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Hikal is a strong chemical company which provides active ingredients, intermediates and R&D services to global pharmaceuticals, animal health, crop protection and specialty chemicals companies. Pharma and agrochemical accounted for 58% and 42%, respectively, of the revenues. The company is a beneficiary of the disruption of production in China and overall rise in end product prices. New molecules for custom manufacturing and direct B2B sales should drive growth at around 15% for the next two years. The business model is derisked due to revenues coming from many products. Main risk factor is regulatory and sharp slow down in global markets. We have a neutral weight rating as valuations are on the higher side but company could report steady earnings growth for next 2-3 years. Recent performance post Covid have been exceptional and reflects potential of the business – 14-08-2021 Price: 696.75 Rating: Over Weight Recommendation: Buy

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