Hikal: #39;China plus#39; opportunity adds to conviction for capex

Trading Calls - Equity F&O

For FY21 and FY22, Hikal is spending close to Rs 600 crore in capacity enhancement, where the major part of the benefit will accrue in FY24

Hikal: 'China plus' opportunity adds to conviction for capex

PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook

Hikal Ltd (CMP: Rs 551, Market cap: Rs 6,776 crore) is one of the few CDMO (contract development and manufacturing organisation) businesses that have exposure to the promising end-markets of pharma and crop protection chemicals. This makes it reasonably placed to capitalise on the “China plus” strategy although near-term hiccups are being felt due to supply-chain disturbances. Strong show in crop protection business The Q2 top line growth of 26 percent year on year (YoY) was chiefly led by the crop…