ICICI Direct is bullish on Hikal has recommended buy rating on the stock with a target price of Rs 165 in its research report dated June 20, 2020.
ICICI Direct's research report on Hikal
Q4FY20 revenues fell 17.2% YoY to Rs 379 crore due to the temporary shutdown of the company's manufacturing facilities and ~Rs 50 crore sales deferral due to Covid-19. Crop protection segment fell 23% to Rs 153 crore whereas pharma segment de-grew 12.7% to Rs 226 crore. EBITDA margins stayed stable at 18.6% (up 28 bps YoY) with a 564 bps increase in GM (48.8%) offset by higher staff & other expenses. Subsequently, EBITDA de-grew 15.9% to Rs 70.6 crore. Net profit declined 26.6% YoY to Rs 24.5 crore.
Outlook
This bodes well in the current scenario when Chinese supply disturbances, government incentives are likely to create opportunities for Indian players both in APIs, crop protection CDMO. We arrive at a valuation of Rs 165 based on 12x FY22E EPS of Rs 13.8.
For all recommendations report, click here
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