Q1 2027 Hikal Ltd Earnings Call

August 6, 2026

Speaker #1: Ladies and gentlemen, you are connected to the Hikal Q1 FY27 conference call. Please stay connected; the call will begin shortly. Ladies and gentlemen, you are connected to the Hikal Q1 FY27 conference call.

Speaker #1: On this conference call, please be connected to the call shortly. Ladies and gentlemen, good day and welcome to the Hikal Q1 FY27 conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 1: Ladies and gentlemen, good day and welcome to the Hikal Limited Q1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this call is being recorded. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call.

Operator: Ladies and gentlemen, good day and welcome to the Hikal Limited Q1 FY2027 earnings Conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this call is being recorded. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call.

Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touchscreen phone. Please note that this call is being recorded.

Speaker #1: This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call.

Speaker #1: These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Sameer Hiremat, Finance Director of Hikal Limited.

Operator 2: These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Sameer Hiremath, Managing Director for Hikal Limited. Thank you, and over to you, sir. Ladies and gentlemen, please stay connected. The management line has been dropped. Ladies and gentlemen, we have the management on the line with us. Sameer, sir, you may proceed.

Operator: These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Sameer Hiremath, Managing Director for Hikal Limited. Thank you, and over to you, sir. Ladies and gentlemen, please stay connected. The management line has been dropped. Ladies and gentlemen, we have the management on the line with us. Sameer, sir, you may proceed.

Speaker #1: Thank you, and over to you, sir. Ladies and gentlemen, please stay connected to the management line as we talk. Ladies and gentlemen, we have management on the line with us.

Speaker #1: Sameer, sir, you may proceed.

Speaker #2: Yeah, thank you, Aina. I think there were some call drop-offs—apologies for that. Good afternoon, ladies and gentlemen, and a warm welcome to all of you.

Sameer Hiremath: Yeah. Thank you. I think there was some call drop-off. Apologies for that. Good afternoon, ladies and gentlemen, and a warm welcome to all of you. We extend our gratitude to all of you for participating in our Q1 results conference call. I'm delighted to provide you with an update on the progress made by our company. We trust you've had the opportunity to review our comprehensive earnings release, the investor presentation, and the financial statements for the quarter ended 30 June 2026. These documents can be accessed on both Hikal's official website and the stock exchange's website. I am Sameer Hiremath, Vice Chairman and Managing Director of Hikal Limited, and I'll be leading the discussion and presenting the financial results. On this call with me, I have Anish Swadi, Senior President of Business Transformation and Head of Animal Health Business.

Speaker #2: We extend our gratitude to all of you for participating in our Q1 results conference call. I'm delighted to provide you with an update on the progress made by our company.

Speaker #2: We trust you had the opportunity to review our comprehensive earnings release, the investor presentation, and the financial statements for the quarter ended June 30, 2026.

Speaker #2: These documents can be accessed on both Hikal's official website and the Stock Exchange's website. I am Sameer Hiremat, Vice Chairman and Managing Director of Hikal Limited, and I'll be leading the discussion and presenting the financial results.

Speaker #2: On this call with me, I have Anees Swadhi, Senior President of Business Transformation and Head of Animal Health Business; Kurdeep Jain, our CFO; Manoj Malhotra, Head of our Pharma Business; Ravi Khadbari, Head of our Crop Protection Business; and our Strategic Growth Advisor and Investor Relations Advisor.

Sameer Hiremath: Kuldeep Jain, our CFO, Manoj Mehrotra, our head of our pharma business, Ravi Khadbadi, head of our crop protection business, and Strategic Growth Advisors, our investor relations advisors. Before diving into the quarterly performance, I am pleased to share that Hikal has been recently awarded EcoVadis Gold Medal, achieving an overall score of 84 on 100 and a 97th percentile ranking, placing us among the top 5% of over 175,000 companies globally assessed for sustainable performance. This recognition reflects our continued focus on sustainability, operational excellence, compliance, and governance. It is a strong validation of the progress we are making, a significant boost for our teams, and reinforces the confidence of our customers, partners, and investors in Hikal's long-term commitment to responsible and sustainable growth. Now talking about Q1 FY27 performance.

Speaker #2: Before diving into the quarterly performance, I am pleased to share that Hikal has been recently awarded the EcoVadis Gold Medal rating, achieving an overall score of 84.1 and a 97th percentile ranking, placing us among the top 5% of over 175,000 companies globally assessed for sustainable performance.

Speaker #2: This recognition reflects her continued focus on sustainability, operational excellence, compliance, and governance, and is a strong validation of the progress we are making, as it reinforces the confidence of our customers, partners, and investors in Hikal's long-term commitment to responsible and sustainable growth.

Speaker #2: Now, talking about Q1 FY27 performance, we began the year with a recovery journey as we transitioned from a regulatory-led disruption last year to execution-led growth.

Sameer Hiremath: We began the year with a recovery journey as we transition from a regulatory-led disruption last year to execution-led growth. During this quarter that just ended on 30 June, we continued to strengthen our pharmaceutical crop protection animal health business while entering a new division on personal care. This was done through an execution of customer engagement, strategic investments in manufacturing which were done in the last several years, quality upgrades, innovation, and operational excellence. For Q1 FY27, we reported revenue of INR 403 crore with an EBITDA margin of 9.2%, which was supported by improving customer ordering patterns and product mix, which continue progress across regulated markets and our increasing CDMO partnerships. The pharmaceutical business delivered year-on-year growth despite the expected plant shutdown that we took in this Q1 of this year for the US FDA remediation efforts, which are almost completed.

Speaker #2: During this quarter, which just ended on June 30th, we continued to strengthen our pharmaceutical, crop protection, and animal health businesses while entering a new division in personal care.

Speaker #2: This was done through the execution of customer engagement, strategic investments in manufacturing—which were made over the last several years—quality upgradation, innovation, and operational excellence.

Speaker #2: For Q1 FY27, we reported revenue of ₹403 crore with an EBITDA margin of 9.2%, which was supported by improving customer ordering patterns and a product mix that continued to progress in regulated markets and our increasing CDMO partnerships.

Speaker #2: The pharmaceutical business delivered year-on-year growth despite the expected plant shutdown that we took in Q1 of this year for the US FDA remediation efforts, which are almost completed.

Speaker #2: Customer ordering patterns are normalizing, providing better demand visibility, while disciplined execution and improving product mix supported profitability, which resulted in an improvement in gross margins for the Pharma division.

Sameer Hiremath: Customer ordering patterns are normalizing, providing better demand visibility while disciplined execution, improving product mix supported profitability, which resulted in an improvement in gross margins for the pharma division. Our recovery is expected to strengthen through FY27 as our US FDA remediation program gets implemented and our regulatory milestones are achieved. We continue to evolve our portfolio towards niche, higher-value products while maintaining strong relationships with customers across the regulated markets and entering new geographies like Japan and Latin America. Our investments remain focused on new therapeutic areas like gastroenterology, oncology, CNS, and other specialized therapies. We also continue to expand our CDMO capabilities and strengthen customer partnerships, which are being enabled and accelerated by the recently commissioned cGMP pilot plant at our R&D center in Pune. We expect the momentum to improve with H2 of FY27 benefiting from recovery in regulated markets and increasing CDMO contribution, thereby increasing margins.

Speaker #2: Our recovery is expected to strengthen through FY27 as our US FDA remediation program is implemented and our regulatory milestones are achieved. We continue to evolve our portfolio toward niche, higher-value products while maintaining strong relationships with customers across regulated markets and entering new geographies like Japan and Latin America.

Speaker #2: Our investments remain focused on new therapeutic areas like gastroenterology, oncology, CNS, and other specialized therapeutics. We also continue to expand our CDMO capabilities and strengthen customer partnerships, which are being enabled and accelerated by the recently commissioned cGMP pilot plant and the R&D center in Pune.

Speaker #2: We expect the momentum to improve with SQF in H2 of FY27, benefiting from recovery in regulated markets and an increasing CDMO contribution, thereby increasing margins.

Speaker #2: We have been continuously dialoguing with the US FDA over the last year, since we got the warning letter in August 2025, and our remediation program is on track.

Sameer Hiremath: We have been continuously dialoguing with the US FDA over the last year since we got the warning letter August 2025. Our remediation program is on track. We expect a re-inspection towards the end of this financial year. Furthermore, other regulatory international bodies and major pharma innovator clients have successfully audited and reapproved Hikal's facilities over the last 12 months, reinforcing their trust on Hikal by ensuring zero lost customer contracts. We haven't lost a single customer order in the last 12 months. Our newly commissioned pilot plant in Panoli is now operational, and this enables us to de-risk from Bangalore to Panoli and also increases our DMF filing capability, which is now going to be 6 to 7 filings per year compared to 2 to 3 filings historically.

Speaker #2: We expect a reinspection towards the end of this financial year. Furthermore, other regulatory international bodies and major pharma innovator clients have successfully audited and re-approved Hikal's facilities over the last 12 months.

Speaker #2: Reinforcing their trust in Hikal by ensuring zero lost customer contracts, we have not lost a single customer order in the last 12 months. Our newly commissioned pilot plant in Panoli is now operational, and this enables us to de-risk from Bangalore to Panoli and also increases our DMF filing capability, which is now going to be six to seven filings per year compared to two to three filings historically.

Speaker #2: In the crop protection business, the industry continues to recover gradually, with volume growth coming back, although the pace remains uneven across different geographies. Global China inventories have largely normalized after almost two to three years of restocking, which should support fresh buying as seasonal demand improves.

Sameer Hiremath: In the crop protection business, the industry continues to recover gradually by volume growth coming back, although the pace remains uneven across different geographies. Global channel inventories have largely normalized after almost two to three years of restocking, which should support fresh buying as seasonal demand improves. That said, distributors are still buying just in time rather than restocking and building up inventory at their end. The recovery in ordering is steady but cautious. Pricing, however, continues to remain under pressure due to excess supply from China, limiting opportunities for price increases despite improving demand. Additionally, margins are impacted due to geopolitical tensions, leading to increases in raw materials and energy costs.

Speaker #2: That said, distributors are still buying just in time rather than restocking and building up inventory at their end. So, the recovery in ordering is steady but cautious.

Speaker #2: Pricing, however, continues to remain under pressure due to excess supply from China, limiting opportunities for price increases despite improving demand. Additionally, margins are impacted due to geopolitical tensions leading to increases in raw material and energy costs.

Speaker #2: Against this backdrop, our focus remains on securing contracts. We have onboarded a few new customers, maintaining cost discipline and investing extremely selectively in capacity de-bottlenecking and new capacities backed by long-term contracts and where returns are attractive.

Sameer Hiremath: Against this backdrop, our focus remains on securing contracts, which we have onboarded a few new customers, maintaining cost discipline, and investing extremely selectively in capacity debottlenecking and new capacity backed by long-term contracts and where returns are attractive. Domestic demand for our own products continues to improve, while the CDMO order visibility remains mixed, with certain customer orders shifting into H2 from H1. Overall, we expect a gradual volume-led recovery this year. On the personal care segment, which I spoke about in the last conference call, we have recently commissioned a dedicated multipurpose manufacturing line at Panoli, with commercial production having recently commenced. Revenue is expected by the end of this year. This is part of our strategy to diversifying to adjacent high-growth segments while leveraging our existing manufacturing process development and regulatory capabilities.

Speaker #2: Domestic demand for our own products continues to improve, while the CDMO order visibility remains mixed, with certain customer orders shifting into the second half of the year from the first half of the year.

Speaker #2: Overall, we expect a gradual, volume-led recovery this year. On the personal care segment, which I spoke about in the last conference call, we have recently commissioned a dedicated multipurpose manufacturing line at Panoli, with commercial production having recently commenced.

Speaker #2: Revenue is expected by the end of this year. This is part of our strategy to diversify into adjacent high-growth segments while leveraging our existing manufacturing process development and regulatory capabilities.

Speaker #2: The Animal Health business delivered another strong quarter, supported by strong demand from existing customers and approval of validation parties for new projects. We continue to strengthen customer partnerships across innovators, supported by differentiated manufacturing capabilities and regulatory expertise.

Sameer Hiremath: The animal health business delivered another strong quarter, supported by strong demand from existing customers and approval of validation qualities for new projects. We continue to strengthen customer partnerships across innovators, supported by differentiated manufacturing capabilities and regulatory expertise. During the quarter, we further expanded our development pipeline with new NCEs and advanced intermediates progressing through development, validation, and moving towards commercialization. On the capital allocation and balance sheet side, as mentioned in the previous calls, over the last 4 years, we have invested approximately INR 900 crores in capital expenditure. INR 300 crores of this was allocated towards maintenance CapEx, which is approximately INR 75 crores per year across our 6 sites. The balance INR 600 crores was invested in growth CapEx, comprising, number one of the INR 300 crores towards an agricultural chemical manufacturing plant, which was subsequently part impaired in Q4 last year and is now being retooled.

Speaker #2: During the quarter, we further expanded our development pipeline with new NCs and advanced intermediates progressing through development and validation, and moving towards commercialization. On the capital allocation and balance sheet side, as mentioned in the previous calls, over the last four years we have invested approximately ₹900 crore in capital expenditure.

Sameer Hiremath: On the capital allocation and balance sheet side, as mentioned in the previous calls, over the last 4 years, we have invested approximately INR 900 crores in capital expenditure. INR 300 crores of this was allocated towards maintenance CapEx, which is approximately INR 75 crores per year across our 6 sites. The balance INR 600 crores was invested in growth CapEx, comprising, number one of the INR 300 crores towards an agricultural chemical manufacturing plant, which was subsequently part impaired in Q4 last year and is now being retooled.

Speaker #2: Three hundred crores of this was allocated towards maintenance CAPEX, which is approximately seventy-five crores per year across our six sites. The balance six hundred crores was invested in growth CAPEX.

Speaker #2: Comprising number one of the ₹300 crore towards an agrochemical manufacturing plant, which was subsequently part-impaired in Q4 last year and is now being retooled.

Speaker #2: Retooling this asset will reduce execution timelines by nearly 12 months for our new pharma and animal health portfolio, which has already been signed under long-term contracts in the CDMO space.

Sameer Hiremath: Retooling this asset will reduce execution timelines by nearly 12 months for our new pharma animal health portfolio, which has been signed before by long-term contracts in the CDMO space. INR 150 crores of the INR 600 crores were also invested in the last 3 years in a new dedicated animal health manufacturing site, where validations were completed and revenues have started to flow in. INR 100 crores was invested of the INR 600 crores in the multipurpose manufacturing facilities in Bangalore over the last 3 years, which have already started to generate revenue. The balance has been investing in upgrading our R&D capabilities by building up a new high-potency anti-cancer laboratory in Pune, a new cGMP pilot plant, and also a new pilot plant in Panoli, which was commissioned last year.

Speaker #2: ₹150 crores of this ₹600 crores were also invested in the last three years in a new dedicated Animal Health manufacturing site, where validations were completed and revenues have started to flow in.

Speaker #2: ₹100 crores was invested out of the ₹600 crores in the multipurpose manufacturing facilities in Bangalore over the last three years, which have already started to generate revenue.

Speaker #2: The balance has been invested in upgrading our R&D capabilities by building a new high-potency anti-cancer laboratory in Pune, a new CGMP pilot plant, and also a new pilot plant in Panoli, which has been commissioned.

Speaker #2: Last year. Over the years, despite navigating multiple external challenges, we remain focused on strengthening our operations while strategically investing in new growth platforms.

Sameer Hiremath: Over the years, despite navigating multiple external challenges, we remain focused on strengthening our core operations while strategically investing in new growth platforms. As part of this effort, Hikal today, compared to where we were three, four years ago, we are a 2-division type of approach. In the last three years, we have incubated successfully two emerging businesses, Animal Health and Personal Care. The Animal Health has now scaled an annual turnover approximately over INR 100 crore last year and continues to witness strong customer traction based on the CDMO contract that we have signed and are finalizing with our global customers, which will drive meaningful growth revenue in the next three to four years. The Personal Care front, we have recently commissioned a dedicated manufacturing line at Panoli by repurposing the part-impaired asset, which is enabling an efficient capital deployment.

Speaker #2: As part of this effort, Hikal today compared to where we were three or four years ago, we had a two-division type of approach. In the last three years, we have incubated successfully two emerging businesses: animal health and personal care.

Speaker #2: The Animal Health business has now scaled to an annual turnover of approximately over ₹100 crore last year and continues to witness strong customer traction based on the CDMO contracts that we have signed and are finalizing with our global customers.

Speaker #2: Which will drive meaningful revenue growth in the next three to four years. On the personal care front, we have recently commissioned a dedicated manufacturing line at Panoli by repurposing a partly impaired asset, which is enabling efficient capital deployment.

Speaker #2: Importantly, despite undertaking significant investment over the last several years and navigating a challenging business environment, we have reduced our net debt from approximately ₹815 crore in FY24 to ₹685 crore by the end of FY26, with our debt-to-equity ratio now at 0.53.

Sameer Hiremath: Importantly, despite undertaking significant investments over the last several years and navigating a challenging business environment, we have reduced our net debt from approximately INR 815 crore in FY24 to INR 685 crore by end of FY26, with our debt-to-equity ratio now being 0.53. As promised in the last conference call, I'd like to give an outlook for the next quarter and the year for this year. We are seeing a positive momentum going forward. Our expectations from Q2 on a YOY basis, we have substantial growth in revenues and EBITDA. We believe that the momentum will accelerate even further in H2FY27, with full-year growth expectations in the range of approximately 14% to 16%, with strong growth in Pharma and a marginal growth in Crop, and EBITDA growth in the range of 25% to 30%.

Speaker #2: As promised in the last conference call, I’d like to give an outlook for the next quarter and the year. We are seeing positive momentum going forward.

Speaker #2: Our expectations from Q2, on a viable basis, are for substantial growth in revenues and EBITDA. We believe that the momentum will accelerate even further in H2 FY27, with full-year growth expectations in the range of approximately 14 to 16 percent, with strong growth in pharma and marginal growth in crop, and EBITDA growth in the range of 25 to 30 percent.

Speaker #2: Now, I would like to hand over to Kuldeep Jain, CFO, to discuss the financial performance.

Sameer Hiremath: I would like to hand over to Kuldeep Jain, CFO, to discuss the financial performance.

Speaker #3: Thank you, Sameer, and good evening to everyone who is connected to the call. I'm sure you must have gone through our financial results for the quarter ended June 2026.

Kuldeep Jain: Thank you, Sameer, good evening, everybody who's connected to the call. I'm sure you must have gone through our financial results for the quarter ended 30 June 2026. Q1 FY2027 reported revenue stood at INR 403 crore and EBITDA of INR 37 crore. Our EBITDA margin stood at 9.2% and PAT at INR -7 crore. During the quarter, we reported INR 9 crore as exceptional income on account of reversal of excess provision, which we made in the last year's Q4 with regard to the new labor codes. We have done restructuring our pay scales and therefore there is excess reservation in the provision which we had last year. Depreciation charges remained broadly in range during the quarter. Capital expenditure during the quarter stood at approximately at INR 45 crore focused on debottlenecking, regulatory upgrade, and building new capacities.

Speaker #3: Q1 FY2027 reported revenue stood at ₹403 crore and EBITDA at ₹37 crore. Our EBITDA margin stood at 9.2 percent, and PAT was negative ₹7 crore.

Speaker #3: During the quarter, we reported ₹9 crore as exceptional income on account of reversal of excess provision which we made in last year's Q4 with regard to the new labor codes.

Speaker #3: Because we have done restructuring of our pay scales, and therefore there is an excess, there is a reduction in the provision which we made last year.

Speaker #3: Depreciation charges remained broadly in range during the quarter. Capital expenditure during the quarter stood at approximately ₹84.5 crore, focused on de-bottlenecking, regulatory upgrades, and building new capacities.

Speaker #3: Our capital allocation remains highly targeted, prioritizing high ROI projects that align with our long-term growth objectives. Our growth initiatives have been largely financed through internal accruals as of 30 June 2026, and our debt-to-equity ratio stands at 0.53, compared to 0.56 in the March quarter.

Kuldeep Jain: Our capital allocation remains highly targeted, prioritizing high ROI projects that align with our long-term growth objectives. Our growth initiatives have been largely financed through internal accruals as of 30 June 2026, and our debt-equity ratio stands at 0.53 against 0.56 in March quarter. I would like to introduce Mr. Manoj Mehrotra, who will provide an overview of the Pharmaceutical division. Manoj, over to you.

Speaker #3: Now, I would like to introduce Mr. Manoj Mahutra, who will provide an overview of the pharmaceutical division. Manoj, over to you.

Speaker #4: Thank you, Kuldeep, and good evening, ladies and gentlemen. For Q1 FY27, the pharma business reported revenue of ₹233 crore, EBITDA of ₹8 crore, and an EBIT margin of 3.2%.

Manoj Mehrotra: Thank you, Kuldeep, good evening, ladies and gentlemen. For Q1 FY27, the Pharmaceutical business reported revenue of INR 233 crores, EBITDA of INR 8 crore, and an EBIT margin of 3.2%. The Pharmaceutical business continued its recovery trajectory during the quarter, supported by improving demand across both the API and CDMO businesses. We witnessed gradual normalization in customer ordering patterns and trade cycles, while the Pharmaceutical manufacturing facilities at Panoli and Bangalore operated at an average capacity utilization of nearly 80% to 85%, reflecting improving business momentum. As Sameer highlighted in his opening remarks, our focus remains on building a stronger, differentiated Pharmaceutical platform. To support this, we are enhancing our product development capabilities through increased DMF filings and investments in advanced R&D infrastructure.

Speaker #4: The pharmaceutical business continued its recovery trajectory during the quarter, supported by improving demand across both the API and CDMO businesses. We witnessed gradual normalization in customer ordering patterns and trade cycles.

Speaker #4: While the pharma manufacturing facilities at Panoli and Bangalore operated at an average capacity utilization of nearly 80 to 85 percent, reflecting improving business momentum.

Speaker #4: As Sameer highlighted in his opening remarks, our focus remains on building a stronger, differentiated pharmaceutical platform. To support this, we are enhancing our product development capabilities through increased GMA filings and investments in advanced R&D infrastructure.

Speaker #4: With the commissioning of our new pilot plant, we expect to increase our GMA filing rate from 2 to 3 filings annually, to around 5 to 6 filings per year.

Manoj Mehrotra: With the commissioning of our new pilot plant, we expect to increase our DMF filing rate from 2 to 3 filings annually to around 5 to 6 filings per year, enabling faster product development and strengthening our future pipeline. We continue to focus on high-growth therapeutic segments such as CNS, antidiabetics, gastro, and gastroenterology, while steadily expanding into differentiated higher-value product categories of oncology, urology, and anti-migraine. The Pharmaceutical generic business delivers strong year-on-year margin recovery in legacy products driven by focused cost management initiatives, while the rest of the legacy portfolio maintains stable performance. Customer ordering patterns continue to normalize, resulting in improved demand visibility across key markets. Looking ahead, we expect to further expand our geographical presence in Latin America, Japan, and Korea, while a new DMF filing program is also expected to gather momentum during FY27 and beyond.

Speaker #4: Enabling faster product development and strengthening our future pipeline. We continue to focus on high-growth therapeutic segments such as CNS, anti-diabetics, gastro, and gastroenterology.

Speaker #4: While steadily expanding into differentiated, higher-value product categories of oncology, urology, and antimigraine, the pharma generic business delivers strong year-on-year margin recovery in legacy products, driven by focused cost management initiatives.

Speaker #4: While the rest of the legacy portfolio maintains stable performance, customer ordering patterns continue to normalize, resulting in improved demand visibility across key markets. Looking ahead, we expect to further expand our geographical presence in Latin America, Japan, and Korea, while a new GMA filing program is also expected to gather momentum during FY27 and beyond.

Speaker #4: These initiatives will support portfolio expansion, broaden our market reach, and drive future growth. Our Pharma CDMO business continues to build strong momentum, with expanding customer engagement across development and commercial programs in North America, Europe, and Japan.

Manoj Mehrotra: These initiatives will support portfolio expansion, broaden our market reach, and drive future growth. Our Pharmaceutical CDMO business continues to build strong momentum, with expanding customer engagement across development and commercial programs in North America, Europe, and Japan. We continue to strengthen our pipeline of entities and intermediates with around 8 to 9 molecules at various stages of development. Repeat campaign orders from existing innovator customers reflect their continued confidence in our capabilities. In addition, discussions with a leading Japanese innovator are progressing well, further strengthening our future growth pipeline. Our integrated cGMP pilot plant at our R&D center in Pune continues to be a key differentiator, enabling faster development, scale-up, and technology transfer for innovator customers. At the same time, we continue to invest in next-generation technology platforms including high-potency APIs, ADC linkers, and payloads, positioning Hikal to participate in emerging opportunities within the global Pharmaceutical and CDMO landscape.

Speaker #4: We continue to strengthen our pipeline of NCs and intermediates, with around 8 to 9 molecules at various stages of development. Repeat campaign orders from existing innovator customers reflect the continued confidence in our capabilities.

Speaker #4: In addition, discussions with the leading Japanese innovator are progressing well, further strengthening our future growth pipeline. Our integrated cGMP pilot plant at our R&D center in Pune continues to be a key differentiator, enabling faster development, scale-up, and technology transfer for innovator customers.

Speaker #4: At the same time, we continue to invest in next-generation technology platforms, including high-potency APIs, ADC linkers, and payloads, positioning high-quality participation in emerging opportunities within the global pharmaceutical and CDMO landscape.

Speaker #4: On the commercial front, we have strengthened our global business development capabilities by adding four dedicated business development professionals across Japan, North America, and Europe. This will help expand our CDMO opportunity pipeline and deepen customer engagements in key markets.

Manoj Mehrotra: On the commercial front, we have strengthened our global business development capabilities by adding four dedicated business development professionals across Japan, North America, and Europe, which will help expand our CDMO opportunity pipeline and deepen customer engagement in key markets. Overall, we remain confident that our differentiated product portfolio, expanding CDMO pipeline, strengthening technology capabilities, and continued investments in innovation position the Pharmaceutical business well for sustainable long-term growth. Now I would like to invite Mr. Ravi Khadbadi, Head of our Crop Protection, to provide an overview of the Crop Protection division's performance.

Speaker #4: Overall, we remain confident that our differentiated product portfolio, expanding CDMO pipeline, strengthening technology capabilities, and continued investments in innovation position the pharmaceutical business well for sustainable long-term growth.

Speaker #4: Now, I would like to invite Mr. Ravi Kharbari, Head of our Crop Production, to provide an overview of the Crop Production division's performance.

Speaker #2: Thank you, Manoj. And good evening, ladies and gentlemen. I'm Ravi Kharbari, the head of the Crop Production business. For Q1 FY27, the Crop Production business reported a revenue of ₹170 crore with an EBIT of negative ₹6 crore.

Ravi Khadbadi: Thank you, Manoj, and good evening, ladies and gentlemen. I'm Ravi Khadbadi, the Head of the Crop Protection business. For Q1 FY27, the Crop Protection business reported a revenue of INR 170 crores with an EBIT of INR -6 crores. Q1 FY27 was a mixed quarter for the business. Our own product segment delivered sequential growth supported by improving demand, domestic demand, and higher sales volumes. Margins remained under pressure due to elevated raw material and fuel costs arising from geopolitical developments in the Middle East, along with continued pricing pressure from China. In our CDMO business, export demand remained subdued, with certain customer orders deferred to subsequent quarters owing to inventory buildup at the customer end. The broader agrochemical industry continues to recover gradually. Global channel inventories have largely normalized after two years of destocking, supporting fresh buying from across key markets.

Ravi Khadabadi: Thank you, Manoj, and good evening, ladies and gentlemen. I'm Ravi Khadbadi, the Head of the Crop Protection business. For Q1 FY27, the Crop Protection business reported a revenue of INR 170 crores with an EBIT of INR -6 crores. Q1 FY27 was a mixed quarter for the business. Our own product segment delivered sequential growth supported by improving demand, domestic demand, and higher sales volumes. Margins remained under pressure due to elevated raw material and fuel costs arising from geopolitical developments in the Middle East, along with continued pricing pressure from China. In our CDMO business, export demand remained subdued, with certain customer orders deferred to subsequent quarters owing to inventory buildup at the customer end. The broader agrochemical industry continues to recover gradually. Global channel inventories have largely normalized after two years of destocking, supporting fresh buying from across key markets.

Speaker #2: Q1 FY27 was a mixed quarter for the business. Our own product segment delivered sequential growth, supported by improving domestic demand and higher sales volumes.

Speaker #2: However, margins remained under pressure due to elevated raw material and fuel costs, arising from geopolitical developments in the Middle East, along with continued pricing pressure from China.

Speaker #2: In our CDMO business, export demand remained subdued, with certain customer orders deferred to subsequent quarters owing to inventory buildup at the customer end. The broader agrochemical industry continues to recover gradually.

Speaker #2: Global channel inventories have largely normalized after two years of destocking, supporting fresh buying from across key markets. However, customer ordering continues to remain need-based, while surplus supply from China continues to keep pricing under pressure.

Ravi Khadbadi: Customer ordering continues to remain need-based, while surplus supply from China continues to keep pricing under pressure. As a result, the current recovery is being driven primarily by volumes rather than pricing. Operationally, we remain focused on improving efficiencies and strengthening our manufacturing capabilities. During the quarter, we expanded existing product lines, established in-house liquid formulation capabilities, and continued initiatives around automation, backward integration, solvent recovery, yield improvement, and maximizing asset utilization to enhance cost competitiveness. Looking ahead, we expect domestic demand for our own products to remain healthy while CDMO volumes are expected to improve as deferred customer orders are executed in the second half. We expect Q2 to be better than Q1, supported by the Indian kharif season, with further improvement in Q3 driven by the rabi season and Latin American demand.

Ravi Khadabadi: Customer ordering continues to remain need-based, while surplus supply from China continues to keep pricing under pressure. As a result, the current recovery is being driven primarily by volumes rather than pricing. Operationally, we remain focused on improving efficiencies and strengthening our manufacturing capabilities. During the quarter, we expanded existing product lines, established in-house liquid formulation capabilities, and continued initiatives around automation, backward integration, solvent recovery, yield improvement, and maximizing asset utilization to enhance cost competitiveness. Looking ahead, we expect domestic demand for our own products to remain healthy while CDMO volumes are expected to improve as deferred customer orders are executed in the second half. We expect Q2 to be better than Q1, supported by the Indian kharif season, with further improvement in Q3 driven by the rabi season and Latin American demand.

Speaker #2: As a result, the current recovery is being driven primarily by volumes rather than pricing. Operationally, we remain focused on improving efficiencies and strengthening our manufacturing capabilities.

Speaker #2: During the quarter, we expanded existing product lines, established in-house liquid formulation capabilities, and continued initiatives around automation, backward integration, solvent recovery, yield improvement, and maximizing asset utilization to enhance cost competitiveness.

Speaker #2: Looking ahead, we expect domestic demand for our own products to remain healthy, while CDMO volumes are expected to improve as deferred customer orders are executed in the second half.

Speaker #2: We expect Q2 to be better than Q1, supported by the Indian Kharif season, with further improvement in Q3 driven by the Rabi season and Latin American demand.

Speaker #2: While margins may remain under pressure in the near term due to raw material costs and Chinese competition, we expect gradual improvement as volumes recover and operating leverage strengthens.

Ravi Khadbadi: Margins may remain under pressure in the near term due to raw material costs and Chinese competition, we expect gradual improvement as volumes recover and operating leverage strengthens. Overall, we continue to view FY27 as a recovery year for the Crop Protection business, led by volume normalization, improving demand fundamentals, and disciplined execution. Thank you. Now I would like to introduce Mr. Anish Swadi, Senior President of Business Transformation, who will provide an overview of our business strategy. Over to you, Anish.

Ravi Khadabadi: Margins may remain under pressure in the near term due to raw material costs and Chinese competition, we expect gradual improvement as volumes recover and operating leverage strengthens. Overall, we continue to view FY27 as a recovery year for the Crop Protection business, led by volume normalization, improving demand fundamentals, and disciplined execution. Thank you. Now I would like to introduce Mr. Anish Swadi, Senior President of Business Transformation, who will provide an overview of our business strategy. Over to you, Anish.

Speaker #2: Overall, we continue to view FY27 as a recovery year for the crop production business, led by volume normalization, improved demand fundamentals, and disciplined execution.

Speaker #2: Thank you. Now, I would like to introduce Mr. Anish Swadhi, Senior President of Business Transformation, who will provide an overview of our business strategy.

Speaker #2: Over to you, Anish.

Speaker #3: Thanks, Ravi.

Sameer Hiremath: Thanks, Ravi.

Anish Swadi: Thanks, Ravi.

Speaker #4: Ravi, this is Manoj Mehrotra. There is some correction in my data. The Q1 capacity utilization was close to 55% to 60%, considering the shutdowns which we had in the first quarter.

Manoj Mehrotra: Ravi, this is Manoj Mehrotra. Some correction in my data. The Q1 capacity utilization was close to 55% to 60%, considering the shutdowns which we had in the first quarter. Sorry for that. Yes, Anish, you can take over.

Speaker #4: Sorry for that. Yes, Anish, you can take over.

Speaker #3: Thanks, Manoj. For the animal health business in Q1 FY27, we continued to deliver a resilient performance, supported by improving customer demand, capacity expansion, and commercialization of some of the new molecules we had in the pipeline.

Anish Swadi: Thanks, Manoj. For the animal health business in Q1 FY27, we continued to deliver a resilient performance supported by improving customer demand, portfolio expansion, and commercialization of some of the new molecules we had in the pipeline. We did witness in the existing pipeline healthy volume growth across the API and the intermediate segment. We continue to strengthen our customer partnership across several innovators, supported by differentiated manufacturing and regulatory capabilities. We've had some repeat NCE campaign supplies for a leading innovator, which are currently underway, and which reflect continued customer confidence in our execution capabilities. Beyond our existing commercial portfolio, we continue to witness encouraging traction across customer engagements and new molecule opportunities. Several programs are progressing through various stages of development and validation, and finally will end up at commercialization, providing a strong visibility for future growth.

Speaker #3: We did witness, in the existing pipeline, healthy volume growth across the API and the intermediate segments. We continue to strengthen our customer partnerships across several innovators, supported by differentiated manufacturing and regulatory capabilities.

Speaker #3: We've had some repeat NCE campaign supplies for a leading innovator, which are currently underway and reflect continued customer confidence in our execution capabilities.

Speaker #3: Beyond our existing commercial portfolio, we continue to witness encouraging traction across customer engagements and new molecule opportunities. Several programs are progressing through various stages of development and validation, and finally will end up at commercialization, providing strong visibility for future growth.

Speaker #3: In parallel, discussions on a strategic partnership with several Japanese companies are progressing well and could further strengthen our position in this segment.

Anish Swadi: In parallel, discussions on a strategic partnership with several Japanese companies are progressing well and could further strengthen our position in this segment. Together, these ongoing engagements provide us the confidence in the long-term growth trajectory of our business. The business continues to scale steadily, and we still remain confident of growing this business to INR 400 crores plus by FY30, as indicated earlier, making it an increasingly meaningful contributor to our overall portfolio. Our customer engagement continues to strengthen with long-term contracts in place with leading global innovators. We currently have a mix of molecules at various stages, from development to commercialization, of which several have been validated and several are in the pipeline. Commercial production is underway for some of these molecules, providing a strong base foundation of growth. During Q1 FY27, we also completed the US EPA and Canada PMRA regulatory filings for a particular molecule.

Speaker #3: Together, these ongoing engagements provide us with confidence in the long-term growth trajectory of our business. The business continues to scale steadily, and we still remain confident of growing this business to ₹400 crore plus by FY30, as indicated earlier, making it an increasingly meaningful contributor to our overall portfolio.

Speaker #3: Our customer engagement continues to strengthen with long-term contracts in place with leading global innovators. We currently have a mix of molecules at various stages, from development to commercialization, of which several have been validated and several are in the pipeline.

Speaker #3: Commercial production is underway for some of these molecules, providing a strong foundation, a base foundation of growth. During Q1 2027, we also completed the US EPA and Canada PMRA regulatory filings for a particular molecule.

Speaker #3: To support future growth, we also continue to invest in flexible manufacturing capacities and capabilities across the company. Our retooled manufacturing facility, originally built for the crop protection business, is being converted into a multipurpose pharma and animal health contract development and manufacturing facility.

Anish Swadi: To support future growth, we also continue to invest in flexible manufacturing capacities and capabilities across the company. Our retool manufacturing facility, originally built for the crop protection business, is being converted into a multipurpose pharma and Animal Health contract development and manufacturing facility. This will enhance our ability to support both our existing customers as well as our new customers with their new product commercial pipeline. Given the specialized nature of this business and our differentiated manufacturing capabilities, Animal Health represents one of the higher margin growth platforms within our portfolio. Overall, it remains a strategic growth pillar of Hikal, supported by strong customer partnerships and a healthy commercial pipeline. I would like to open the floor to Q&A.

Speaker #3: This will enhance our ability to support both our existing customers as well as our new customers with their new product commercial pipeline. Given the specialized nature of this business and our differentiated manufacturing capabilities, animal health represents one of the higher-growth, margin-growth platforms within our portfolio.

Speaker #3: Overall, it remains a strategic growth pillar of the cycle, supported by strong customer partnerships and a healthy commercial pipeline. Now, I would like to open the floor to Q&A.

Speaker #1: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Operator 2: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aman Gora from Prima Capital. Please proceed.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aman Gora from Prima Capital. Please proceed.

Speaker #1: If you wish to remove yourself from the question queue, you may press start and two. Participants are requested to use handsets while asking a question.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Aman Bora from Premier Capital.

Speaker #1: Please proceed.

Speaker #5: Hi, thanks for the opportunity. I'll just start where Anish left off—congratulations on the ramp-up in the Animal Health vertical, and in record time.

Aman Gora: Hi. Thanks for the opportunity. I'll just start with where Anish left. Congratulations on the ramp-up in the Animal Health vertical and in record time. We talk about the business, INR 400 crore of top line by FY30. You mentioned that the margin profile of the business is better than that we report for the pharma division. Could you help us understand what kind of margins do we expect out of this business?

Amaan Vora: Hi. Thanks for the opportunity. I'll just start with where Anish left. Congratulations on the ramp-up in the Animal Health vertical and in record time. We talk about the business, INR 400 crore of top line by FY30. You mentioned that the margin profile of the business is better than that we report for the pharma division. Could you help us understand what kind of margins do we expect out of this business?

Speaker #5: When we talk about the business, ₹400 crore of top line by FY30, and you mentioned that the margin profile of the business is better than what we report for the pharma division.

Speaker #5: But could you help us understand what kind of margins we should expect out of this business?

Speaker #3: Yeah. So, the margin profile that we expect once we reach that operational leverage will be 20% plus EBITDA margins for the animal health business.

Anish Swadi: Yeah. The margin profile that we expect once we reach that operational leverage will be 20%+ EBITDA margins for the Animal Health business.

Speaker #5: Okay. Got that. Got that. And second is on the crop protection side. So what is so we've last almost and this is not only for HICL but for the industry too.

Aman Gora: Okay. Got that.

Amaan Vora: Okay. Got that.

Anish Swadi: Yeah.

Aman Gora: Second is on the Crop Protection side. We've last almost, and this is not only for Hikal, but for the industry too, it's almost been two years of first tepid volumes, then tepid pricing now. What would it take for the industry, or for Hikal specifically, to get back on trajectory in this business? How do you look at, I understand FY27 would be a year of recovery and all of those things, but how do you look at this business on a three-year basis? What should we expect out of this business over three years?

Amaan Vora: Second is on the Crop Protection side. We've last almost, and this is not only for Hikal, but for the industry too, it's almost been two years of first tepid volumes, then tepid pricing now. What would it take for the industry, or for Hikal specifically, to get back on trajectory in this business? How do you look at, I understand FY27 would be a year of recovery and all of those things, but how do you look at this business on a three-year basis? What should we expect out of this business over three years?

Speaker #5: It's almost been two years of first step at volumes, then tepid pricing now. So what would it take for the industry or for HICL specifically to get back on trajectory in this business?

Speaker #5: And how do you look at I understand F27 would be a year of recovery and all of those things. But how do you look at this business on a three-year basis?

Speaker #5: What should we expect out of this business over three years?

Speaker #3: So I'll take that call no, the problem is question. Hi, Charlotte. So customers are also not doing very well. And as you know, the end customers which are five or six big players contribute to almost 80 percent of the total global market by value.

Sameer Hiremath: I'll take that question. Hi, Shava. The problem is that the Crop industry, the end customers are also not doing very well. As you know, the end customers, which are five or six big players, contribute to almost 80% of the total global market by value. They don't do well, then there's a lot of pressure put on their suppliers. Innovation is also not exactly accelerating in the Crop Protection side. We are expecting very marginal growth in the Crop division. That's why we've diversified to allied businesses. We are not investing significant amount of new capital in the Crop business. We are managing the Crop business with what we have with very strict capital allocation and financial discipline to ensure a healthy cash flow for the business while being focusing on operational discipline.

Speaker #3: So they don't do well and there's a lot of pressure put on their suppliers. And innovation is also not exactly accelerating in the crop protection side.

Speaker #3: expecting very marginal growth in the crop division. That's why we've highlighted and we've diversified to highlight businesses. We are not investing significant amount of new capital in the crop business.

Speaker #3: We are managing the crop So we are business with what we have with very strict capital allocation and financial discipline. To ensure a healthy cash flows for the business while being focusing on operational discipline we're onboarding a few new customers but it is projects are taking time to materialize and the margins that are lending on a new CDMO contract are lower than what they were maybe three, four years ago.

Sameer Hiremath: We're onboarding a few new customers, projects are taking time to materialize, and the margins that we are getting out of new CDMO contracts are lower than what they were maybe three, four years ago because of the competitive nature and the pressures being faced by our end customers in the end market. That's how we see the Crop business. We'll see marginal growth, mid to high single-digit growth going forward.

Speaker #3: Because of the competitive nature and the pressures being faced by our end customers in the end market. So that's how we see the crop business which marginal growth single digit to high mid to high single digit growth going forward.

Speaker #5: Right. Got that. Got that. Thanks, Sameer. Hi. I just continuing a couple of more questions from my side. Just on the so as I hear your commentary and think about HICL, we are positioning more like I think five, six years back we were seeing more as a chemical company or maybe a decade back.

Aman Gora: Right. Got that. Thanks, Sameer. Hi. Just continuing a couple of more questions from my side. As I hear your commentary and think about Hikal, we are positioning more like, I think five, six years back, we were seen more as a chemical company or maybe a decade back. Now, if I think about next five years, we are positioning ourselves more as a Pharma company. Right? Is my understanding correct?

Amaan Vora: Right. Got that. Thanks, Sameer. Hi. Just continuing a couple of more questions from my side. As I hear your commentary and think about Hikal, we are positioning more like, I think five, six years back, we were seen more as a chemical company or maybe a decade back. Now, if I think about next five years, we are positioning ourselves more as a Pharma company. Right? Is my understanding correct?

Speaker #5: Now, if I think about next five years, we are positioning ourselves more as a pharma company. Right? Is my understanding correct?

Speaker #3: Yeah. I think if you look at us, maybe five or six years ago, we were a chemical company. Then by '23, we became like a pharma and crop—two-division company.

Sameer Hiremath: I think if you look at us maybe five, six years ago, we were a chemical company. By 2023, we became a Pharma and a Crop, two division company. In the last three to four years, we've incubated two very exciting businesses. One is the Animal Health business, which is already ramping up quite nicely, and the Personal Care business, which is somewhere between Crop and Pharma. Now we've built up a new asset in our repurposed multipurpose plant in Panoli to run the first manufacturing line for Personal Care. As a percentage of our total revenue, while we were known mostly as a chemical company, maybe seven, eight years ago, 10 years ago, we'll be like a two-division company maybe five years ago.

Speaker #3: And in the last three to four years we've incubated two very exciting businesses. One is the animal health business which is already ramping up quite nicely.

Speaker #3: And the personal care business, which is somewhere in between crop and pharma. So now we’ve built up a new asset in our repurposed multipurpose plant in Panoli to run the first manufacturing line for personal care.

Speaker #3: And so yeah, as a percentage of our total revenue, while we were known mostly as a chemical company, all right, maybe seven, eight years ago or 10 years ago, and maybe like a two division company, maybe five years ago, if you look at our business going forward in the next two to three years, we will be more into a four division type of approach where pharma and allied pharma human non-human pharma and even the skincare line personal care which is like pharma will be almost 70 to 80 percent of our total business with crop division coming up about 30 percent of our total business.

Sameer Hiremath: If you look at our business going forward in the next two to three years, we will be more into a four-division type of approach where Pharma and allied Pharma, human, non-human Pharma and even the skincare line, Personal Care, which is like Pharma, will be almost 70% to 80% of our total business, with Crop division coming up at 30% of our total business.

Speaker #5: Got that. Thanks. Thanks for that clarity, Sameer. And so for the personal care part of the portfolio, any guidance or any thoughts you can share on the next three years near term and maybe three years how that business can look like?

Aman Gora: Got that. Thanks for the clarity, Sameer. For the Personal Care part of the portfolio, any guidance or any thoughts you can share on the next three years, near term and maybe three years, how that business can look like? What could the margins be like? What should we expect there?

Amaan Vora: Got that. Thanks for the clarity, Sameer. For the Personal Care part of the portfolio, any guidance or any thoughts you can share on the next three years, near term and maybe three years, how that business can look like? What could the margins be like? What should we expect there?

Speaker #5: What could the margins be like? What should we expect there?

Speaker #3: Absolutely. Repeat that question. I couldn't hear you.

Sameer Hiremath: Sorry, can you repeat that question? I couldn't hear you.

Speaker #5: I'm just because personal care would now be another growth driver other thoughts you can share on what that business could be in the next three years maybe near term or three years as you want to share?

Aman Gora: Personal care would now be another growth driver, other than animal health. Any thoughts you can share on what that business could be in the next three years, maybe near term or three years, as you want to share, and what the margin profile of that business could look like?

Amaan Vora: Personal care would now be another growth driver, other than animal health. Any thoughts you can share on what that business could be in the next three years, maybe near term or three years, as you want to share, and what the margin profile of that business could look like?

Speaker #5: Any

Speaker #5: And what the margin profile of that business could look like?

Speaker #3: So I think if we take this year as just launching this year, I would say it is a launch of

Sameer Hiremath: I think that if you take this year as we're just launching this year. I would say it is a launch of its very small volume. As we grow in the next three years post this year, we expect to cross about INR 200 crore revenue in the business.

Speaker #3: expect to cross about 200 crores in revenue in the business.

Speaker #5: Okay. And margins would be like between 15 and 20 percent? Is that a than animal health. safe assumption?

Aman Gora: Okay. Margins would be between 15% and 20%? Is that a safe assumption?

Amaan Vora: Okay. Margins would be between 15% and 20%? Is that a safe assumption?

Speaker #3: Over 20 percent EBITDA.

Sameer Hiremath: Over 20% EBITDA.

Speaker #5: Perfect. Got that. But just one last.

Aman Gora: Perfect. Got that.

Amaan Vora: Perfect. Got that.

Sameer Hiremath: It will be like a pharma business, yeah.

Speaker #3: If you look at the pharma business, yeah.

Speaker #5: Right. Got that. Got that. And just one last question from me, Sameer. First of all, thanks a lot for sharing your guidance in a very turmoil geopolitical environment.

Aman Gora: Right. Got that. Just one last question from me, Sameer. First of all, thanks a lot for sharing your guidance in a very turmoil geopolitical environment. I think your guidance was 15% to 16% top line growth on FY26 base and about 30% EBITDA growth. We are talking about flattish top line for crop this year. The growth would be animal health and pharma led this year because personal care would be low volumes. When we are talking about, say, better than that growth in pharma, shouldn't our margins be better? Because if I just put your guidance to work, we're talking about between 14% and 15% EBITDA margins for FY27. If pharma does better than crop, which is generally a better margin business, and we are ramping up animal health also, shouldn't our EBITDA growth and margins be better than that?

Amaan Vora: Right. Got that. Just one last question from me, Sameer. First of all, thanks a lot for sharing your guidance in a very turmoil geopolitical environment. I think your guidance was 15% to 16% top line growth on FY26 base and about 30% EBITDA growth. We are talking about flattish top line for crop this year. The growth would be animal health and pharma led this year because personal care would be low volumes. When we are talking about, say, better than that growth in pharma, shouldn't our margins be better? Because if I just put your guidance to work, we're talking about between 14% and 15% EBITDA margins for FY27. If pharma does better than crop, which is generally a better margin business, and we are ramping up animal health also, shouldn't our EBITDA growth and margins be better than that?

Speaker #5: When we talk about so I think your guidance was 15 to 16 percent top line growth on F26 base and about 30 percent EBITDA growth.

Speaker #5: So and we are talking about flattish top line for crop this year. So the growth would be animal health and pharma led this year because personal care would be low volumes.

Speaker #5: So, when we are talking about, say, better than that growth in pharma, shouldn't our margins be better? Because if I just put your guidance to work, we're talking about between 14% and 15% EBITDA margins for FY27.

Speaker #5: If pharma does better than crop which is generally a better margin business and we are ramping up animal health also, shouldn't our EBITDA growth and margins be better than that?

Speaker #3: Oh, absolutely right. And for this is a transition year very earlier. Remediation costs are still hitting our fixed cost numbers. So we're depressing EBITDA.

Sameer Hiremath: You're absolutely right. This is a transition year where the FDA remediation costs are still hitting our fixed cost numbers, depressing EBITDA. Once the FDA remediation goes away by end of this year, next year onwards, the EBITDA will start improving even more substantially. Since the remediation cost has been pretty substantial, which is hitting our fixed cost number. There will be growth in EBITDA margins compared to last year. The real meaningful numbers will be in FY28 and beyond.

Speaker #3: Once the FDA remediation goes away by end of this year, next year onwards, the EBITDAs will start improving even more substantially. Since the remediation cost has been pretty substantial, which is hitting our fixed cost number.

Speaker #3: So the growth in EBITDA margins compared to last year but the real meaningful numbers will be in FY28 and beyond.

Speaker #5: Got that. Perfect. That makes sense. Thank you so much. For taking my questions and for sharing guidance and fingers crossed and hopefully we'll meet and exceed the guidance.

Aman Gora: Got that. Perfect. That makes sense. Thank you so much for taking my questions and for sharing guidance, and fingers crossed and hopefully we'll meet and exceed the guidance. Best wishes.

Amaan Vora: Got that. Perfect. That makes sense. Thank you so much for taking my questions and for sharing guidance, and fingers crossed and hopefully we'll meet and exceed the guidance. Best wishes.

Speaker #5: Best wishes.

Speaker #3: Thank you so much. Yeah. Yeah.

Sameer Hiremath: Thank you so much.

Speaker #1: Thank you. Before we take the next question, we would like to remind participants that you may press start and one to ask a question.

Operator 2: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask the question. Participants who wish to ask a question may please press star and one at this time. The next question is from the line of Rohit Sinha from Sunidhi Securities. Please proceed.

Operator: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask the question. Participants who wish to ask a question may please press star and one at this time. The next question is from the line of Rohit Sinha from Sunidhi Securities. Please proceed.

Speaker #1: Participants who wish to ask a question may please press start and one at this time. The next question is from the line of Rohit Sinha from Sunidhi Security.

Speaker #1: Please proceed.

Rohit Sinha: Yeah. Thank you for taking my question, sir, and pardon me for the audio disturbance. Just wanted to know as our US FDA final clearance is, I think, due by end of this year, and you were stating that two, three contracts are in process. How will you be looking at the addition of incremental revenue in FY28 post this US FDA clearance?

Speaker #2: Yeah. Thank you for taking my question, sir. And pardon me for the audio disturbance. Just wanted to know as our USRBA fine clearance is I think end of this year.

Speaker #2: So and you were stating that two, three contracts are in process. So how will you be looking at the how will you be looking at the addition of incremental revenue in FY28 post this USRBA clearance?

Speaker #3: Yeah. So I mean I've given an overall guidance for this year's growth, right? I think and that will get accelerated even more in FY28 over this year because we expect I want the remediation happened.

Sameer Hiremath: Yeah. I've given an overall guidance for this year's growth, right? I think that will get accelerated even more in FY28 over this year, because we expect once the remediation happens, we have some filings that are pending approval for want of the FDA approval. Once that approval comes, those filings will be done, and that will have a ramp-up in revenues in the next financial year, in FY28.

Speaker #3: We have some filings that are pending approval for want of the FDA approval. Once that approval comes, those filings will be in revenues in the next financial year in

Speaker #2: Okay. Okay. And that too with the better margins from the existing one.

Rohit Sinha: Okay. That too, with the better margins from the existing one.

Speaker #3: That's right. Right. Absolutely right.

Sameer Hiremath: That's right. Absolutely right.

Speaker #2: Yeah. And secondly, just on the crop protection side, as you said that pricing is a main concern right now for us, aren't we getting our contracts revised or how basically these contracts with the customers are placed in order to price revisions?

Rohit Sinha: Yeah. Secondly, just on the Crop Protection side, as you say that pricing is a main concern right now for us, aren't we getting our contracts revised? How basically these contracts with the customers are placed in order to price revisions?

Sameer Hiremath: There is a pass-through in some of the contracts, but some of the contracts when compared with in China, our customers are partially compensating us because of the nature of the end product. End product prices to the farmers have not increased much, and there's no price elasticity, very less flexibility to increase prices in the end distributor level. It's a mixed bag. While some were able to get, but in our Q1 number itself, we got impacted by almost INR 7 to 8 crores of raw material increase in our Crop Protection division because of raw material energy prices, which impacted our EBITDA in this one quarter itself. We're expecting now with oil prices are beginning to drop, that prices will start to normalize, and we hope that by the end of Q2, prices do come down. If the war starts again, the prices might go up.

Speaker #3: It's there is a pass-through in some of the contracts but some of the contracts where the competitor in China customers are partially compensating us because of the nature of the end product.

Speaker #3: End product prices to the farmers have not increased much. And there's no price elasticity very less to increase prices in the end distributor level.

Speaker #3: So it's a mixed bag while some were able to get but in a quarter one number itself, we got impacted almost seven to eight crores of raw material increase in our crop division because of raw material energy prices which impacted our EBITDA in this one quarter itself.

Speaker #3: We expecting now with oil prices are beginning to drop that prices will start to normalize and we hope that by the end of Q2 prices do come down.

Speaker #3: But if the war starts again, again the prices might go up. There's so much volatility and uncertainty in these geopolitical scenario right now.

Sameer Hiremath: There's so much volatility and uncertainty in this geopolitical scenario right now.

Rohit Sinha: Got it. One last question, just in terms of overall growth, which we are looking at in FY28 and beyond that. Let's say for FY29, probably what kind of overall margin profile and top line we would be looking at, if at all you can guide us.

Speaker #2: Got it. Got it. And one last question just in terms of overall growth which we are looking at in FY28 and beyond that. Let's say for FY29, probably what kind of overall margin profile and top end you would be looking at if at all you can guide us?

Speaker #3: We expect this 15 to 16 percent CAGR to continue going forward on the base we keep getting bigger. But we're expecting 15 to 16 percent CAGR every year.

Sameer Hiremath: We expect this 15% to 16% CAGR to continue going forward. The base will keep getting bigger. We're expecting 15% to 16% CAGR every year. That's bringing a lot of operating leverage because fixed cost, as you know, will not go at this level because already a lot of fixed costs is already being spent in the company. The next year remediation also will not be there. That remediation cost benefit will come to the P&L. We expect next year, FY28, to be a substantially better year compared to this year, which will also be a growth year compared to last year.

Speaker #3: And that will bring in a lot of operating leverage. Because fixed cost as you know will not go at this level because already a lot of fixed cost has already been spent in the company.

Speaker #3: And the next year the remediation also will not be there. That remediation cost benefit will come to the P&L. So we expect next year FY28 to be a substantially better year compared to this year which will also be a growth year compared to last year.

Speaker #2: Got it, got it. That's it from my side, sir. Thank you, and best of luck.

Rohit Sinha: Got it. That's it from my side, sir. Thank you, and best of luck.

Speaker #3: Thanks a lot.

Sameer Hiremath: Thanks a lot.

Speaker #1: Thank you. Before we take the next question, we would like to remind participants that you may press star one to ask a question.

Operator 2: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Raghu Ram from Best Stocks Research and Advisory. Please proceed.

Operator: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Raghu Ram from Best Stocks Research and Advisory. Please proceed.

Speaker #1: The next question is from the line of Raghu Ram from Best Pals Research and Advisors. Please proceed.

Speaker #5: Hello. Am I audible sir?

Raghu Ram: Hello, am I audible, sir?

Speaker #3: Yes. Hello. Hi.

Sameer Hiremath: Yes. Hello. Hi.

Speaker #5: Yeah. So thanks for the opportunity. And so I would like to understand about on the this US FDA issue. So when you're saying that you are in the penultimate stage of remediation plan and how should we understand on this instead and how confident are you of your high-tech rating this year's FDA thing?

Raghu Ram: Yeah. Thanks for the opportunity. I would like to understand both on this U.S. FDA issue. When you're saying that you are in the penultimate stage of remediation plan, how should we understand on this filter and how confident are you of your Hikal clearing this U.S. FDA thing? What gives you the confidence that you can clear it?

Speaker #5: What gives you the confidence that you can clear it?

Speaker #3: No. I think we are working towards success. The FDA remediation plan is now going on for almost one year. And it's a stage gate approach where we're continuously dialoguing with the FDA.

Sameer Hiremath: No, I think we are working towards success. The FDA remediation plan is now going on for almost 1 year, and it's a stage-gate approach where we're continuously dialoguing with the FDA and giving them our continuous updates, which happen on a bi-monthly or a quarterly basis. Updates are going in. Based on the feedback we've received from the FDA, they have told us that we are moving in the right direction. We have a few open issues that we need to close out in the next few months, and once that is done, we'll be ready for our re-inspection. We are hoping that they come by end of this year, and we'll be ready for our re-inspection by end of this year. It may get delayed by a few months here and there, but we are quite hopeful that we will do it.

Speaker #3: And giving them our continuous updates which happen on a bi-monthly or a quarterly basis updates are going in. Based on the feedback we received from the FDA, they have told us that we are moving in the right direction.

Speaker #3: We have a few open issues that we need to close out in the next few months. And once that is done, we'll be ready for a re-inspection.

Speaker #3: We are hoping that they come by end of this year and we'll be ready for a re-inspection by end of this year. It may get delayed by a few months here and there.

Speaker #3: But we are quite hopeful that we will do it. We're putting in a lot of controls, a lot of system upgradations, a lot of training, a lot of SOPs have been upgraded.

Sameer Hiremath: We're putting in lot of controls, lot of system upgradation, lot of training, lot of SOPs have been upgraded, lot of checks and balances have been put. There's a continuous auditing happening on the site to ensure that we have a successful FDA re-inspection.

Speaker #3: And a lot of checks and balances have been put. And there's a continuous auditing happening on the side to ensure that we have a successful FDA re-inspection.

Speaker #5: Okay. And your customers are they're satisfied with whatever remediation measures that you have taken with regard to this thing?

Raghu Ram: Your customers are satisfied with whatever remediation measures that you have taken with regard to this?

Speaker #3: Absolutely right. And because I just—I said that in my opening remarks. After the FDA, which happened in August, we had three big regulatory global authorities come and inspect the facility.

Sameer Hiremath: Absolutely right. Because I said that in my opening remarks. After the FDA, which happened in August, we had three big regulatory global authorities come and inspect the facility. All three of them have cleared the facility. These were also very tough inspections. We also had over 86 customer audits in the last one year who have come and re-inspected our site, and all of them have reapproved our facilities and have continued to buy products from us. We have not lost a single contract or a single customer in the last one year.

Speaker #3: And all three of them have cleared the facility. And these were also also had over 86 customer audits in the last one year who have come and re-inspected our site and all of them have re-approved our facilities and have continued to buy products from us.

Speaker #3: We have not lost a single contract or a single customer in the last one year.

Raghu Ram: That's very helpful, sir. That. It's also our team to visit.

Speaker #5: That's very helpful sir. And it's also adding to this.

Speaker #3: We are working with the innovative pharma customers that we have on our remediation program. They're helping us remediate so the hand-holding us to the putting in the right documentation by the FDA.

Sameer Hiremath: We are working with the innovative pharma customers that we have on a remediation program. They're helping us remediate. They're handholding us to putting the right documentation with the FDA, and they have a lot of global knowledge and global expertise. That knowledge is being passed on to us, how do we respond to the FDA.

Speaker #3: And we have a lot of global knowledge and global expertise to that. Knowledge is being passed on to us. How do we respond to the FDA?

Speaker #5: That's very helpful sir. Thank you. And sir, in the comment you have mentioned that you are very confident of a stepwise recovery of revenue and profitability.

Raghu Ram: That's very helpful, sir. Thank you. Sir, in the commentary, you mentioned that you are very confident of a stepwise recovery of revenue and profitability. Regarding this, once you clear the U.S. FDA issue, how should we look at the growth in the pharma business? Would it be stepwise, or would it be a slowly ramp-up, or how should we understand that part of the business once the FDA issue is clear?

Speaker #5: So regarding this, once you clear the US FDA issue, how should we look at the growth in the pharma business? Would it be a stepwise or would it be a slowly ramp up or how should we understand that part of the business once the FDA issue is clear?

Speaker #3: I think the CAGRs will start improving. I mean, if you look at our 14 to 15 percent CAGR for the company, I think FDA will be sorry, no.

Sameer Hiremath: I think the CAGR will start improving. If you look at a 14% to 15% CAGR for the company, I think pharma will be 18% to 19% CAGR going forward and maybe even faster. If some of the approvals ramp up and some of the NCE filings that are pending, if they ramp up, the growth could be even faster in the next few years.

Speaker #3: Pharma will be 18 to 19 percent CAGR going forward and maybe even faster if some of the approvals ramp up. But some of the NC filings that are pending, if they ramp up, the growth could be even faster in the next few years.

Raghu Ram: Okay, sir. Thanks a lot, sir. That was very helpful. On the animal health business, did I hear right that you have guided for INR 300 crores top line by FY30?

Speaker #5: Okay sir. Thanks. Thanks a lot sir. That was very helpful. And on the animal health business, did I hear right that you have guided for 300 crores top end by FY30?

Speaker #3: Yeah. So we had talked about this last conference call is we have a vision of FY30 where we planned out a strategic plan including FY30.

Anish Swadi: Yeah. We had talked about this last conference call is, we have a vision of FY30 where we planned out our strategic plan, including FY30. We have guided for about INR 400 crores of revenues by then based on what we see and what our target that we put in place for the business is.

Speaker #3: So we have guided for about 400 crores of revenues by then based on what we see and what a target that we put in place for the businesses.

Speaker #5: And this would be and so this business would be you would be you would be exporting to which part of the world sir? Is it to develop markets in US, Europe or what part of the world would it be going to?

Raghu Ram: For this business, you will be exporting to which part of the world? Is it to developed markets in US, Europe, or what part of the world would it be going to?

Speaker #3: Yeah. Globally we're exhausting in terms of market. Obviously we're focusing on the our customer base is primarily innovators, right? So that's where we're so we sell to all the markets in which they are selling their end product.

Anish Swadi: Yeah. Globally, we're agnostic in terms of market. Obviously, we are focusing on our customer base is primarily innovators, right? We sell into all the markets in which they are selling their end product. Europe, US, Japan, and of course, ROW, including Latin America and other markets.

Speaker #3: So Europe, US, Japan, and of course ROW including Latin America, and other markets.

Speaker #5: Okay. Thanks a lot sir. Thank you very much.

Raghu Ram: Okay. Thanks a lot, sir. Thank you very much.

Speaker #3: Yeah. Okay.

Anish Swadi: Yeah. Okay.

Speaker #5: Yeah. All the best, sir. Thank you.

Raghu Ram: All the best, sir. Thank you.

Speaker #3: Thanks. You too.

Sameer Hiremath: Thanks.

Speaker #1: Thank you. That was the last question for today. I would now like to hand the conference over to the management for the closing comments.

Operator 2: Thank you. That was the last question for today. I would now like to hand the conference over to the management for the closing comments. Over to you, sir.

Operator: Thank you. That was the last question for today. I would now like to hand the conference over to the management for the closing comments. Over to you, sir.

Speaker #1: Over to you sir.

Speaker #4: Thank you. Thank you everyone for joining our quarterly earnings call and for your continued interest and support. We remain fully committed to executing our turnaround strategy with discipline and focus.

Sameer Hiremath: Thank you. Thank you everyone for joining our quarterly earnings call and for your continued interest and support. We remain fully committed to executing our turnaround strategy with discipline and focus. The actions we have taken over the last several quarters and a few past few years have laid a very strong foundation for long-term sustainable growth. We are confident that our progress will become increasingly visible in every passing quarter going forward. As we conclude this call, we want to assure you that we're here to address any further questions or concerns. Please feel free to reach out to us or our investor relations partners, SGA. Once again, thank you for your participation. Have a very good evening. Goodbye.

Speaker #4: The actions we have taken over the last several quarters and a few last few years have laid a very strong foundation for long-term sustainable growth.

Speaker #4: We are confident that our progress will become increasingly visible in every passing quarter going forward. As we conclude this call, we want to assure you that we are here to address any further questions or concerns.

Speaker #4: Please feel free to reach out to us. Our investor relations partners, SGA, once again thank you for your participation. Have a very good evening.

Speaker #4: Goodbye.

Operator 2: On behalf of Hikal Limited, that concludes this conference. Thank you for joining us, and you may now disconnect the line.

Operator: On behalf of Hikal Limited, that concludes this conference. Thank you for joining us, and you may now disconnect the line.

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Q1 2027 Hikal Ltd Earnings Call

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