Hikal Ltd - Research Note -- Baba Kalyani Group Co -- Significant Rerating Ahead -- FY14e 1040 cr. Revenues -- Exclusive Supplier to Syngenta, Bayer, BASF + World Leader in Gabapentin -- Views Invited

[mahesh i. shah]

Attached is detailed 15-pages Research Note on Hikal Ltd. alongwith its FY12 Annual Report.

Hikal Ltd., being a Baba Kalyani (Bharat Forge fame) Group company, who, alongwith Hiremath Family, owns 73.52 % equity stake in the company, needs a closer look by any prudent fund manager because of it being on verge of commencement of a significant growth phase starting Q4FY13 when major molecules of the company begin commercial production.

An Exclusive Supplier Relationship with Syngenta (for Thiabendazole), Bayer (for Fenamidone) & BASF (for Initium) as also World Leadership status in Gabapentin Molecule make the company hard to ignore, especially, at a time when its decade old efforts & upfront investments made, are likely to begin yielding pronounced results.

Current Market-Cap of just INR 697 cr. which is even lower than its current Net Fixed Asset base at INR 714.87 cr. with FY14e Revenues of INR 1040 cr. at 27 % + EBITDA margins make the company an interesting Investment Opportunity at current juncture.

Views are Invited from fellow members on this promising Research-driven Company.

Rgds.

Mahesh

 

---------------------Contents of this Note------------------------------

Key Investment Arguments In Favour & Against Hikal Ltd.

( Hikal Ltd. - Mcap – Rs. 697 cr. with FY14e Revenues of Rs. 1040 cr. ) Page 2-3

Why it Deserves to be a Part of One's Core Portfolio

Management Overview ( Baba Kalyani Group with Distinguished Management Team ) Business Model Explained ( Co. Sitting on Verge of Significant Growth Phase Commencing FY14 ) Evolution of the Company ( From Asset Building to Signing Exclusive MNC Innovator Relationships to Commercialisation & Delivery ) AI Segment ( Exclusive Supplier to Syngenta, Bayer & BASF ) API Segment ( World's Largest Supplier of Gabapentin ) CRAMS Segment ( Complements AI & API Segments ) Margin Focus ( 10 Years' Avg. EBITDA Margins at 27.64 % ) Minority Shareholders' Wealth Creation Track Record - 12 Years ( Consistent High Dividend Payment with Two Bonus Issues ) Peer Comparison ( Divis Lab, PI Ind, & Shasun ) Conclusion ( A Knowledge-driven Life Sciences Company on Verge of Significant Rerating )

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