ICICIdirect Money Manager – July 2019

ICICIdirect Money Manager June 2019

STOCK IDEAS

10

players both in APIs and crop

protection CDMO. The

company has spent ~| 500

crore over the last five years to

augment capacities. After

years of volatility in growth,

Hikal has been witnessing a

relatively stable growth

trajectory. We expect sales,

EBITDA, PAT to grow at a

CAGR of 15%, 19%, 28%,

respectively, in FY19-21E on

the back of new launches and

better operating leverage.

Simultaneously, we also

expect a 320 bps RoCE

improvement to 18.2%

through FY21. We arrive at a

valuation of | 205 based on 15x

FY21E EPS of | 13.7.

Experience in high profile clients
servicing to the fore...

For years, the company has
been dealing with high profile
MNCs like Merck & Co, Bayer,
Syngenta, BASF, Pfizer to
name a few. With proven
capabilities and management
pedigree, we believe Hikal
offers a compelling value
proposition as it continues to
expand in both pharma and
crop protection segments with
separate focus and a
calibrated approach. This
bodes well in the current
scenario when Chinese supply
disturbances are likely to
create opportunities for Indian