Shares of Hikal Ltd surged almost 11% in early trade on May 30 after the company reported strong financial figures for the quarter ending March 2023. The agrochemical and pharmaceutical company reported a significant year-on-year (YoY) growth of Rs 3.6 crore in Q3FY23 net profit.

This was followed by a 37% increase in net profit in Q4FY23, driven by a better product mix.

In the March quarter, total revenue stood at Rs 545 crore, up 9% from Rs 502 crore in the corresponding quarter of the previous fiscal year. As stated in the regulatory filing, the revenue growth was attributed to changes in product mix and increased demand for specific products.

On an operational level, EBITDA surged by 48% to Rs 90 crore against Rs 61 crore in the same period last year. Consequently, the recovery in margins was driven by softening raw material prices, various operational improvement initiatives and efficiencies from ongoing business excellence initiatives across the value chain.

Regarding segment performance, the pharmaceutical business recorded flat year-on-year revenue at Rs 309 crore, while the crop protection business grew 22% year-on-year to reach Rs 236 crore in Q4FY23. EBIT margins showed a year-on-year increase of 21% in Pharmaceuticals and 167% in the crop protection segment.

The stock traded 11% higher on the National Stock Exchange at Rs 314.40 at 10:14 am.

Key highlights of the quarter include:

– Construction of a new multi-purpose animal health plant at Panoli, Gujarat, is on track and is expected to be completed by H1FY24.

– Existing and new customers favour the Contract Development and Manufacturing Organisation (CDMO) business.

– The sales network of the API Generics business unit in the Latin American and Middle Eastern markets was strengthened.

– The cost improvement program is gaining the necessary momentum.

Commenting on the company’s performance, Hikal Ltd executive chairman Jai Hiremath said that despite the challenges faced in FY23, they gradually expanded operating margins by reducing costs and improving operational efficiency.

Hiremath said, “We expect a slowdown in the coming quarters due to the global economic downturn and increased pricing pressure. However, we focus on operational excellence and capital efficiency to reduce costs and improve margins, enabling us to maintain competitiveness in this challenging global environment. With our emphasis on innovation, commitment to sustainable development, global reach and strong financial foundation, we are well positioned for sustainable growth in the medium to long term.”

Meanwhile, Hikal’s board has recommended a final dividend of 30% of paid-up capital (Rs 0.60 per equity share) for FY23. The total dividend for the year represented 60% of the paid-up capital (i.e., Rs 1.20 per equity share).