Hikal Ltd. Q3 FY26 Earnings Call Summary

Summary

Hikal Ltd. - Q3 FY 2026 Earnings Call Summary Wednesday, February 11, 2026 4:00 PM

Event Participants

Executives 5 Anish Swadi (Senior President – Business Transformation and Animal Health), Kuldeep Jain (CFO), Manoj Mehrotra (President, Pharmaceutical Business), Sameer Hiremath (Vice Chairman and Managing Director), Vimal Kulshrestha (Head, Crop Protection)

Analysts 4 Aman Vora (Premier Capital), Ankit (Individual Investor), Gautam Gupta (Individual Investor), Henil (Equicorp)

Financials & KPIs

Geographic & Segment Commentary

• Pharmaceutical: Performance reached a “turning point” as U.S. FDA remediation is substantially complete. Management is pivoting toward high-value molecules in oncology, CNS, and gastroenterology, with 8-9 molecules in advanced development. Dual-site validation is being executed for all critical APIs to mitigate future regulatory risks.
• Crop Protection: The segment is navigating “normalization” characterized by aggressive Chinese pricing. Strategy involves diversifying into Specialty Chemicals (Personal Care), with 3-4 products slated for commercialization in FY27. Management is focused on cost optimization in procurement and energy to protect base margins.
• Animal Health: Sustained momentum in CDMO with a long-term goal of becoming a ₹500 crore+ business in 4-5 years. The segment benefits from global innovators diversifying supply chains away from single geographies. Utilization is increasing as the company manufactures early-stage intermediates for its asset-heavy facilities.

Company-Specific & Strategic Commentary

• U.S. FDA Remediation: Remediation at the Bengaluru facility is substantially implemented; bi-monthly updates are being sent to the FDA. Management expects to hear back from the regulator within 2-3 weeks following the completion of the 6-month warning letter period.
• Diversification (Personal Care): Successfully entered the cosmetic/specialty chemical space with initial production batches completed. This high-growth segment is expected to contribute meaningful revenue starting in FY27.
• High-Potency API (HPAPI): Invested ₹10-11 crores in a new HPAPI lab in Pune to target the oncology market. Management plans to build a commercial-scale plant by FY28 to support ADC (Antibody-Drug Conjugates) and other complex services.
• Operational Efficiency: Repurposing a large underutilized Crop Protection asset into a multipurpose facility in phases over the next 6-18 months. This move is backed by specific customer contracts to ensure high ROI and fixed-cost absorption.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Regulatory Status

• Question: What is the status of the CAPA submission and U.S. FDA follow-up? (Henil)
• Answer: Remediation is substantially complete. Updates were sent Dec 16 and Feb 9. The 6-month warning letter period ends in two weeks, after which FDA feedback is expected (Manoj Mehrotra).

Revenue Recognition

• Question: Was the ₹80 crore deferred revenue from Q2 included in Q3? (Ankit)
• Answer: Yes, the ₹80 crore has been adjusted and included in Q3 sales. No further reversals are expected (Sameer Hiremath).

Product Pipeline

• Question: What is the status of the anti-diabetes and anticoagulant portfolio? (Henil)
• Answer: Apixaban is seeing good progress in LatAm. Milvexian KSM launch is planned for FY27. SGLT2 and DPP-4 inhibitors will gain more traction from FY28 onwards as patents expire (Manoj Mehrotra).

Growth Outlook

• Question: Is the worst behind the company after three tepid years? (Aman Vora)
• Answer: Confident that the worst is over. The company used this period to strengthen quality systems (DNA upgrade) and diversify into Animal Health and Personal Care, which will drive FY27-28 performance (Sameer Hiremath).

Key Takeaway

Hikal Ltd. reported a pivotal Q3 FY26, signaling an exit from a 6-9 month period of intensive regulatory remediation. Consolidated revenue of ₹494 crores and an EBITDA margin of 16.8% reflect a return to operational profitability, supported by the resumption of Pharmaceutical supplies and better capacity utilization. While the Crop Protection segment remains hindered by Chinese pricing pressures and 3% EBIT margins, Hikal is aggressively diversifying into high-margin niches, including Personal Care, Animal Health (targeting ₹500cr+ revenue in 5 years), and HPAPIs for the oncology market. Management has successfully reduced debt by ₹50 crores in 9M FY26 and revised FY26 capex downward to ₹150 crores to prioritize capital efficiency. With the U.S. FDA remediation substantially implemented and a robust pipeline of NCEs moving into Phase III, the company is positioned for a high-quality growth trajectory starting in FY27.