Hikal Ltd

NSE:HIKAL

Earnings Call Analysis

Earnings Call Transcript 2025-Q1

[Operator]

Good day, and welcome to Hikal Limited Q1 FY '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

[Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Sameer Hiremath, Managing Director of Hikal Limited. Thank you, and over to you, sir.

[Sameer Hiremath, executive]

Thank you. Ladies and gentlemen, good afternoon, and a very warm welcome to all of you. We extend our gratitude to all of you for participating in our Q1 FY '25 results conference call. We are pleased to provide you with an update on the progress made by our company. We trust that you have had the opportunity to review our earnings release, investor presentation and the financial statements for the quarter ended 30 June 2024. These documents can be accessed on both Hikal's website and the stock exchange's website.

I am Sameer Hiremath, Managing Director, Hikal Limited, and I will be leading the discussion and presenting the financial results. On this call with me, I have Anish Swadi, Senior President, Business Transformation; Kuldeep Jain, Chief Financial Officer; Manoj Mehrotra, President of Pharmaceutical business; Vimal Kulshrestha, President Crop Protection business and strategic growth advisers, Investor Relations advisers.

Now talking about our quarter 1 FY '25 performance. Despite the ongoing challenges and price pressure from competitors, particularly China, the global crop protection industry is expected to stabilize by the end of this year. The pharmaceutical sector is showing definitive improvement, supported by stabilized raw material prices and an increased demand. Our strategic focus remains on acquiring new customers, improving operational efficiencies and optimizing costs through various business excellence initiatives.

In the current quarter, we have experienced increased market penetration, stable raw material prices and a significant rise in inquiries in our CDMO segment. Our Animal Health facility has completed validations for 5 products and is on track for validating several others in the following quarters. We have also initiated regulatory filings for these products across the globe.

In our Pharmaceutical business, we have seen increased market demand in terms of volume and offtake, which reflect the positive outcomes of our strategic efforts to increase market share into new geographies over the last few years. This progress is evident through the regulatory approvals and expansion of our customer base, which have now increased significantly into new geographies like Latin America, Middle East, and other parts of Southeast Asia in the API segment.

In the Crop Protection business, the industry continues to face challenges, including subdued demand due to inventory correction, intense price competition and severe overcapacity. While we recognize the short-term challenges in the industry, we anticipate an improvement in the market trajectory by the end of this financial year. We are well positioned across our businesses for long-term profitable and sustainable growth.

For Q1 FY '25, the EBITDA stood at INR 58 crores, which is 14.3% compared to INR 50 crores, which is 12.9% on a year-on-year basis, resulting in a growth of 16%. The same is not being reflected in the profit before tax and profit after tax due to the increase in depreciation and interest cost on account of capitalization of new assets during the last 12 months. The combined impact amounts to INR 10 crores. As we ramp up production and sales from these assets, these costs will get absorbed, resulting in higher profitability going forward.

Now I would like to hand over to Vimal Kulshrestha, who will provide an overview of the Crop Protection division's performance. Over to you, Vimal.

[Vimal Kulshrestha, executive]

Thank you, Sameer. Good afternoon to all the participants of this call. In Q1 FY '25, revenue of our crop Protection business was INR 177 crores with EBITDA of INR 21 crores and EBIT margin of 11.6% (sic) [ 11.9% ], showing a year-on-year increase of 110 basis points. Our product mix for the quarter was more leveraged towards our CDMO portfolio leading to improved margins.

However, the crop protection industry continues to face challenges due to destocking, overcapacity and intense price completion from China. We are actively engaged in several projects both with our existing innovator customers and new customers, which are in the advanced stage of discussion. We are seeing positive traction with several companies in CDMO segment for development and contract manufacturing. These projects are expected to drive our mid- to long-term growth.

Our efforts to improve costs are starting to show positive results and have played a significant role in maintaining our margin profile amidst the challenging market conditions.

Overall, despite the challenging industry landscape, we are focused on growth opportunities in our -- and cost optimization, which will contribute to our sustained success in the market.

In business verticals, own product destocking continues to impact demand globally and expectation for -- which is expected to improve towards end of FY '25. In line with our growth strategy, we are actively working on new product opportunities to expand our business further and derisk our customer and product portfolio.

Our CDMO business maintained a healthy pipeline of inquiries from both current and prospective clients. Our focus on these opportunities is expected to strengthen our position among global innovators driving growth in the segment in the medium term.

Now I would hand over to Manoj, who will provide an overview of Pharmaceutical division's performance. Manoj, over to you.

[Manoj Mehrotra, executive]

Thank you, Vimal, and good afternoon to all on this call. I will talk about the performance of the Pharma business. On the financial side for Q1 FY '25, our pharmaceutical business reported revenue of INR 229 crores and EBIT of INR 9 crores. This was a decrease of 60 points as compared to year-on-year.

We are anticipating good volume growth in our API business in the coming years, and therefore, we took capacity expansion and debottling shutdowns, which will give us increased operating leverage in the next few quarters.

Several CDMO project deliveries were also pushed back due to customer requirements, which will improve in the second half of the year. We are focused on improving profitability and on increasing revenue and to achieve this, we are implementing several measures to enhance cost efficiencies and optimize operational processes.

Coming to our business vertical. On the API side, the performance of our API business is improving, both in terms of quarter-over-quarter and year-over-year growth. We have started the necessary regulatory filings for our expansion project in different regions, which will significantly contribute to our future growth.

Our product development pipeline is robust with 8 to 9 products in progress, and we are on track to launch 2 to 3 products every year. 1 DMF was filed in quarter 1 FY '25. Additionally, our market share in the existing product portfolio is consistently growing. The CDMO vertical in the first quarter of the fiscal year 2025, our CDMO business continues to be impacted by destocking, but it is expected to normalize by second half of the fiscal year.

We are consistently engaging with our existing customers and in the last 2 quarters have received a growing number of inquiries and conversions to form business, indicating a strong interest in expanding partnership with us. Our CDMO business is showing positive results with 2 products currently in production that are expected to reach therapeutic potential within the next 2 years.

Furthermore, 2 of our advanced intermediate NCEs are progressing well in Phase III of the clinical trials with innovators and are anticipated to start ramping up by 2026, '27.

On the overall pharma business, the API business is experiencing positive momentum with strong growth potential in different regions. We expect regulatory approvals for new products to contribute to this growth. We have a strong pipeline of projects in the CDMO sector and are actively seeking new opportunities. We have lined up several customer audits for the remainder of the fiscal year. The improved operating leverage in this segment is expected to result in better profitability.

Now I would hand over to Anish, who will provide an overview of our business strategy.

[Anish Swadi, executive]

Thank you, Manoj, and good afternoon to everyone. First, I'd like to give us -- give you the highlights on the Animal Health business. The development of multiple APIs for an animal health innovator company is progressing well under our long-term agreement. Furthermore, our new multipurpose plant for Animal Health is operational, and we have successfully completed the validation of 5 products with several more products undergoing validation, which is expected to be completed by year-end. These will then be submitted for registration and eventual commercialization.

We are also in discussions with a range of new customers in this segment for process development and complex molecule synthesis, which is also showing positive signs.

In summary, despite the immediate challenges we face, we are confident that the long-term opportunities -- that there are long-term opportunities for us to surpass them. Our transformation initiative Project Pinnacle is already producing results, bringing us closer to our goal of fostering sustainable growth across all our businesses.

Furthermore, we have established strategic partnerships and collaborations with key industry stakeholders, enabling us to partner on new technology, gain expertise and resources. These partnerships also provide us with increased market visibility and credibility.

Moreover, we are actively investing close to about 4% to 5% of our revenue in R&D to innovate new products and services that address the evolving needs of our customers. Our focus on continuous improvement and innovation ensures that we stay ahead of market trends and remain at the forefront of the industry.

Our encouraging momentum of Project Pinnacle is evident in our derisking of our supply chain and acquiring new customers. In addition, we have made significant progress in diversifying our revenue streams by expanding into new markets and segments. This has also allowed us to reduce our dependence on any single market or region, thereby mitigating risks associated with economic fluctuations and/or regulatory changes.

As we progress through the next phase of our strategic development, significant progress has also been achieved by integrating sustainable practices into our ESG framework. Our commitment to sustainability is substantiated with Hikal becoming a signatory to the United Nation's Global Impact program, and we received the bronze rating awarded by EcoVadis.

In order to make a positive environmental impact through our operations, we have developed a clear future strategy and road map. As we move forward in our strategic evolution, we have placed a strong emphasis on talent development and fostering a culture of innovation and collaboration within the organization.

Overall, we remain optimistic about the future and believe our strategic initiatives and focus on sustainability will enable us to overcome challenges and achieve sustainable and profitable growth in the long run.

Now I would like to open the floor to Q&A.

[Operator]

[Operator Instructions]. The first question is from the line of Aman Vora from Premier Capital.

[Aman Vora, analyst]

So my first question is on the comment that Mr. Vimal made on the Crop Protection business and the industry seeing improvement at the end of financial year. While our press release the Chairman has mentioned end of calendar year. So could you just clarify that comment.

[Vimal Kulshrestha, executive]

Yes. So we expect it to be towards Q3 or Q4 of current financial year. It is difficult to specifically tell you the period, but this should be around of Q3 or Q4 of current financial year.

[Aman Vora, analyst]

Okay. And what exactly gives us the confidence that this will be during Q3, Q4 because it's been in -- the issues have been there for more than 15 months, 12 months now. So what is giving us this confidence now that towards the end of this financial year, we would see some uptick.

[Vimal Kulshrestha, executive]

Yes. So this is based on various interactions, discussions in the market with our customers and understanding that how they have been destocking their products and also with the end consumers and in the supply chain.

[Aman Vora, analyst]

Okay. Okay. Got it. But -- and sir, just to look at Hikal I -- just to look at Hikal as a company. So we did about INR 2,000-odd crores of turnover in FY '23, with 17% to 18% kind of EBITDA margin -- 18% kind of EBITDA margins broadly. So if I look at this -- as an investor, if I look at this company over 3 to 5 years, what is the broad outlook that the management can share on the base of FY '23, please?

[Sameer Hiremath, executive]

No, I think rather than giving forward guidance expecting 10% to 15% growth coming back from next financial year. Once the Crop Protection business comes back on track, I think we should be getting back to those numbers. And the EBITDA numbers historically, of 18% to 20% is what we can achieve in the next few years after post -- from '26 onwards.

[Aman Vora, analyst]

Right. Sir, just to understand this 10% to 15% once demand normalizes, as you said, is really underwhelming number, because if we see, we've been guiding mid- to high teens earlier also in FY '23, and we've done cumulative about INR 600 crores to INR 800 crores of CapEx, which would be 1.3x to 1.5x asset turns over the last 3-odd years. So just to get a better sense on this 10% to 15% guidance. And this is when you're specifying that Crop Protection returns back to normalcy.

[Kuldeep Jain, executive]

Yes, I think the focus is more on improving the margins and the product mix. In Crop Protection, as Vimal said, will start normalizing by end of this financial year, but the real impact will start coming by next financial year. So it will take about 1 year, 1.5 years for Crop to come back on to track. And then we expect another few years.

So [indiscernible] CAGR over the next 3 years. That's why [indiscernible] CapEx will come into play here. As for Pharma approval, a lot of the CapEx is going into crop -- Animal Health and Pharma and those validations are happening by end of this financial year. So that takes a few years to get ramping up, right? In the Pharma API business is a 2- to 3-year gestation period post CapEx.

[Aman Vora, analyst]

Got it. And any CapEx guidance for this year, sir?

[Sameer Hiremath, executive]

So we're doing about INR 25 -- INR 120 crores to INR 140 crores in that range depending -- approximately, nothing significant. It's mostly -- mostly debottlenecking and maintenance CapEx. There's no major significant CapEx right now.

[Operator]

[Operator Instructions]. The next question is from the line of Ankeet Pandya from InCred Asset Management.

[Ankeet Pandya, analyst]

Sir, just 1, 2 questions. So on the EBIT front, we are seeing Crop Protection EBIT margins improving both year-on-year and sequentially. While [indiscernible] sentimental currently, the overall industry wise it is -- still there is weakness. So any particular reason for increase in the EBIT margins for Crop Protection?

[Sameer Hiremath, executive]

Well, I think we had some high-margin products that we sold in quarter 1 in the CDMO space. And that's why the margins were on the higher side in quarter 1.

[Ankeet Pandya, analyst]

Okay. But is this like a sequential thing or like it can still fluctuate in the coming quarters?

[Sameer Hiremath, executive]

I think it will decrease -- will fluctuate.

[Ankeet Pandya, analyst]

Okay. Fair, sir. And 1 question on the interest cost during the quarter. So that has increased sequentially from Q4 to Q1, it has increased from INR 15 crores to INR 20 crores almost. So I think the short-term debt has increased in FY '24. So can we expect by the -- like by the end of FY '24 -- FY '25 the interest expenses to come down?

[Sameer Hiremath, executive]

Well, the interest has increased because the capitalization of certain assets has taken place in the last year. And from this year onwards, that is hitting our P&L on this quarter onwards. So that's why the interest cost has increased. Debt.

Has actually gone down for this quarter, if you look at our absolute debt numbers. It is down this quarter.

And what was your second question again? Can you repeat that?

[Ankeet Pandya, analyst]

No, sir, it was on interest costs only.

[Sameer Hiremath, executive]

Yes. So interest cost was increased because of the capitalization of certain assets in the last financial year, which is now hitting the P&L fully this year. And as we ramp up production and sales from these assets, these costs will get absorbed, resulting in higher profitability. So there's a little lag effect as what it is.

[Ankeet Pandya, analyst]

Okay. And sir, by how much amount or -- have we reduced the debt this quarter?

[Sameer Hiremath, executive]

Overall debt is about INR 759 crores compared to INR 804 crores in the last quarter. So a decrease of almost INR 45 crores.

[Ankeet Pandya, analyst]

And do we plan to reduce it further for this year or by next year? Any plans for debt reduction?

[Sameer Hiremath, executive]

We are looking at a growth -- we'll have some optimization of CapEx numbers, but as the business grows, we're looking at around continuous improvement in CapEx -- sorry, debt and improve the debt equity ratio, yes. It should start coming down for next year, yes.

[Ankeet Pandya, analyst]

From next year onwards.

[Operator]

[Operator Instructions]. The next question is from the line of [ Ravi ] Shah from [ Opal Securities ].

[Unknown Analyst]

Yes. Sir, my first question is in the speech you had mentioned about the price or -- the crop protection industry. But in terms of pricing, if you could help us understand what is going on like in terms of aggression and pricing?

[Sameer Hiremath, executive]

Yes. So I think crop protection industry pricing from China is very aggressive and they're dumping products at a very low price. So that is definitely impacting crop protection pricing power. There is a -- and this continues for the older molecules, which are commoditized.

But for the new molecules, which is what we are focusing on in the CDMO space, which are under patent, the pricing is intact. So there is a short-term correction -- there's been a correction last few years for the inventory correction. But once that pans out, I think once demand will come back, then the margins will start improving because they're not prevalent much in the commodity space, they are more in the specialty space in the crop business as well.

[Unknown Analyst]

Understood, sir. Thank you for the detailed answer. So my second question would be on the Pharma side. So is there any increased traction towards the contract manufacturing? And what are the type of inquiries that you mentioned as they are getting. So what are the types of inquiries that we are getting in this space?

[Manoj Mehrotra, executive]

No. So we are definitely seeing increased traction in the CDMO business. First of all, we are getting more business from our existing customers where we are already approved as a service provider. Plus we have been in discussions with some other innovators and they are, at this point of time, wanting us and visiting us to approve us for more opportunities. .

And we are definitely seeing that impact of China Plus One strategy in the CDMO business. Gestation period is long. So you will take some time for the financials to show it, but one can sense that increased interest of innovators to come to India and to Hikal.

[Unknown Analyst]

Understood, sir.

[Operator]

[Operator Instructions]. The next question is from the line of [indiscernible] Rathi from NM Securities.

[Unknown Analyst]

OI have a couple of questions. How long does it. Hello? Am I audible?

[Sameer Hiremath, executive]

Yes, please go ahead.

[Unknown Analyst]

Okay. How long does it take from CDMO inquiry to commercialization, where we start seeing realization?

[Manoj Mehrotra, executive]

It can be 2 years, 3 years or sometimes more also because they start with smaller quantities. And it depends where do you start with, you start in Phase II, Phase III or near to commercialization. There's no definite answer. It takes time, but what is there if it passes through clinical and business is certain after that. .

[Unknown Analyst]

Okay. And my second question is for Q1 FY '25 was your R&D spend as a percentage of sales?

[Sameer Hiremath, executive]

About 4% of our total sales.

[Operator]

[Operator Instructions]. Next question is from the line of Aman Vora from Premier Capital.

[Aman Vora, analyst]

Just some clarification on the comment you made on the Crop Protection margin. So I understand that there can be volatility quarter-on-quarter. But can on a full year basis, we maintain our 1Q margins?

[Sameer Hiremath, executive]

I mean, there'll be some variation. I mean this quarter, we had some high-margin products. I don't think -- there will be a little bit of variations. Once quarter 4 comes into play, I think the demands starts coming back then these margins will be more sustainable. [indiscernible] next few quarters yes.

[Aman Vora, analyst]

Okay. Got it. And second thing is on the Animal Health side. When do we start seeing revenue accruing? And any thoughts you can share on the potential on the -- of this division over the next 5 years in terms of revenue?

[Anish Swadi, executive]

Yes. So as we -- as I said earlier, is that right now, we are just in the validation phase of several molecules, but we also have an existing Animal Health business. So right now validation revenues are smaller than what you'd expect -- significantly smaller than what you'd expect on the commercial scale. And we expect the lag time of anywhere between, I would say, 14 to 16 months before the product becomes commercial post the validation. .

Over a longer period of time, if I look at a 3- to 4-year horizon, I could certainly see that this business could be a INR 300 crores to INR 400 crores business because we have number one, a portfolio of products that we have in discussions with the customer. We have an existing portfolio as well, and we're in late-stage discussions with several other customers. So we do have good traction in this business.

[Aman Vora, analyst]

Right. Got it. And just to put things together. So we're thinking that we can -- in 3 to 4 years' time, we can do INR 300 crores to INR 400 crores revenue in this business, while Mr. Hiremath guided that over longer term, we can do a 15% kind of a growth.

So on that base of FY '23, which was INR 2,000 crores of revenue, over the next 4 years, can we double that revenue to about INR 4,000 crores, putting Animal Health and the other 2 businesses at 15% growth just mathematically?

[Anish Swadi, executive]

Look, when you have an existing base, which is significant currently at this time as a company across both the divisions, it's more challenging to grow a business at 15-plus percent CAGR return.

I think Animal Health is a smaller business because the base is smaller, we have some good traction in there. So when Sameer mentioned about growing this business at about 10% to 15% on a CAGR basis, he's including all the businesses that we have.

Is it possible Yes, certainly. I mean, we are always striving to grow faster. But again, the focus, as he mentioned, is on profitability, right? How do we improve the margin profile and the net profit. That's the key focus of the business across all the verticals.

[Aman Vora, analyst]

Got it. No, I understand that, sir, but you will have a lot of other CDMO players, both on the chemicals and pharma side in India, operating at a larger base than what we are and going at a faster rate.

So I am just a little -- I'm just a little not clear why a 10% to 15% growth. Because if you see the overall scheme of demand and the opportunity that both the Pharma and the Crop Protection had mentioned, INR 2,000 crores base is still very small. So I'm just trying to understand better from you. Because we have players who, on a larger base growing faster in India. And for a company that has as impeccable track record on regulatory front as what we have, why can't we do faster?

[Anish Swadi, executive]

Yes. I mean that's a great question. I mean, look, we're looking at what we have currently in the pipeline, what we're confident about and our focus is on delivering exceeding what we talk about. So right now, we're comfortable in giving this type of guidance. Obviously, we're working towards exceeding that over a period of time.

But today, whatever we have defined visibility about is what we are talking about. So eventually, that run rate will increase. Again, we have a good pipeline of products that have either been submitted to the client for validations across the businesses. or are in late stage in terms of developments -- in the development phase.

So once those products -- there's a relative uncertainty, which is beyond our control in terms of where those products land, whether they actually go through commercial to market, and that's beyond our control. So when we look at our future growth projections, we discount -- we have a discount rate which we use in terms of what potentially could come to market. So using that is what's the guidance we are giving you as.

[Aman Vora, analyst]

Got it. Got it. No, that's perfectly fine. We've been investors in the company for 5 years. I just thought I would urge us to aspire for higher growth, which I hear you that we are aspiring for higher, but this is a conservative guidance which you are giving as of now. Perfect.

[Operator]

[Operator Instructions]. The next question is from the line of [ Sajal ] Kapoor an Individual Investor.

[Unknown Attendee]

A quick question on this food ingredient [ NCEs ] 2 molecules that we launched, 1 in the U.S. and 1 in the EU where we expect full potential or big potential in next 2 years? I mean, can -- are you -- would you be able to quantify what that peak potential is? It is INR 50 crores or INR 100 crores across both products? I mean what's the sort of expectations that you have? What do you speak? I mean that's what I'm trying to understand in terms of revenue.

[Sameer Hiremath, executive]

Yes, these are a pretty niche product. I think rather than looking at revenue, we're looking at margins. So this is a high margin but niche molecules what we have done and very complex products. So it's about INR 40 crores, INR 50 crores peak potential, yes. .

[Unknown Attendee]

So Sameer, when you say higher margins, I say gross margin rather than the EBITDA because that's a function of capacity utilization, et cetera. So at a gross level, I mean, is it north of 60% material gross margin? Or is it not?

[Sameer Hiremath, executive]

Close to 60% plus, yes.

[Unknown Attendee]

All right. And then given that we have a pipeline of Phase III and the NDA presumably have also been filed. I mean, you previously mentioned there are 2 KSMs in Phase III. And I mean -- I know Anish mentioned that the focus is on the quality of the earnings and the margins.

So is it fair to assume that we are actively targeting projects where the material gross margins are no less than 60% and in many cases, especially in the development phase of a molecule I have seen companies reporting material gross margins as high as 80% and even 90%. And so I mean just wanted to understand your sort of take on the current pipeline, especially the Phase III and also the pipeline where the innovator has already filed the NDA.

[Sameer Hiremath, executive]

If you look at our blended gross margin of the company, we're between close to 45% today. This is even after the ricing pressure in the crop business, so -- and the generic part of our Pharma business or some of the older molecules, right?

As our portfolio moves to more niche specialty based products in Crop and also when we ramp up our Animal Health business and our pharma NCEs, so -- and the new projects that are coming on stream in the next 2, 3 years will be well in north of the current contribution margin that we've had.

I mean, I don't have the correct number, whether it will be significantly higher than where the blended contribution of the company is today. So that will drive the blended numbers pretty high compared to where we are today. And the new inquiries are significantly higher in terms of contribution margin compared to historical numbers. Yes.

[Unknown Attendee]

Right, sir. So you're guiding for 10% to 15% in the sort of near term over the next 2, 3 years kind of starting next fiscal. But when these new molecules start -- see the workflow is -- we all understand how the workflow works, right? I mean you launched NCE it doesn't mean that it will reach its full potential in the market. It takes typically 3, 4, 5 years, give or day to reach the peak potential. So -- and at that point in time, the reflection will be visible on the EBITDA margin.

So is it fair to assume that the -- the best of margins are at least 5 years away, maybe fiscal '29, even '30 for that matter, when these new molecules are scaling up full potential or near full potential in the marketplace?

[Sameer Hiremath, executive]

I think they'll start in about 3 years from now. The ramp-up will start significant upside. And you're right, maybe 4 to 5 years is where the full potential will peak. But it will start up for about 3 years. It could happen earlier. But I think our estimate is 3 years. .

[Operator]

[Operator Instructions]. The next question is from the line of [ Rajvi Shah ] from [ Bright ] Securities.

[Unknown Analyst]

I just have 1 question. What is the capacity utilization for Pharma and Crop Protection, including the annual shutdowns?

[Sameer Hiremath, executive]

Crop utilization is on the lower side, it's about 60% because of the demand contraction in the current scenario and crop.

Pharma, we've done a significant amount of shutdown because of or -- as part of our annual shutdown also, debottlenecking of our capacities for the future. So we had to take shutdown in the first quarter. And that's why the Pharma capacity utilization is about 65% for this quarter, which will increase in the quarter 2 onwards.

[Operator]

[Operator Instructions]. As there are no further questions, I would now like to hand the conference over to Mr. Sameer Hiremath for closing comments.

[Sameer Hiremath, executive]

Thank you, everyone, for joining our quarterly earnings call and for your continued interest in our company. We appreciate your support as we navigate through the challenges of the global business environment. As we conclude this call, we want to assure you that we are here to address any further questions or concerns, feel free to reach out to us on our Investor Relations partner, Strategic Growth Advisors. Once again, thank you for your participation. .

[Operator]

Thank you. On behalf of Hikal Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.