EBITDA for the same period was Rs. 32 crores, with a margin of 4.6%. Finance costs for the Quarter 2 FY 2026 was at Rs. 15 crores, which is a

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Guidance — 20 items

Sameer Hiremath

opening

“We extend our gratitude to all of you for participating in our Q2 and H1 FY26 Results Conference Call.”

Sameer Hiremath

opening

“I am Sameer Hiremath – Vice Chairman and Managing Director, Hikal Limited, and I will be taking you through the discussion and presenting the financial results.”

Sameer Hiremath

opening

“Talking about our Q2 FY26 performance: If we look at the end market, the global chemical and life sciences industry is showing signs of a measured recovery.”

Sameer Hiremath

opening

“The consolidated revenue for Quarter 2, FY26, stood at Rs.”

Sameer Hiremath

opening

“Despite the challenges faced in the first half of this year, we expect a strong recovery in Q3 and Q4 as mentioned in our last conference call, supported by improved demand visibility, higher capacity utilization, and the commercialization of new products which are being ramped up as we speak.”

Sameer Hiremath

opening

“We expect and we are progressing now well to resumption in the supply which has begun from October 2026.”

Sameer Hiremath

opening

“In the near term, we anticipate a gradual recovery in the second half of this year for the crop division, with stable performance expected on a full year basis, which is similar to last year.”

Sameer Hiremath

opening

“We are expanding our collaboration with global customers on personal care ingredients, and we expect to commercialize two to three products in the second half of this financial year and ramp up the volumes in the next financial year.”

Sameer Hiremath

opening

“We reaffirm the recovery in H2 FY26, as mentioned in the last conference call, to cover the deferment gap from H1 FY26 while sustaining demand of second half of the year.”

Kuldeep Jain

opening

“We are maintaining our full-year CAPEX guidance of Rs.”

Risks & concerns — 14 flagged

This had delayed temporarily the off-take across both our generics and our CDMO businesses as customers conducted their own internal risk assessments.

— Sameer Hiremath

We have responded to these risk assessments with urgency and discipline, which have now been completed.

— Sameer Hiremath

The margins remained under pressure due to the ongoing pricing challenges stemming from oversupply in the global market.

— Sameer Hiremath

Most customers have completed their risk assessments, and we have resumed deliveries which will ramp up significantly in H2 FY '26.

— Manoj Mehrotra

As part of our risk mitigation efforts, we are progressing towards dual-side validation for all critical APIs.

— Manoj Mehrotra

But as the pricing pressure comes on these innovators, they start looking for generic version.

— Manoj Mehrotra

But the customer had asked us to hold on till the risk assessment was completed.

— Sameer Hiremath

They re- looked at the risk assessment again in September post the warning letter.

— Sameer Hiremath

Yes, there was a delay in September, which we explained, because the customers do their risk assessment post their warning letter.

— Manoj Mehrotra

My answer is the same that because of the customers asking us to do the risk evaluation, even though the orders of the system, if we are asked to ship them, we are asked to hold the material.

— Sameer Hiremath

Yes, there is a deferment because of customers do their risk assessment.

— Manoj Mehrotra

So, it is difficult to quantify at this point of time.

— Manoj Mehrotra

Sir, I have a few questions regarding, sir, some of our peers have actually started into a specialty chemical side because of seeing the slowdown in the crop chem side.

— Henil Bagadia

In the crop protection space, the crop protection companies are now, because of the tremendous cost pressure that our customers are facing, in the past they were outsourcing manufacturing, and India was well known for crop protection CDMO manufacturing.

— Sameer Hiremath

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Q&A — 7 exchanges

Sir, I have got a few questions. Sir, on the pharma and crop care both sides, a large part of our revenue actually does come from the legacy and old molecules which have got very low margins. So, as investors, how should we look at the mix? I mean, what is the mix right now between the legacy and the new molecules that you have launched in the last 3-4 years which do enjoy healthy margins? And how should we see the mix in FY27 and FY28 as the projects start actually picking up?

Sameer Hiremath

So, if you look at our total margin profile, the mix between CDMO and own, and I would categorize CDMO to be obviously higher margin business. So, our current CDMO business is about 50% of our revenue today. And our own business is also close to 50%. In that 50% of the own molecules, which is our generic API business, only we have a few commodity low-margin products, but we have a market leadership and volumes-based business. So, that covers our fixed costs to a very large extent with volumes. That is a volume play. But we are launching several new generic APIs, which is in the new generation

I would like to understand regarding the footnote which talks about this Rs. 80 crores revenue. So, was there some accounting change during the quarter which we were not aware of? So, I am seeing this for the first time in a pharma company that during the quarter the auditor doesn't allow this revenue to be recognized. Can you just elaborate on this?

Sameer Hiremath

Yes, see, basically the sales, because of the FDA issue that many of the orders that were in the system, the sales took place towards the end of September. But the customer had asked us to hold on till the risk assessment was completed. So that resulted in the sales getting spilled over to the first week of October. Because of that they had to be reversed into the September numbers. All the reverses were taken in September. And all the sales subsequently happened in the first few weeks of October. And have been completed. So, all of these were related to the pharma division. So, it is only the

Good evening to the management. Thanks for the opportunity. I just wanted to understand, get sense on this deferral that we have had. What was the nature? I know you clarified to the previous participant, but just any more details that you can share because it is a large number of Rs. 80+ crores.

Sameer Hiremath

Basically, this is what I just mentioned to the previous participant. My answer is the same that because of the customers asking us to do the risk evaluation, even though the orders of the system, if we are asked to ship them, we are asked to hold the material. And the material got delayed by a week or so in shipment. It went into the first week of October. So, we took a decision to reverse these sales because of the accounting technicalities and they have been accounted already from the October sales. They have all come into October sales now. And previous quarter we had spoken about, and you

I hope that this is the worst of it that we have seen. Two questions quickly, if you may permit. One is that there is an increase in manpower cost. Is that justifiable with this kind of performance? We are seeing a surge in manpower cost rather than reduction in salary or some kind of incentive being disallowed to people who are not performing that well?

Sameer Hiremath

Well, we had to front-load some of the manpower costs because of the new assets that are coming on stream. So, we are building up new assets in our businesses based on the CAPEX. So, that is why some of the front-loading of manpower costs has come. And we have onboarded business development people in the global markets. And also, we have added on some additional manpower based on the new technology that we are putting in place in the R&D side. That being said, we have taken an exercise for rationalizing the manpower cost this year. And the initiative is underway. And by end of this year, we wi

Sameer, my first question is, post the warning letter, whatever our plans were to introduce new molecules, if you can quantify the impact in the current year as well as if it goes further in the next year, then what could be the total impact on our business or the potential loss that we would see in terms of revenue?

Sameer Hiremath

Manoj, you want to take that? Yes, as I mentioned to the previous person who asked this question, that first is the mature products don't get affected. Yes, there is a deferment because of customers do their risk assessment. They have to come here, make sure that their specificities are being met and we have no chance, no possibility of any kind of batch failure or so. Yes, the new products do get affected, but if you really see, say in this FY '26, we would not have really lost more than, say, Rs. 20 crores, Rs. 30 crores, which is very minimum if you see our Rs. 1,200 crores, Rs. 1,300 crore

Sir, I have a few questions regarding, sir, some of our peers have actually started into a specialty chemical side because of seeing the slowdown in the crop chem side. So, what was the reason why we have delayed? Because, I mean, a lot of our peers have actually got more strong on the specialty chemicals and probably they have reduced the turnover from the crop chem side. So, what got us to delay so much?

Sameer Hiremath

No, I don't think it was delayed. As you know, we have a pharma business which is larger than our crop business. And the focus has been in the last few years to invest in the pharma business where we created and to ramp up the animal health business. So, we are rationalizing our crop assets and then we are retooling some of the plants that I mentioned to the previous speaker to make the specialty chemicals. So, it’s not been a delay. I think we are not making huge investments in spec chem. We are retooling some of the existing assets to launch the spec chem business, but with the GMP in focus.

Thank you, everyone, for joining our quarterly and our H1 earnings call and for your continuous interest in our company. We appreciate all the support you have provided to us as we navigate through the challenges of the current global business environment. As we conclude this call, we want to assure you that we are here to address any further questions or concerns. Please feel free to reach out to our Investor Relations partner, Strategic Growth Advisors. And once again, thank you for your participation. Goodbye, and have a very good evening. Thank you.

Management

Speaking time

Sameer Hiremath

Manoj Mehrotra

Henil Bagadia

Manoj

Moderator

Dhaval Shah

Anish Swadi

Shravan Vohra

Pranay Dhelia

Kuldeep Jain

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Opening remarks

Sameer Hiremath

Thank you. Ladies and gentlemen, good afternoon, and a warm welcome to all of you. We extend our gratitude to all of you for participating in our Q2 and H1 FY26 Results Conference Call. We are pleased to provide you with an update on the progress made by our company. We trust you have had the opportunity to review our comprehensive earnings release, investor presentation, and the financial statements for the quarter and half-year ended 30th September 2025. These documents can be accessed on both Hikal's website and the stock exchanges website. I am Sameer Hiremath – Vice Chairman and Managing Director, Hikal Limited, and I will be taking you through the discussion and presenting the financial results. On this call with me, I have Anish Swadi – our Senior President & Head of Business Transformation and Animal Health; Kuldeep Jain – our Chief Financial Officer; Manoj Mehrotra – our President and head of the Pharmaceutical Business; Strategic Growth Advisors, our Investor Relations adviso

Kuldeep Jain

Thank you, Sameer, and good evening, everybody. Let me now take you through the financial performance of Hikal for Q2 and H1 FY 2026 and share key updates on our financial trajectory, capital allocation priorities and balance sheet strength. For Quarter 2 FY 2026, our consolidated revenue stood at Rs. 319 crores. EBITDA for the quarter stood at Rs. 8 crores, translating to a margin of 2.6%. Lower than expected sales have resulted in under-absorption of fixed costs during the quarter. For the half-year FY 2026, consolidated revenue reached Rs. 699 crores, and EBITDA for the same period was Rs. 32 crores, with a margin of 4.6%. Finance costs for the Quarter 2 FY 2026 was at Rs. 15 crores, which is a reduction of 13% and 20% on a Y-o-Y basis. Depreciation remained in line with last quarter. Capital expenditure during the first half year stood at Rs. 65 crores, focused on debottlenecking, regulatory upgrades and expanding CDMO capacity. We are maintaining our full-year CAPEX guidance of Rs

Manoj Mehrotra

Thank you, Kuldeep, and good afternoon, ladies and gentlemen. Let me now walk you through the performance of our pharmaceutical business: In Q2 FY '26, our pharmaceutical segment recorded a revenue of Rs. 190 crores and EBIT of Rs. (-17) crores. There have been disruptions in customer optic patterns, which were influenced by the recent US FDA Official Action Indicated (OAI) status at a Bangalore facility, followed by warning letters in August 25. Most customers have completed their risk assessments, and we have resumed deliveries which will ramp up significantly in H2 FY '26. Following the US FDA inspection, our Bangalore facility received an OAI classification, and a subsequent warning letter dated August 22nd. We are actively addressing these observations through a structured, time-bound remediation program. In collaboration with global CGMP consultants, we are implementing corrective and preventive actions that align with international regulatory standards. The remediation plan is o

Anish Swadi

Thanks, Manoj. First, I would like to discuss the animal health business. We are seeing continued progress in our animal health business. Most molecules under the long-term supply agreement are now being delivered at small commercial volumes as registrations have started to come through across global markets. At the same time, I am pleased to tell you that we have been awarded new development contracts for two molecules from global innovators. Additionally, we have submitted proposals for two new RFPs from different global innovators for their on-patent proprietary products. Our recent enhancement in the technology platform with HP API capabilities on the pharmaceutical business will also enable us to further diversify our offerings in the animal health and enter into niche segments. We have built a strong long-lasting partnerships with innovators across the U.S. and Europe and are increasingly positioned as more than just a manufacturing partner. We are now being recognized for our di

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