1. At a Glance
Hikal Ltd — the chemical multitasker that manufactures everything from Active Pharma Ingredients to the molecules that protect your crops — just reported a quarter that looks like it was written by a chemist with a hangover. Q2FY26 revenue slumped to ₹319 crore, EBITDA to ₹8 crore, and PAT crashed to a loss of ₹35 crore. And why? Because the USFDA decided to give its Jigani facility a “Warning Letter,” which in FDA-speak is like being told to “fix your house or we’ll bring the bulldozer.”
With amarket cap of ₹2,811 crore,stock price at ₹228, andreturns over 6 months at -43.6%, this is the corporate version of a chemistry experiment gone wrong — fumes everywhere and shareholders coughing. Debt stands at ₹683 crore, theROE has shrunk to 7.38%, and theP/E ratio of 278suggests investors are either very hopeful or very delusional.
As the Bhagavad Gita reminds us:“Karmanye vadhikaraste ma phaleshu kadachana”— do your duty, not for the fruits of the result. In Hikal’s case, that duty probably involves a lot more cleaning up, documentation, and politely replying to FDA emails.
2. Introduction
If the Indian specialty chemicals sector is a Bollywood movie, then Hikal is that misunderstood supporting actor who always gets blamed for the fire scene. Founded with the noble intent to “partner with global innovators,” the company today is juggling Pharmaceuticals, Crop Protection, and Contract Manufacturing — while also defending itself from regulators, the National Green Tribunal, and occasionally, bad chemistry.
The company’s financial trajectory resembles a lab graph during an acid-base titration — dramatic rises, steep falls, and a lot of sighs in between. For the quarter ended September 2025, the loss ballooned to ₹35 crore from a profit of ₹17 crore a year ago, with revenue plunging almost 30% year-on-year. To make it spicier, this performance came right after theUSFDA’s Official Action Indicated (OAI)status for its Bengaluru facility in August 2025, and aWarning Letterlater that month.
It’s almost poetic — the company built to handle complex molecules is now entangled in complex regulations.
Yet, Hikal isn’t just another pharma name in distress. Behind the scenes, it’s quietly expanding intoAnimal Health APIs, investing ₹204 crore in FY24 capex, and pushing new molecules through its R&D pipeline. There’s science, there’s strategy, and yes — there’s drama.
3. Business Model – WTF Do They Even Do?
Think of Hikal as India’s molecular middleman — it doesn’t make the pill you swallow or the pesticide you spray, but it makes the stuff that makes those possible. The company operates infour verticals:
1. Pharmaceuticals (62.5% of revenue)– Includes manufacturing of Active Pharmaceutical Ingredients (APIs), intermediates, and advanced intermediates. With 67 DMFs and 27 commercialized APIs, it supplies the world’s chemistry homework.
2. CDMO (Contract Development & Manufacturing Organisation)– This is where the company earns its “nerd cred.” With a pipeline of 13–14 products under development (2 expected by FY26), Hikal works with global innovators for early-stage molecules. Essentially, they do the tough chemistry while big pharma takes the credit.
3. Crop Protection (37.5% of revenue)– A mix of custom synthesis, agrochemicals, and specialty chemicals for sectors like personal care and home care. Or in simpler terms, “If it grows, glows, or cleans, we probably made the molecule.”
4. Research & Technology– Their Pune R&D lab is a chemical Disneyland, equipped with 15 synthetic labs, a Kilo Lab, Innovation Lab, and 26 PhDs running around with pipettes. The company claims to serve industries ranging from Biotech to Food and Animal Healthcare — proving that chemistry really does find its way into everything.
With 5 manufacturing facilities across Karnataka, Gujarat, and Maharashtra — and a total reactor capacity of4,100+ m³, Hikal is literally one explosion away from a Marvel origin story.
4. Financials Overview
| Metric | Q2FY26 (₹ Cr) | Q2FY25 (₹ Cr) | Q1FY26 (₹ Cr) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 319 | 453 | 380 | -29.6% | -16.1% |
| EBITDA | 8 | 75 | 25 | -89.3% | -68.0% |
| PAT | -35 | 18 | -22 | -291.0% | -59.1% |
| EPS (₹) | -2.83 | 1.48 | -1.82 | — | — |
Commentary:The numbers read like the world’s most depressing chemistry lab results — revenue
evaporated, profits decomposed, and EPS went radioactive. Operating margins slipped from 17% YoY to just 2%, and PAT is now deep in the negative zone. At this rate, “P/E” might soon mean “Please Explain.”
5. Valuation Discussion – Fair Value Range (Educational Only)
Let’s do some sober math before more drama.
- Current Price (CMP): ₹228
- EPS (TTM): ₹0.82→ Annualized P/E = 278x
- Industry P/E:~31x (Pharma average)
P/E Method:
If Hikal traded at a “sane” 25–35x P/E range →Fair value range = ₹0.82 × (25–35) = ₹20.5 – ₹28.7
EV/EBITDA Method:
- EV = ₹3,475 Cr
- EBITDA (TTM) = ₹228 Cr → EV/EBITDA = 15.2xIf normalized to 10–12x (sector mean):Fair value range = ₹2,280 – ₹2,736 Cr → per share ≈ ₹183 – ₹220
DCF (simplified educational model):
Assuming free cash flow growth of 6%, WACC of 10%, and terminal value at 12x FCF →DCF fair range = ₹200 – ₹250
→ Educational Fair Value Range: ₹180 – ₹240
(This fair value range is for educational purposes only and is not investment advice.)
6. What’s Cooking – News, Triggers, Drama
If you thought the FDA storyline was over, oh boy. Between February and August 2025, Hikal’sJigani Unitwent through a full-blown regulatory episode. The USFDA first issuedsix observations, followed by anOAI classification, and finally aWarning Letteron August 20, 2025. That’s the FDA equivalent of three red cards in one match.
Naturally, the company deferred exports, leading to revenue dips and PAT losses. Management has promised remediation and “intensive corrective action.” Meanwhile, the CTO resigned in April 2025, possibly before the next batch of emails arrived.
Adding to the spice, the National Green Tribunal previously ordered Hikal to deposit ₹5 crore for an alleged hazardous incident — an order later stayed by the Supreme Court. Somewhere between FDA paperwork and legal affidavits, the finance team must be wondering whether they joined a pharma firm or a courtroom drama.
On the brighter side, theAnimal Health divisioncommissioned its new Panoli facility and validated four
